The Issue Whether the Respondents' Florida real estate licenses should be disciplined based upon the following charges, as alleged in the administrative complaint: COUNTS I and II: Whether Respondent Richard Michael Regazzi ("Regazzi") is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, 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. COUNT III: Whether Respondent Regazzi is guilty of failure to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), Florida Statutes. COUNT IV: Whether Respondent Atlantic Rentals Realty, Inc. is guilty of failure to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), Florida Statutes. COUNT V: Whether Respondent Regazzi is guilty of failure to prepare the required written monthly escrow statement- reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and therefore in violation of Section 475.25(1)(e), Florida Statutes. COUNT VI: Whether Respondent Atlantic Rentals, Inc. is guilty of failure to prepare the required written monthly escrow statement-reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and therefore in violation of Section 475.25(1)(e), Florida Statutes. COUNT VII: Whether Respondent Regazzi is guilty of having been found guilty for a third time of misconduct that warrants his suspension or has been found guilty of a course of conduct or practices which shows that he is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom he may sustain a confidential relation, may not safely be entrusted to him in violation of Section 475.25(1)(o), Florida Statutes.
Findings Of Fact Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaint pursuant to the laws of the State of Florida, in particular Section 20.165, Florida Statutes, and Chapters 120, 455 and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent Regazzi is, and was at all times material hereto, a licensed Florida real estate broker. License number 0273453 was issued in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker in care of Atlantic Rentals, Inc., 6811 North Atlantic Avenue, No. B, Cape Canaveral, Florida. Respondent Atlantic Rentals, Inc. is, and was at all times material hereto, a corporation registered as a Florida real estate broker having been issued license number 0273444 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 6811 North Atlantic Avenue, No. B, Cape Canaveral, Florida. At all times material hereto, Respondent Regazzi was licensed and operating as the qualifying broker and officer of Respondent Atlantic Rentals, Inc. On January 28, 1997, Petitioner's Investigator Maria Ventura ("Investigator Ventura") conducted an audit of Respondents' escrow account #3601612291, maintained at NationsBank and titled Atlantic Rentals, Inc., Multi Unit escrow Account (escrow account). On January 28, 1997, Respondents had a reconciled bank balance of $46,166.93. As of January 28, 1997, Investigator Ventura determined that Respondents had a total trust liability of $84,586.77. By comparing Respondents' reconciled bank balance with Respondents' trust liability, it was determined that Respondents had a shortage of $38,419.84 in their escrow account. In addition, Respondents were not performing monthly reconciliations of their escrow account. On January 28, 1997, Respondent Regazzi prepared a monthly reconciliation statement (reconciliation statement) for December 1996, and provided it to Petitioner on the same day. Respondent Regazzi's reconciliation statement indicated that there was shortage of $28,885.36 in the escrow account. Respondent Regazzi's reconciliation statement is not signed, and does not indicate what month was being reconciled. The statement indicates that the reconciled bank balance and trust liability agree when, in fact, the reconciliation statement indicates a shortage of $28,885.36. Respondent Regazzi's explanation of how the funds were removed from the escrow account by a third party is not credible. Even if this account were credible, it does not lessen Respondent Regazzi's culpability. On April 21, 1992, the Florida Real Estate Commission ("FREC") issued a final order whereby Respondent Regazzi was found guilty of misconduct and was fined $200, and placed on probation for one year with a requirement to complete and provide satisfactory evidence to the Department of having completed an approved 30-hour broker management course. Respondent successfully completed the terms of probation. On November 12, 1996, the FREC issued a final order whereby Respondent Regazzi was fined $250 for misconduct and Respondent Atlantic Rentals, Inc. was reprimanded.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent Regazzi be found guilty of violating Sections 475.25(1)(b), (e), (k), and (o), Florida Statutes (1995), as charged in the Administrative Complaint. Respondent Atlantic Rentals, Inc. be found guilty of having violated Sections 475.25(1)(b), (k), and (e), Florida Statutes, as charged in the Administrative Complaint. That Respondents Regazzi's real estate license be revoked and that he be ordered to pay restitution in the amount of $38,419.84, plus interest. That Respondent Atlantic Rentals, Inc.'s corporate brokerage registration be revoked. RECOMMENDED this 23rd day of December, 1997, at 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 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of December, 1997. COPIES FURNISHED: Daniel Villazon, Esquire Department of Business and Professional Regulation 400 West Robinson Street, Suite N-308 Orlando, Florida 32801 Richard Michael Regazzi, pro se Atlantic Rentals, Inc. 6811-B North Atlantic Avenue Cape Canaveral, Florida 32920 Henry M. Solares, Division Director Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, I make the following: The Defendant, Leroy Wilson, is a registered real estate broker with the Commission and during January 1, 1975 to November 5, 1975, Defendant was registered as trading as Overpass Real Estate. On April 27, 1975, Defendant was the owner of residential property located at 291 N.W. 29th Terrace, Ft. Lauderdale, Florida. On April 28, 2/ Robert English and his wife Mazie English in response to a "for sale" sign posted at 291 N.W. 29th Terrace, Ft. Lauderdale, Florida, went to the real estate brokerage office maintained by the Defendant at room 201 Romark Building, 3521 West Broward Boulevard, Ft. Lauderdale, Florida. Defendant and Mr. and Mrs. English discussed and negotiated a deposit receipt contract dated April 28, 1975, between the Englishes as purchasers and Defendant as seller for the purchase and sale of property owned by Defendant located at 291 N.W. 29th Terrace. Mrs. English testified that they put up an earnest money deposit of $300 acknowledged by Defendant, however, Defendant executed the deposit receipt contract reflecting an earnest money deposit of $600. (See FREC Exhibit number 2). Mrs. English testified that part of the terms of the contract was that she would apply for a mortgage loan but when it was determined that her daughter who was to participate with her in the purchase, was not able to stay with her, she and her husband decided not to apply for a mortgage loan. She explained to Defendant and he agreed to return the $300 deposit that she had submitted along with the deposit receipt contract. When the Englishes demanded the return of their deposit, Defendant advised them that "it was the law that the deposit must be kept for 6 weeks, and thereafter, he would have to keep the deposit another ten days." After the expiration of the six week period, the Englishes called the Defendant's office and was advised that he no longer lived there and other efforts by the Englishes to contact the Defendant were fruitless. Thereafter on or about August 20, 1975, the Englishes filed a complaint with the Commission. Approximately two days after the Commission initiated its investigation, the Defendant returned the $300 deposit to the Englishes. (See FREC Exhibit number 3). N.B. Wolf an employee of Gulf Atlantic Mortgage Brokers testified that she was familiar with the document received into evidence as Exhibit number 2 which is the deposit receipt contract entered into by the Defendant and the Englishes. She testified that she did not recall ever having taken a credit application for the Englishes to apply for a mortgage loan. Roy E. Conner, the operations officer for Plantation First National Bank testified that he caused to be gathered the bank records as they relate to the escrow account maintained by the Defendant at that bank. An examination of those bank records revealed that the Defendant's escrow bank account maintained at Plantation First National Bank had a shortage of $5 as of September 16 and that on August 14, his escrow bank account showed a balance of $65 when it should have reflected a balance of $300 in earnest money deposits. See FREC Exhibit number 4 received into evidence. Pruyn investigated Defendant's brokerage office on September 16, at 2951 N.W. Avenue, Ft. Lauderdale, Florida. Based on an official inspection, Pruyn noted a number of inadequacies in that there were no letterheads, no desks, no chairs, no business mail, no diary of witnesses or any official sign as required and set forth in Commission Rule 21V-10.07 and 10.09, Florida Administrative Code and Section 475.22, Florida Statutes. See FREC Exhibit number 5 received into evidence. As previously stated, the Defendant did not appear at the hearing nor did he have a representative present to present any defense to the charges made by the Commission in the administrative complaint.
