Findings Of Fact Having heard the testimony and considered the evidence presented at the hearing, the undersigned finds as follows: At all relevant times, respondent was a licensed mortgage broker, holding license number 3256. (Exhibit A) On November 26, 1974, Carl Sciacca and George Williams, the general partners of a limited partnership known as University Professional Plaza Ltd., entered into a written contract with respondent to procure a mortgage loan commitment. Mr. Sciacca first went to respondent because respondent had been highly recommended to him. The amount of the mortgage was to be $2,450,000.00 and the commitment was to be procured "on or before 21 days from date all required exhibits are presented...". The agreement further provided that University would pay to respondent a brokerage fee in the amount of $24,500.00 upon funding of the loan. (Exhibit B) On the same date, November 26, 1974, University delivered to respondent a check in the amount of $7,500.00. This check bears the notation "For partial brokerage commission to be held in escrow." (Exhibit C) On November 27, 1975, respondent used said check to purchase a cashier's check and the money was never placed in escrow by respondent. While some correspondence from someone denoting an interest in the loan did transpire, the loan was never consummated. Sometime after the expiration of 21 days from November 26, 1974, Mr. Sciacca requested respondent to refund the deposit. A dispute arose between respondent and University regarding whether or not respondent had received from University all the required documents pertaining to the procurement of the loan. Respondent stated that University had not acted in good faith and thus was not entitled to a refund of the deposit. When attorneys were brought into the picture, it was learned that respondent no longer had all the deposit money. Respondent still has not refunded the $7,500.00 to University, however, respondent and University have now entered into an agreement whereby respondent and his wife executed a mortgage note to University in the amount of $9,000.00 secured by a second mortgage on their condominium apartment. This arrangement is satisfactory to University and represents complete settlement of the $7,500.00 owed to University, along with attorney There is some dispute in the evidence as to the parties' understanding of both the disposition to be made of the $7,500.00 deposit when the check was delivered to respondent and the actual terms of the mortgage loan commitment agreement. It was Sciacca's and William's opinion that all necessary documents for the procurement of the loan had been delivered to respondent and that if a loan were not procured within 21 days, the deposit was to be returned to University. It was respondent's opinion that the 21 days was to run from the date of receipt. of all necessary documents and that respondent had never received from University an accurate financial statement. Respondent further testified that he informed Mr. Sciacca of some problems involved with procuring the loan and that he would need some of the $7,500.00 to straighten out those problems. It was respondent's testimony that, despite the notation on the check "to be held in escrow", Sciacca told respondent to use whatever he needed to procure a loan.
Recommendation Based upon the findings of fact and conclusions of law set forth herein, it is recommended that: Respondent be found not guilty of violations of F.S. Section 494.05(1)(a) , (b) , or (c) or Section 494.05(2); Respondent be found guilty of violations of F.S. Section 494.05(1)(e) , (f) , and (g) and F.A.C. Rule 3-3.06(7) recognizing that the latter two statutes and the Rule involve the same offense - the failure to place the deposit in a trust fund or escrow account; and The Division of Finance issue, in such manner as it deems appropriate, a public reprimand or censure regarding respondent's violations as set forth above. Respectfully submitted and entered this 31st day of October, 1975, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Joseph M. Ehrlich, Esquire Department of Banking and Finance Division of Finance The Capitol Tallahassee, Florida 32304 Barry Chapnick, Esquire Assistant General Counsel Office of the Comptroller The Capitol, Legal Annex Tallahassee, Florida 32304 Attorney for Division of Finance Steve E. Moody, Esquire MOODY & JONES 207 E. Broward Boulevard Suite 200 Fort Lauderdale, Florida 33301 Jack E. London, Esquire 2134 Hollywood Boulevard Hollywood, Florida 33020 Attorney for Carl Sciacca and George Williams, members of the general public