The Issue The issue presented is whether Petitioners are entitled to recover from Respondent the attorney's fees and costs incurred by Petitioners, pursuant to the Florida Equal Access to Justice Act.
Findings Of Fact At the time material hereto, Global Real Estate and Management, Inc., was a corporation registered as a real estate broker in the state of Florida, Mark H. Adler was a real estate broker licensed in the state of Florida, and Richard Shindler was a real estate salesman licensed in the state of Florida. Adler was the qualifying broker for Global, and Shindler was employed by Global. On November 17, 1989, the Department of Professional Regulation, Division of Real Estate, received a written complaint about Adler, Shindler, and Global from Jay Hirsch, a real estate broker licensed in the state of Florida. Hirsch's complaint included the following allegations. Shindler had entered into two contracts for the purchase of real estate which required Shindler to place a total of $11,000 in Global's escrow account. Requests for verification of the deposit of such funds had been ignored. Hirsch had told Shindler at the time that the contracts were executed and on numerous occasions thereafter that since Shindler had chosen to participate in the real estate commission to be earned from the transaction, Shindler had assumed a fiduciary relationship with the sellers. Shindler had arbitrarily refused to close pursuant to the contracts and on October 2, 1989, Hirsch met with Shindler, reminded Shindler of Shindler's fiduciary responsibil-ities to the sellers, made demand on Shindler for the escrow deposit on behalf of the sellers, and advised Shindler of the provisions of Florida law relating to the responsibilities of the escrow holder when demands are made for release of escrowed money. Written demand was made on Adler within days of the oral demand. Hirsch subsequently spoke with Adler, the broker of record for Global, regarding the legal requirements in escrow deposit disputes but discovered that Adler "knew nothing" about the transaction. Shindler and Adler continued to ignore the demands made on them for the escrow deposit. Hirsch also alleged that there may be "certain other irregularities" regarding fiduciary responsibilities, entitlement to commissions by Global, and conflicts of interest. An investigator was assigned to investigate Hirsch's complaint against Adler, Shindler, and Global. According to the investigative report issued on February 12, 1990, that investigation revealed possible serious violations of the laws regulating the conduct of real estate brokers and salespersons. Although the investigative report recited that Global waited two months after the initial deposit demand was made by Hirsch before it filed an interpleader action to resolve conflicting demands on the escrow deposit, the documentation attached to the investigative report clearly indicated that Global waited just a few days short of three months before filing the interpleader action. The investigative report further revealed that during the time that at least the $11,000 was required to be in Global's escrow account (if Global were not involved in any other real estate transactions at the time), the escrow account had less than an $11,000 balance for both the months of September and October of 1989. The report further indicated that the IRS had attached Global's escrow account for Global's failure to pay payroll taxes. The investigative report revealed that there had been a problem obtaining broker Adler's presence for the interview with the Department's investigator. When a joint interview with both broker Adler and salesman Shindler did take place, the broker was unable to answer any of the investigator's questions, telling the investigator that he knew little regarding the problems since he relied on salesman Shindler to operate the business on a daily basis. In response to the investigator's continued questioning as to how IRS was able to attach an escrow account, Shindler explained that although the checks were marked escrow account, the bank statements did not reflect an escrow account but rather reflected a "special account." It was further discovered during the investigation that broker Adler had not been a signatory on the escrow account; rather, salesman Shindler had been the only signatory on the escrow account. At the conclusion of that interview, Shindler, who had taken control of the interview, agreed to supply the Department's auditors with all IRS and bank correspondence relative to the escrow account attachment. During that same joint interview on January 23, 1990, when questioned about the real estate transactions which were the subject of broker Hirsch's complaint, Shindler spoke in terms of having "his" attorney file an interpleader action (although he was the buyer). He also talked about oral extensions to the written contracts. Shindler also explained that his "deposit moneys" were in the escrow account because he was using a part of sale proceeds belonging to his brother as his down payment on purchases made for himself, an explanation which suggested there might be co-mingling of funds. A complete audit of Global's escrow account by the Department's auditors was scheduled for February 7, 1990. A supplemental investigative report was issued on May 3, 1990. That report contained the following recital. Shindler and Adler had failed to comply with the Department's requests for files and bank statements so that an audit could be conducted on the escrow and operating accounts. On March 22, 1990, a subpoena was served on Global requiring those records to be made available by April 3. As of April 30, complete records were still not submitted in that case files were not available and certain checks and monthly bank statements were missing. Therefore, an appointment was made to conduct the audit in Global's office on May 1 with the requirement that broker Adler be present. On that date, files were still not available and bank records were incomplete, precluding the conduct of a proper audit. Adler told the investigator on that date that Shindler had not even told Adler that a subpoena had been served, which statement reinforced the investigator's belief that salesman Shindler had been operating as a broker and running the business operations of Global, with broker Adler merely lending his license. On that same date Shindler changed his explanation of the escrow account shortages, saying the IRS had not garnished the escrow account; rather, Global's bank had transferred $3,200 from Global's "escrow" account to Global's operating account to cover checks written on Global's operating account when the account did not have sufficient funds. It was also discovered that Adler had not been performing monthly reconciliations of Global's "escrow" account. Adler told the investigator that he would supply files and reconciliations by June 1, 1990. A supplemental investigative report was issued on June 12, 1990, advising that although the subpoena return date had been extended to June 1, 1990, as of June 12 Adler had still failed to respond by producing the required records. On June 19, 1990, the Probable Cause Panel of the Florida Real Estate Commission considered the investigative reports and determined that there was probable cause to believe that Adler, Shindler, and Global had violated statutes regulating the conduct of real estate brokers and salespersons. The administrative complaint recommended to be filed by the Probable Cause Panel was issued by the Department of Professional Regulation, Division of Real Estate, on June 21, 1990, against Mark H. Adler, Richard Shindler, and Global Real Estate and Management, Inc. That Administrative Complaint contained factual allegations regarding Shindler's contracts to purchase properties listed by broker Hirsch, regarding the alleged "verbal" extensions of the closing dates in the written contracts, regarding the repeated demands on broker Adler for release of the escrowed money as liquidated damages, and regarding the lengthy delay in responding to those demands. The Administrative Complaint also contained factual allegations regarding Shindler's use of a part of sale proceeds due to his brother as his own down payment on the properties and regarding the escrow account balance which was less than $11,000, the minimum balance required to be maintained in Global's escrow account if there were no other sales pending. Also included were factual allegations regarding the alleged attachment of Global's escrow account by the IRS for failure to pay payroll taxes, regarding the fact that broker Adler was not a signatory on the escrow account, and regarding Adler's reliance on Shindler to operate the real estate brokerage office on a daily basis. The Administrative Complaint also recited the failure of the Respondents to comply with the subpoena served on Global by the Department, which precluded the possibility of conducting a proper audit of Global's account. Factual allegations were included reciting that on May 1, 1990, Shindler had acknowledged that he had been operating as a broker and running the real estate brokerage business of Global with broker Adler "lending his license." In addition, the Administrative Complaint recited Shindler's original explanation that the IRS had attached the escrow account, which explanation was later changed by Shindler to be that Global's bank had taken $3,200 from Global's escrow account to cover checks written against Global's operating account when there were not sufficient funds in that operating account. Lastly, the Administrative Complaint alleged that Adler had not done monthly reconciliation statements of the escrow account from October of 1989 through the date of the Administrative Complaint. Based upon those factual allegations, the Administrative Complaint alleged that Adler was guilty of culpable negligence or breach of trust in a business transaction (Count I), that Shindler was guilty of culpable negligence or breach of trust in a business transaction (Count II), that Global was guilty of culpable negligence or breach of trust in a business transaction (Count III), that Adler was guilty of having failed to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized (Count IV), that Global was guilty of having failed to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized (Count V), that Adler was guilty of having failed to produce for inspection records when subpoenaed by the Department (Count VI), that Global was guilty of having failed to produce for inspection records when subpoenaed by the Department (Count VII), that Shindler was guilty of having failed to deposit funds with his employing broker (Count VIII), and that Shindler was guilty of having operated as a broker while being licensed as a salesman (Count IX). The Administrative Complaint sought disciplinary action against Adler, Shindler, and Global for those alleged violations. Adler did not seek a formal hearing regarding the allegations contained within that Administrative Complaint. Rather, he entered into a settlement agreement with the Department, agreeing that all of his real estate licenses, registrations, certificates, and permits would be suspended for a period of eighteen months, that he would resign as an officer and/or director of Global, and that he would testify at any formal hearing held regarding the Administrative Complaint. Adler also agreed that notice would be published that he had been suspended for 18 months for culpable negligence and failure to properly supervise a licensed salesman in his employ. That agreement was approved by the Florida Real Estate Commission in a Final Order filed of record on August 31, 1990. On the other hand, Shindler and Global did request a formal hearing regarding the allegations contained in that Administrative Complaint. The matter was subsequently transferred to the Division of Administrative Hearings for the conduct of that formal hearing and was assigned DOAH Case No. 90 That formal hearing was conducted on January 9, 1991. Based on the evidence presented during that final hearing, a Recommended Order was entered on March 20, 1991, finding that the Department had failed to prove its allegations as to Shindler and further finding that the Department had failed in its burden of proof as to two of the three counts against Global. The Recommended Order did find that Global failed to maintain trust funds as alleged in Count V of the Administrative Complaint and recommended that Global be ordered to pay an administrative fine in the amount of $500. That Recommended Order was adopted in toto by the Florida Real Estate Commission in its Final Order filed on April 24, 1991. It is clear that Shindler prevailed in the underlying administrative action and that Global prevailed as to two of the three counts against Global. The Department was substantially justified in initiating the underlying administrative proceeding against both Shindler and Global. At the time that the underlying action was initiated, it had a reasonable basis both in law and in fact.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The Respondent was at all times material to this proceeding a licensed real estate broker in the state of Florida having been issued license number 0035275. The last license issued was as a broker, d/b/a Silver Springs Real Estate, Corp., 4121 East Silver Springs Boulevard, Ocala, Florida 32671. On or about August 3, 1984, the Respondent obtained Teri L. Lochman (Lochman) as a tenant of certain residential property belonging to Gail and Valerie Cox (Cox) that was involved in a sale to A. Pillot. In connection with this sale, a lease had been prepared between A. Pillot as Lessor and A. Alongi as Lessee. Lochman signed this lease as Lessee, and in connection with this lease, paid Respondent $1,600.00 representing $700.00 for the first month's rent, $700.00 for the last month's rent and $200.00 security deposit. These funds were paid by Lochman to Respondent in two separate checks in the amount of $500.00 and $1,100.00 dated August 5, 1984 and August 13, 1984, respectively. The Pillot/Cox escrow account, which had previously been established in