Findings Of Fact Davis was general manager of the Florida Food Industry Credit Union from May 31, 1980 to May 30, 1985. He was a member of the Board of Directors of the Credit Union from 1980 to May 31, 1985. Davis resigned as General Manager and Director of the Credit Union effective May 31, 1985. In his letter of resignation, Davis acknowledged that he had falsely reported delinquent loans in reports to the Board of Directors for the previous eight years (including three years before he became General Manager). These reports understated the status and amount of delinquent loans. A review of loan records of the Credit Union by the Department of Banking and Finance in June, 1985, confirmed that delinquency reports to the Board of Directors and the Department had been understated over $300,000 for at least six months of 1984. Other source documents of actual loan delinquency and reports thereof could not be located by the Credit Union. The amount of loans past due two months and over were significantly understated as follows: DATE REPORTED AMOUNT REPORTED ACTUAL AMOUNT AMOUNT UNDERSTATED 12/84 $90,117.02 $415,054.48 $324,937.46 9/84 $107,792.25 $446,224.48 $348,400.50 6/30/84 $86,378.35 $454,206.15 $367,827.80 5/31/84 $85,003.54 $492,721.49 $407,717.95 4/30/84 $80,538.85 $477,767.97 $397,299.12 The June 30, 1984, Report of Condition of the Credit Union to the Department understated loans delinquent over sixty days by $367,827. Loans past due two months and over as of April 30, 1985, Report of Examination, totaled $520,600. Of this amount $348,700 were classified by the examiner as loss and $57,400 doubtful of collection. The earned net worth of the Credit Union, as of the date of the examination, was 3.8 percent of total assets. Earned net worth, adjusted for loans classified loss and 50.0 percent of loans classified doubtful of collection, was 1.4 percent of total assets. Essentially, the loans classified loss and doubtful of collection are those that were not reported by Davis. By his response to Requests for Admissions and by his letter of resignation, Davis has acknowledged that he knowingly reported the false delinquent loan information. The understatement of delinquent loans as it relates to an inflation of earned net worth could seriously prejudice the interests of the depositors, members or shareholders of the Credit Union in that inflation of earned net worth impacts on future lending policies and declaration of dividends. The Complaint seeking formal removal of Respondent as a director and officer of Florida Food Industry Credit Union was dated and served on August 29, 1985. At the time the Department of Banking and Finance issued and served the Complaint instituting these proceedings, Respondent was not an officer, director, committee member or employee of Florida Food Industry Credit Union or of any other financial institution in the State of Florida, having resigned on May 31, 1985.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Banking and Finance enter a Final Order finding Respondent, Thomas E. Davis, guilty of violating Sections 655.037(1)(a) and (g), Florida Statutes, and prohibiting his participation in the affairs of any financial institution for a period of three years from May 31, 1985. DONE and ENTERED this 19th day of February, 1986, in Tallahassee, Florida. DIANE K. KIESLING Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of February, 1986. COPIES FURNISHED: Rodney C. Wade, Esquire Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301 Thomas E. Davis 1775 N. Andrews Avenue, 204W Fort Lauderdale, Florida 33311 Honorable Gerald Lewis Comptroller The Capitol Tallahassee, Florida 32301 Charles Stutts General Counsel Office of the Comptroller Plaza Level, The Capitol Tallahassee, Florida 32301 APPENDIX 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 to this case. Rulings on Proposed Findings of Fact of Petitioner Adopted in substance in Finding of Fact 3. Adopted in substance in Findings of Fact 2 and 3. Adopted in substance in Finding of Fact 4. Adopted in substance in Finding of Fact 5. Adopted in substance in Finding of Fact 6. Adopted in substance in Finding of Fact 7. Rulings on Proposed Findings of Fact of Respondent Adopted in substance in Finding of Fact 1. Adopted in substance in Finding of Fact 1. Adopted in substance in Finding of Fact 2. Adopted in substance in Finding of Fact 10. Adopted in substance in Finding of Fact 10. Adopted in substance in Finding of Fact 3. Adopted in substance in Finding of Fact 3.
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
The Issue The issue in the proceeding was whether the Respondents violated various provisions of Florida Statutes regulating the real estate profession by failing to return a $2,000.00 deposit, failing to notify the Florida Real Estate Commission of a deposit dispute, and failing to maintain the deposit in a trust account or other proper depository.