Respondent's escrow ledger, was credited with these funds and the funds deposited in Respondent's real estate brokerage trust bank account, No. 805 0006583, in the Sun Bank of Ocala (Trust Account), on August 9, 1984 and August 17, 1984, respectively. Upon attempting to move into the home she had rented, Lochman discovered that Cox was still in possession because the sale had not gone through. At this point, August 17, 1984, Lochman and Cox signed an agreement which would allow Lochman to reside in the home rent free for two weeks while Cox was out of town in return for acting as a security guard. Sometime after the August 17, 1987 agreement was executed by Lochman and Cox, Lochman and Cox signed a handwritten month to month lease of the premises requiring Lochman to pay Cox $700.00 for the first month's rent, $700.00 for the last month's rent and a $200.00 damage deposit. This payment was conditioned upon Lochman receiving her refund from the Respondent. There was no credible evidence that Respondent agreed to release Cox from any previous agreement with Respondent wherein Respondent acted as agent for Cox in obtaining Lochman as a tenant or the handling of Cox's property, i.e. mowing grass or preparing house for rent. Additionally, there was no credible evidence that Respondent agreed to Lochman dealing directly with Cox. Respondent was at all times relevant to this proceeding acting as agent for Cox, and therefore, demanded from Cox her commission for obtaining Lochman as a tenant and reimbursement for other services rendered before returning Lochman's rental deposit. There is no credible evidence that the Respondent agreed to return Lochman's rental deposit without first obtaining her commission or reimbursement for other services rendered from Cox. There is no credible evidence to show that Cox paid Respondent her commission or reimbursed Respondent for other services rendered or that Cox made a demand on Respondent to pay the Lochman rental deposit to Lochman. There is credible evidence that Lochman made a demand on Respondent for the return of her rental deposit and that Respondent refused to return Lochman's rental deposit because there was a dispute between Respondent and Cox concerning Respondent's commission and reimbursement for other services rendered. Lochman did not pay Cox the rent for the month of September, 1984, therefore, she contends that Respondent only owes her $900.00 of the rental deposit. Upon Respondent's refusal to pay her the balance of the rental deposit, Lochman obtained a default judgment for $900.00 in civil court, however, and although the record is not clear, the default judgment may have been set aside. (See transcript, page 15, lines 9-13). The evidence is clear that check no. 257 drawn on the Trust Account in the amount of $1,465.00, paid on April 18, 1985, included $1,278.00 from the Pillot/Cox escrow account and depleted the funds in the Pillot/Cox escrow account. However, there was no evidence presented to show that the Lochman rental deposit was paid to Respondent. Likewise, there was no evidence presented to show that Cox did not receive the Lochman rental deposit. There was no evidence presented to show the payee on Check No. 257, or any other check, drawn on the Trust Account. There was no evidence presented to show that Respondent commingled trust funds and personal funds in the Trust Account in regard to deposits and withdrawals. There was insufficient credible evidence to show that Lochman was entitled to delivery of $900.00 or any funds from the Trust Account. There was no evidence that Respondent notified the Real Estate Commission (Commission) of the conflicting demands on the Lochman rental deposit or followed any of the procedures set forth in the statutes to resolve such a conflict.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, it is, therefore, RECOMMENDED that the Commission enter a Final Order finding the Respondent guilty of failing to notify the Commission of the conflicting demands on the trust funds and failing to follow the procedures set forth for resolving such conflict in violation of Section 475.25(1)(d), Florida Statutes and that Respondent's real estate broker's license be suspended for a period of six (6) months, stay the suspension, place the Respondent on probation for a period of six (6) months under the condition that the issue of conflicting demands on the trust funds be resolved within sixty (60) days and under any other conditions the Commission feels appropriate, and assess an administrative fine of $300.00 to be paid within sixty (60) days of the date of the Final Order. It is further RECOMMENDED that the Final Order DISMISS Counts I, III, IV and V of the Administrative Complaint filed herein. Respectfully submitted and entered this 1st day of May, 1987, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of May, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2387 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties in this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner 1.-2. Adopted in Finding of Fact 1. 3. Adopted in Findings of Fact 8 and 9. 4.5 Rejected as not supported by substantial competent evidence in the record. Additionally, Petitioner has treated certain facts in this case as background in unnumbered paragraphs which I have numbered 6-10. Adopted in Finding of Fact 2 as clarified. Adopted in Finding of Fact 4 except for the phrase that Respondent agreed to the return of the rental deposit which is rejected as not being supported by substantial competent evidence in the record. I did not find Lochman's testimony credible in this regard. Adopted in Findings of Fact 8 and 9 as clarified. Adopted in Finding of Fact 10 as clarified. This paragraph is a statement of Lochman's testimony and not presented as a fact, therefore, is rejected. Rulings on Proposed Findings of Fact Submitted by the Respondent For the reasons set forth in the Background portions of this Recommended Order, there has been no rulings of Respondent's Proposed Findings of Fact. COPIES FURNISHED: Van Poole, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Harold Huff Executive Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32801 James H. Gillis, Esquire Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Jeffrey J. Fitos, Esquire Valley Forge Military Academy Wayne, Pennsylvania 19087
Findings Of Fact At all times material hereto Respondent Marvin M. Kornicki has been a licensed real estate broker in the State of Florida, having been issued License Nos. 0265344 and 0252335. The last license issued was as a broker for Waterway Properties, Inc., t/a Waterway Properties. At all times material hereto, Respondent Waterway Properties, Inc., t/a Waterway Properties, has been a corporation registered as a real estate broker in the State of Florida, having been issued License No. 0265344. At all times material hereto, Respondent Kornicki was licensed and operating as the qualifying broker and an officer of Respondent Waterway Properties, Inc. On January 7, 1990, Respondents solicited and obtained an offer in the amount of $155,000 from Alda Tedeschi and John Tocchio, buyers, to purchase real property, to-wit: Unit 422 at Mariner Village Garden Condominium, Aventura, Florida, from Arthur Goldstein and Myra Goldstein, sellers. The buyers' offer reflected a $1,000 deposit to be held in trust by the Respondent Waterway Properties, Inc. The offer reflected that if the offer was not executed by and delivered to all parties, or fact of execution communicated in writing between the parties, on or before January 10, 1990, the deposit would be returned to the buyers and the offer would be withdrawn. The offer also reflected that "time is of the essence." On January 8, 1990, Respondents sent the buyers' offer to the sellers in New Jersey by air express. On January 10, 1990, the sellers signed the offer but made it a counteroffer by requiring the buyers to furnish an additional deposit of $14,500 by January 12, 1990, and requiring the buyers to sign a condominium rider and an agency disclosure form. The sellers returned the counteroffer with condominium rider and agency disclosure form to the Respondents. On January 12, 1990, Respondents sent the counteroffer, condominium rider, and agency disclosure form, together with a letter dated January 11, 1990, to the buyers for the buyers' initials and signatures. Although the buyers could not have received the counteroffer until after its expiration date, they advised Respondents by telephone that they had in fact initialed the counteroffer and mailed it back to Respondents. Respondents never received from the buyers that accepted counteroffer. The buyers subsequently verbally demanded the return of their $1,000 deposit, but Respondents wrote to the buyers on February 9, 1990, advising the buyers that they were in default. On February 8, 1990, Respondents had already disbursed the $1,000 deposit to Respondents' operating account since the sellers had told the Respondents to use the deposit to cover the costs incurred advertising the sellers' property. Since he was uncertain as to whether he had "conflicting demands upon an escrow deposit" Respondent Kornicki telephoned the Florida Real Estate Commission and discussed the matter with one of the Commission's attorneys. Because Respondent Kornicki believed that the buyers were "in default," Respondents failed to notify the Florida Real Estate Commission in writing that they had received conflicting demands. No explanation was offered as to why Respondent Kornicki believed the buyers were in default when the counteroffer could not have been signed by the buyers prior to its expiration and when Respondent Kornicki had never seen a fully executed document. Further, no explanation was offered as to why the sellers believed they were entitled to the money. Since that transaction, Respondents have experienced other transactions where conflicting demands were made. In those subsequent instances, they have timely notified the Florida Real Estate Commission in writing as to those conflicting demands. On June 18, 1990, Petitioner's investigator conducted an office inspection and escrow/trust account audit of Respondents' office and escrow/trust account. That audit revealed that Respondents wrote a trust account check on September 1, 1989, in the amount of $369.15, which was returned on October 3, 1989, for insufficient funds. A second trust account check in the amount of $800 was also returned for insufficient funds on October 3, 1989. Respondents had received rental monies from a tenant by check. Respondents had written checks out of those monies for the mortgage payment on the rental property, not knowing that the tenant's check would fail to clear. The worthless check written by the tenant caused these checks written by Respondents to be returned for insufficient funds. Respondents have changed their office policies so that they no longer accept checks from tenants except before tenants move into rental properties and the checks must clear before the tenants are allowed to take possession of the leased premises.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered: Finding Respondent Kornicki guilty of Counts I, III, V, VII, IX, and Finding Respondent Waterway Properties, Inc., guilty of Counts II, IV, VI, VIII, X, and XII; Dismissing Counts XIII and XIV; Ordering Respondent Marvin M. Kornicki to pay a fine of $1,000 to the Division of Real Estate within 60 days and revoking Respondents' licenses should such fine not be timely paid; Placing Respondents on probation for a period of one year if the fine is timely paid; Requiring Respondent Kornicki to complete and provide satisfactory evidence of having completed 60 hours of approved real estate post-licensure education for brokers, 30 hours of which shall include the real estate broker management course, during the probationary period; Establishing terms for the probationary period except that such probationary terms shall not require Respondent Kornicki to retake any state licensure examinations and Requiring Respondent Kornicki to appear before the Commission at the last meeting of the Commission preceding the termination of Respondents' probation. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 13th day of February, 1991. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of February, 1991. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 90-5863 Petitioner's proposed finding of fact numbered 1 has been rejected as not constituting a finding of fact but rather as constituting a conclusion of law. Petitioner's proposed findings of fact numbered 2-4, 6-14, and 16-19 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 5 has been rejected as being unnecessary for determination of the issues herein. Petitioner's proposed finding of fact numbered 15 has been rejected as not being supported by the weight of the credible evidence in this cause. COPIES FURNISHED: Darlene F. Keller, Division Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Jack McCray, Esquire Department of Professional Regulation Legal Division 1940 North Monroe Street Tallahassee, Florida 32399-0792 James H. Gillis, Esquire Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Marvin M. Kornicki Waterway Properties, Inc. 16560 Biscayne Boulevard North Miami Beach, Florida 33160
The Issue The issues are whether Respondent is guilty of issuing checks from his escrow account without sufficient funds so as to constitute culpable negligence, breach of trust, misrepresentation, or concealment, in violation of Section 475.25(1)(b), Florida Statutes; failing to reconcile escrow accounts, in violation of Section 475.25(1)(e) and (k), Florida Statutes, and Rule 61J2-14.012, Florida Administrative Code; employing an unlicensed person, in violation of Section 475.42(1)(c), Florida Statutes; failing to maintain business records, in violation of Section 475.5015, Florida Statutes; and violating a lawful order of the Florida Real Estate Commission by failing to pay a citation within the required time, in violation of Section 475.25(1)(e), Florida Statutes. If Respondent is guilty of any of these allegations, an additional issue is the penalty that should be imposed.