Findings Of Fact The following findings are facts stipulated by the parties in their Prehearing Stipulation filed on March 31, 1986 That Petitioner is a state government licensing and regulatory agency charged [w]ith 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 thereto. That Respondent C.P. O'Sullivan is now, and was at all times material hereto, a licensed real estate broker in the State of Florida having been issued license number 0144214 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker, % Preferred Properties of Lee County, Inc., 311 Homestead Road, Lehigh Acres, Florida 33936. That Respondent, Preferred Properties of Lee County, Inc., is now and was at all times material hereto, a corporation licensed as a real estate broker in the State of Florida having been issued license number 0169117 in accordance with Chapter 475, Florida Statutes. The last license issued was at the business address of 311 Homestead Road, Lehigh Acres, Florida 33936. At all times alleged herein, Respondent C.P. O'Sullivan was licensed as a real estate broker and sole qualifying broker and officer of Respondent Preferred Properties of Lee County, Inc. That on or about September 25, 1984, the Respondents solicited and obtained a sales contract entered into by Claretha Pinkney, as purchaser, and Elsie Barning, as seller, of certain residential property. That in connection therewith, the Respondents received in trust from Claretha Pinkney, a $2,000.00 earnest money deposit. The contract was contingent upon Claretha Pinkney obtaining a new mortgage loan. Claretha Andrews Pinkney is a school teacher for the Lee County Board of Education. In July 1984, she moved to the Lee County area from Georgia where she had also been a school teacher. (T. 20, 35). She contacted Respondent, Preferred Properties about her desire to purchase a house and began working with Kay Alcantara, a sales associate with Preferred Properties. (T-21, 85). Ray Alcantara introduced Mrs. Pinkney to C. P. O'Sullivan, who did a pre-qualification in his office. That is, he determined, through a series of questions, what price range to look for. During the pre-qualification, Ms. Pinkney gave her profession and her income, said she was from Georgia and said she owned a house in Georgia, which she rented out. She also said she had minimal liabilities. (T-99-100, 107-108). A house was found at 13 Apache Street in Lehigh Acres, and on September 25, 1984, a contract to purchase the house for $39,900.00 was executed. Mrs. Pinkney made deposits of $500.00 and $1500.00 in accordance with the contract. The contract required that she " make immediate application for a mortgage loan, or loans at a local lending institution at the prevailing rate of interest, in the amount of $35,900.00." The remaining $2,000.00 was to be due at the time of closing. (Petitioner's Exhibit #2). Claretha Pinkney applied for mortgage financing, through Columbus Mortgage Company, a Ft. Lauderdale based mortgage broker. She has relatives on the east coast who in the past had dealt with that company. (T-24-25, Respondent's composite Exhibit 2) The company did not maintain an office in Ft. Myers, but conducted business there through advertising WATTS Telephone number. (Deposition of James Gordon, P. 16). A representative of the company came over for the closings which took place in the office of Tri-County Title Company in Lee County, but the level of business never warranted opening a branch office in Ft. Myers. (Deposition of James Gordon, pp. 15-16, 20). In early November, Nancy Leclair, an employee of Columbus Mortgage Company, told Mrs. Pinkney that the company could not go forward with her application until they had verification that she had funds to close on the sale. (T. 43- 44). Mrs. Pinkney planned on using money from the Retirement System of the Georgia Board of Education but the retirement check had been sent to her prior address and was routed back to the Board of Education before it finally reached her in Florida. (T-23, 27) Mrs. Pinkney asked to have the loan application stay open while she was trying to get the funds from the Georgia Retirement System (T-45). Mrs. Pinkney told Kay Alcantara about the problem with getting the loan approved and the lost retirement check (T-27). Kay Alcantara stayed in touch with both Nancy Leclair and Mrs. Pinkney regarding the status of the loan and the retirement check. (T-89). Before November 20, Mrs. Pinkney called Kay Alcantara to say that she received a letter from the Georgia School System that her money was forthcoming but that she was eligible to leave the money in the fund and later receive benefits. If she cashed the check, she would lose her benefits. (T-86-87). The funds from the retirement system amounted to approximately $13,000.00 (T-52, 53, Respondent's Exhibit 43). On November 19, 1984, at Kay Alcantara's Suggestion, Mrs. Pinkney