Findings Of Fact Respondent became a licensed real estate salesperson in 1987. The following year, he became a licensed real estate broker, and he has remained a broker continuously since that time. From September 30, 1996, through January 30, 2000, Respondent was the qualifying broker of Express Realty and Investments, Inc. (Express Realty). At no time relevant to this case was Novellete Faye Hanse a Florida-licensed real estate broker or real estate salesperson. At all relevant times, Ms. Hanse was the office manager of Express Realty. Respondent formed Express Realty in 1995. Respondent was the sole director and president. Ms. Hanse's son was an officer of Express Realty from the time of its formation. Respondent met Ms. Hanse in 1991. She informed Respondent that she was a licensed mortgage broker. Respondent and Ms. Hanse agreed in late 1991 to form a joint real estate/mortgage broker operation in a single office. However, when Hurricane Andrew struck in 1992, Respondent, who has been a licensed general contractor since 1978, engaged exclusively in construction until 1995. Respondent formed Express Realty to pursue the prior plan of a joint real estate/mortgage broker operation. The two businesses occupied an office building owned by Ms. Hanse, who did not charge Respondent's business any rent. The address was 6306 Pembroke Road in Miramar. Express Realty served as an escrow agent in a contract dated May 9, 1999, for the sale and purchase of real property located at 6360 Southwest 23rd Street in Miramar. In this capacity, Express Realty, held various funds in escrow for the closing. For the closing, Express Realty issued two checks payable to the closing agent, totaling $19,169.08, and drawn on its escrow account. The checks, which are dated July 15, 1999, and signed by Ms. Hanse, bear the name, "Express Realty & Investments, Inc. Escrow Account" and bear the address 6306 Pembroke Road in Miramar. The bank failed to pay these checks due to insufficient funds. After receiving a complaint that Express Realty had failed to produce these escrow funds at the closing, Petitioner's investigator conducted an audit of Respondent's escrow account. At the audit, which took place the day prior to the day scheduled, the investigator found Ms. Hanse, but not Respondent, at the Express Realty office. Despite repeated requests on and after the day of the office visit, the investigator could not obtain relevant records from Ms. Hanse or Respondent concerning the real estate transaction for which Express Realty had issued escrow checks with insufficient funds. On August 23, 1999, the Florida Real Estate Commission issued a citation to Respondent at 6306 Pembroke Road in Miramar. The citation was served on Respondent within one week of the date of issuance. The $100-citation was for the failure to give the required disclosure or notice in a real estate transaction. The citation gave Respondent 30 days to contest the citation or 60 days to pay the citation. After the deadline, the investigator contacted Respondent and asked him about the citation. Respondent stated that he had forgotten about it. When Respondent still failed to pay the citation, the investigator called again, and Respondent stated that he had mailed the money, but it had been returned due to a faulty address. Respondent paid the citation approximately four months after it had been served on him. Shortly after Respondent belatedly paid the citation, Petitioner received another complaint concerning a contract for the sale and purchase of real property located at 850 Southwest 9th Avenue in Hallandale. In this transaction, Ms. Hanse represented herself to be a licensed real estate broker, showed the property to prospects, and accepted $5000 in escrow on behalf of Express Realty. In July 2000, Petitioner's investigator conducted an audit of Express Realty's escrow account. Again, the investigator was unable to find any documents by which he could undertake an independent reconciliation of the account or otherwise document the role of Express Realty in the subject transaction. At the hearing, Respondent claimed that he was unaware that Ms. Hanse had been conducting real estate business without his authority in the name of Express Realty. Although he admitted that she was an employee of Express Realty, he disclaimed any knowledge that she had removed him from the escrow account and otherwise taken over the management of the real estate broker company. However, Respondent could not explain why, after his claimed discovery of these misdeeds in the summer of 1999, he did nothing to prevent Ms. Hanse from continuing to use Express Realty as the means by which to conduct unlicensed real estate activities, as she did a few months later. Under the circumstances, Petitioner proved that Respondent was at all times aware that Ms. Hanse was conducting unlicensed real estate activities through Express Realty.
Recommendation It is RECOMMENDED that the Florida Real Estate Commission enter a final order finding Respondent guilty of the allegations contained in Counts I-IV and VI of the Amended Administrative Complaint, imposing a $5000 administrative fine, and suspending his license for three years; provided, however, if Respondent fails to pay the fine in full within 180 days of the final order, his license shall be revoked without further notice. DONE AND ENTERED this 9th day of July, 2002, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 2002. COPIES FURNISHED: Jack Hisey, Deputy Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Dean Saunders, Chairperson Florida Real Estate Commission Division of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Hardy L. Roberts, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202 Juana Carstarphen Watkins Senior Attorney Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32801 Wayne Wagie 11900 North Bayshore Drive, Unit No. 5 Miami, Florida 33181
The Issue Whether the Respondent is guilty of fraud in violation of Section 475.25(1)(b), Florida Statutes. Whether the Respondent is guilty of having failed to account and deliver trust funds in violation of Section 475.25(1)(d), Florida Statutes. Whether the Respondent is guilty of having failed to immediately place upon receipt deposits received in trust and to maintain said trust funds in the real estate brokerage trust account until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), Florida Statutes. Whether the Respondent is guilty of having failed to make available to the Petitioner or its authorized representative all bank statements for all escrow accounts including cancel led checks, all check books and pending contracts and all documents pertaining to all escrow accounts and for having failed to make available such books and accounts to the Petitioner or its authorized representative at a reasonable time during regular business hours, as required by Rule 21V-14.012, Florida Administrative Code, and therefore in violation of Section 475.25(1)(e), Florida Statutes. Whether the Respondent is guilty of having failed or refused to appear at the time and place designated on the Subpoena Duces Tecum, served October 10, 1988, with respect to an official investigation of alleged violations of Chapter 475, Florida Statutes, in violation of Section 475.42(1)(h), Florida Statutes, and Section 475.25(1)(e), Florida Statutes.
Findings Of Fact Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular Section 20.30, Florida Statutes, Chapters 120,455 and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent is now and was at all times material hereto a licensed real estate broker in the State of Florida having been issued license number 0125817 in accordance with Chapter 475, Florida Statutes. The last license issued to the Respondent was as a broker with a business address of 1605 Main Street. Suite 810, Sarasota, Florida 34236 and a home address of 3409 Prudence Drive, Sarasota, Florida 34235. From on or about November, 1984 to on or about May, 1988, the Respondent was employed by the Boathouse on Longboat, Ltd., a Florida limited partnership, to sell condominium boat storage berths for the limited partnership in which Respondent was a limited partner. On April 15, 1988, Harold Kornhaus, made a offer to purchase a storage space in the amount of $19,500.00. The offer by Harold Kornhaus was not for a specific size storage berth but the berth was to be a specific size. An agent of the Respondent named Michael Tewksbury took the offer from Harold Kornhaus and stated he was obligated to present the offer to the Respondent. The Kornhaus offer was delivered to the Respondent who never presented it to the general partner, Barry R. Lewis. The Respondent changed the Kornhaus offer by changing the first page and indicating another seller, named Currier but otherwise left all other pages as drawn by Tewksbury. The Respondent represented individual limited partners at the expense of the partnership entity by having one of the limited partners, Currier, purchase a storage space at a reduced amount and then reselling that space at a profit to a purchaser, Kornhaus. The Respondent and /or his agent Tewksbury handled the transaction, and received a commission. In another transaction involving the Huntsman to Bradt contract written on April 28, 1988, the Respondent wrote an escrow check at closing on April 28, for $1,950.00, which check was dishonored due to insufficient funds on account. Herbert Jacobs, chairman of Ajax Paving Industries, Inc., of Florida, a renter of space at the Boathouse of Longboat, decided to buy a storage space for his company. The Respondent arranged to sell a storage space to William Pettibon, who was a limited partner. The contract selling William Pettibon a storage space was written on February 1, 1988, for storage space #2325. On April 1, 1988, the Respondent arranged to sell Pettibon's unit #2325 to Herbert Jacobs, chairman of Ajax Paving Industries, Inc. On April 28, 1988, the limited partnership records show the bank balance in the Respondent's escrow account should have been $44,436 when in fact there was a negative balance of $1,120.82. Naples Federal Savings and Loan Association loaned approximately $987,500.00 to the limited partnership. One of the conditions of the loan was that Respondent's escrow account pertaining to all sales contracts, deposits, etc., for the limited partnership be placed with Naples Federal. On February 26, 1987, Respondent wrote a letter to William T. Kirtley, attorney for the limited partnership, and stated that the total balance in the Boathouse escrow account was $82, 109.85. The Respondent could not make a proper accounting of his escrow account on that date, and misrepresented to Mr. Kirtley that he had in excess of $80,000 in his escrow account. On December 22, 1987, the Respondent wrote check No. 151 from the escrow account to Mr. Edward Lerian "Larry" Ay, Jr., in the amount of $11,500. Mr. Ay was a contracted buyer of a boat storage unit and had made a personal loan to the Respondent in the amount of $10,000 in December, 1986. The $11,500 check from the Respondent to Mr. Ay was repayment of the loan, plus $1,500 in interest. Mr. Ay thought that he was loaning money to the Boathouse of Longboat, Ltd., the limited partnership, but such was not the case. The Respondent had no valid reason for writing Mr. Ay a check from the escrow account. The Respondent did not have the prior consent of the general partner for either the loan or the use of escrowed funds. On October 27, 1987, Respondent wrote two checks from the escrow account to David Buyher in respective amounts of $5,317.50 and $187.50. The checks represented repayment of a loan, with interest, made to Respondent by Buyher in 1986. Respondent was without authority to use escrow funds for said purposes. On February 26, 1988, the Respondent wrote check number 203 from the limited partnership escrow account in the amount of $616.73 to the "Mountain Chalet" in Snowmass Village, Colorado. The funds were used for the personal lodging and other services of the Respondent and was done without authority. On March 28, 1988, Respondent wrote check No. 236 in the amount of $10,873.11 to himself. On April 28, 1988 Respondent wrote check No. 258 in the amount of $14,600 also to himself. The two checks referred to above were used to obtain cashiers checks to be used at real estate closings. Respondent was fired as the real estate broker for the Boathouse of Longboat, Ltd., in May, 1988. In August and September, 1988, during Petitioner's investigation, several appointments were made with the Respondent to review the Respondent's escrow account which appointments the Respondent cancelled. On the day of the fifth appointment, the Respondent called and cancelled. The Respondent stated he would not permit the account to be reviewed without a subpoena. On or about October 10, 1988, the Respondent was served with a Subpoena Duces Tecum commanding him to produce for inspection and copying at 1605 Main Street, Suite 810, Sarasota, Florida 34236 on October 10, 1988, at 10:00 a.m., for the Department of Professional Regulation "all bank statements for all escrow accounts including cancelled checks from September 1, 1987 to the present time. All checks books and pending contracts and all other documents appertaining to all escrow accounts." Respondent did not comply with the Subpoena Duces Tecum on October 10, 1988. On or about October 14, 1988, a Subpoena Duces Tecum was properly served on Thomas E. Finley, First Vice President or the Custodian of Records, Naples Federal Savings and Loan Association, 5801 Pelican Bay Boulevard, Naples, Florida 33941-3004 commanding that such Custodian of Records appear at the Petitioner's Office of Investigative Services on October 18, 1988, at 11:00 a.m., and have with him "all bank statements and checks from June 1, 1987, through June 30, 1988, appertaining to the escrow account of Michael H. Diffley, account number 1600070019531." Naples Federal Savings and Loan Association provided the May 31, 1988, statement of Respondent's aforementioned account.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Professional Regulation, Florida Real Estate Commission, enter a Final Order which finds as follows: Respondent Michael H. Diffley guilty of fraud, violating the provisions of Subsection 475.25(1)(b), Florida Statutes, as alleged in Count I of the Administrative Complaint; Respondent Michael H. Diffley guilty of having failed to account and deliver funds, violating the provisions of Subsection 475.25(1)(d), Florida Statutes. Respondent Michael H. Diffley guilty of having failed to maintain funds in trust, violating the provisions of Subsection 475.25(1)(k), Florida Statutes; Respondent Michael H. Diffley guilty of violating the provisions of Rule 21V-14.012, Florida Administrative Code, for having failed to preserve and make available to the Department account records kept in accord with good accounting prac- tices, and therefore guilty of violating Subsection 475.25(1)(e), Florida Statutes; and Respondent Michael H. Diffley guilty of having violated Subsection 475.42(1)(h), Florida Statutes, by having failed to appear at the time and place required by subpoena, and therefore violated Subsection 475.25(1)(e), Florida Statutes. It is further recommended that the Final Order entered by the Florida Real Estate Commission revoke the Respondent's real estate license for the above- stated violations of Chapter 475, Florida Statutes. It is further recommended that the Final Order entered by the Florida Real Estate Commission impose an administrative fine in the amount of $1,000 for each of five (5) counts of the Administrative Complaint for a total administrative fine in the amount of $5,000 to be paid within thirty (30) days of the Final Order of the Florida Real Estate Commission. DONE AND ENTERED this 8th day of January, 1990, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 8th day of January, 1990. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Proposed Findings of Fact submitted by the Petitioner: Paragraphs 1 through 39- accepted in substance, except for paragraph 5 which is rejected as unnecessary and paragraph 31 which is in the nature of argument. Proposed Findings of Fact submitted by the Respondent: Paragraphs 1 and 2 - rejected as argumentative. COPIES FURNISHED: James H. Gillis, Esquire Senior Attorney Department of Professional Regulation Post Office Box 1900 Orlando, FL 32302 Kenneth M. Meer, Esquire 423 Country Club Drive Winter Park, FL 32789 Darlene F. Keller Division Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, FL 32802 Kenneth E. Easley General Counsel Department of Professional Regulation Northwood Centre 1940 North Monroe Street Suite 60 Tallahassee, FL 32399-0792
Findings Of Fact The parties Petitioner, Department of Business and Professional Regulation, Division of Real Estate, is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida, in particular Section 20.165, Florida Statutes, Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent, Christopher Chillemi (Christopher), is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0136243. The last license issued to Christopher was as a broker- salesperson with Michael F. Chillemi, 3615 Lake Worth Road, Lake Worth, Florida 33460. Respondent, Michael F. Chillemi (Michael), is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0014678. The last license issued was as a broker t/a Century 21 Chillemi Enterprises, 3615 Lake Worth Road, Lake Worth, Florida 33460. Counts I-III, the rental transaction On May 18, 1993, Christopher, while licensed and operating as a broker- salesperson for Michael F. Chillemi, showed a rental unit on which they had a listing, located at 752 Lori Drive, Palm Beach County, Florida, to Ms. Rose M. Bocek. Ms. Bocek liked the apartment, but since she was currently under a lease at another residence, advised Christopher that she could not take the unit unless the owner agreed to start the lease in August 1993. Christopher advised Ms. Bocek that he would present her offer to the owner, who lived out of state, and requested a deposit check should the owner agree. Thereupon, Ms. Bocek issued her check, dated May 18, 1993, payable to "C-21 Chillemi Escrow" in the sum of $375.00, as a deposit on the apartment, and delivered it to Christopher. 1/ That evening, Christopher spoke with the owner and he agreed to lease the apartment to Ms. Bocek starting in August 1993. Ms. Bocek's check for $375 was duly deposited into the Century 21 Chillemi Enterprises' escrow account on May 19, 1993. Notwithstanding that the owner had agreed to lease the premises to her as she had requested, Ms. Bocek called Christopher on May 19, 1993, and told him she had changed her mind and did not want to rent the apartment. Christopher, after checking with the owner, advised Ms. Bocek that, under the circumstances, the owner had advised him not to return her deposit. After speaking with friends, Ms. Bocek contacted the Florida Real Estate Commission to see if it could assist her in retrieving her money and, on June 24, 1993, an investigator went to Century 21 Chillemi Enterprises' office pursuant to that complaint. Subsequently, by letter of June 24, 1993, Ms. Bocek made a written demand on Michael Chillemi, Century 21 Chillemi Enterprises, for the return of her $375.00. After speaking with the owner by phone, and receiving his permission, Michael Chillemi did, on June 25, 1993, release from his escrow account and deliver to Ms. Bocek her deposit of $375.00, and by letter of the same date notified the Florida Real Estate Commission of the disposition of the deposit. The audit of June 24, 1993 While at the premises of Century 21 Chillemi Enterprises on June 24, 1993, petitioner's investigator conducted an audit inspection of Michael Chillemi's escrow account. That audit revealed that although Michael's escrow account balanced perfectly with the sums he should have in escrow, as it had on every prior audit of his office accounts, Michael did not have a written monthly statement-reconciliation document or form upon which was included the date the reconciliation was undertaken, the date used to reconcile the balances, the name of the bank, the name of the account, the account number, the account balance and date, deposits in transit, outstanding checks identified by date and check number, and which was signed and dated by the broker, as required by Rule 61J2- 14.012, Florida Administrative Code. Rather, Michael's practice was to utilize the back of his bank statement, together with a list of all pending contracts (which included the names of the parties, the date the transaction was to close, and the amount in escrow) and his check stubs, to reconcile his trust liability. These sources of information supplied the basic information required by Rule 61J2- 14.012, Florida Administrative Code, but the method employed to account for his trust liability did not result in one document reflecting the required information, and the reconciliation Michael did was not dated and signed. But for such failing, Michael's banking and accounting practices were deemed sound by petitioner's investigator.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered finding Christopher Chillemi not guilty of the allegations set forth in Count I of the Administrative Complaint, Michael Chillemi not guilty of the allegations set forth in Count II of the administrative complaint, and Michael Chillemi guilty of the allegations set forth in Counts III and IV of the administrative complaint. For the violations set forth in Counts III and IV of the administrative complaint it is recommended that Michael Chillemi receive a reprimand, and that he be directed to comply with the provisions of Rule 61J2-14.012(2), Florida Administrative Code, with regard to all future reconciliations. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 8th day of April 1994. WILLIAM J. KENDRICK 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 8th day of April 1994.