met with Kay, Lynn Aspinwall (the office manager) and C. P. O'Sullivan in Mr. O'Sullivan's office. Mrs. Pinkney informed the realtors that she did not wish to go through with the deal, that she didn't want to lose her retirement benefits and did not want to take the money out of the Georgia Retirement System. Mr. O'Sullivan told her that if she didn't want the house she would lose the $2,000.00 deposit and she should think about it overnight. If she still felt the same way, she could come in the next day and sign a release of the deposit. (T-87, 104-105). On November 20, 1984, Mrs. Pinkney returned to the office and signed the agreement forfeiting her binder deposit of $2,000.00. (T-33, Petitioner's Exhibit #4). At no time prior to, or including that date, did she ask to have her deposit returned. (T-105). On the same date, November 20, 1984, Mrs. Pinkney sent a letter to Nancy Leclair at Columbus Mortgage Company enclosing a copy of another contract for sale for an entirely different property and a different realtor. (T-57, 58, Respondents' composite Exhibit #2). This contract is dated November 4, 1984, and is for a single family residence for a total sales price of $34,900.00. Mrs. Pinkney received her Georgia Retirement fund check and on December 3, 1984, deposited it in Sun Bank/Southwest. (Respondent's Exhibit #3). She later returned the money to the retirement fund and her admitted purpose in making the deposit was to show she had sufficient funds to close and to "fake out" the lender, while waiting for some other funds to materialize. (T-62, 65). Two statements of credit denial were eventually issued by Columbus Mortgage Company. The first, dated January 15, 1985, was clearly for the Apache Street property. The second, dated January 20, 1985, describes the transaction as "First Mortgage financing for a purchase of a home." (Respondent's composite Exhibit #2, Petitioner's Exhibit #3). Neither C. P. O'Sullivan nor Preferred Properties were informed by Columbus Mortgage Company that Mrs. Pinkney's loan was turned down. (T-107, 119). Considered as a whole, the evidence in this proceeding strongly supports the inference that Claretha Pinkney reneged on her contract to purchase the Apache Street property not because she was turned down for the loan, but because she found another house that she preferred. That is why she freely signed the release for the $2,000.00. Respondents didn't know this at the time that the release was discussed and prepared; however, they knew of a different, highly credible basis for Mrs. Pinkney's rejection of the property: to qualify for the loan she would have to use her retirement money; she didn't want to use the money and lose her benefits. This knowledge was sufficient for the Respondents' reasonable and justifiable belief that Mrs. Pinkney was not entitled to return of her deposit.
Recommendation Based upon the foregoing, it is, therefore RECOMMENDED: That a final order be entered dismissing all counts of the Administrative Complaint. DONE and ORDERED this 13th day of May, 1986, in MARY W. CLARK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of May, 1986. COPIES FURNISHED: Harold Huff, Executive Director Division of Real Estate 400 W. Robinson Street Orlando, Florida 32802 James Gillis, Esquire Division of Real Estate 400 W. Robinson Street Orlando, Florida 32802 Simon M. Harrison, Esquire Perch ~ Harrison, P.A. 1820 Colonial Blvd., Ft. Myers, Florida 33907 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Salvatore A. Carpino, Esquire Department of Professional Regulationff 130 North Monroe Street Tallahassee, Florida 32301 APPENDIX The following constitutes my specific rulings pursuant to subsection 120.59(2), Florida Statutes on all of the proposed Findings of Fact submitted by the parties to this case. Rulings on Petitioner's Proposed Findings of Fact Adopted in Finding of Fact #l.b. Adopted in Finding of Fact #1.c. Adopted in Finding of Fact #l.d. Adopted in Finding of Fact #1.e. Adopted in Finding of Fact #l.f. Adopted in Finding of Fact #l.g. Rejected as contrary to the weight of evidence. The finding that the loan was applied for is, however, adopted in Finding of Fact #5. Adopted in Finding of Fact #11. Adopted in Findings of Fact #7 and 8. Rejected as contrary to the weight of evidence. Rejected as contrary to the weight of evidence. Rejected as contrary to the weight of evidence. Rejected as unnecessary and, as to entitlement to the money, wholly unsupported by competent evidence. Rulings on Proposed Findings of Fact Submitted by the Respondent 1. Rejected as unnecessary. ·2. Adopted in substance in Findings of Fact #1-12 except 2.m and 2.0 which are unsupported by the evidence. The record does not reveal when Mrs. Pinkney attempted to claim the $2,000.00; it does establish that she did not claim the $2,000.00 before or at the time she signed a release. Rejected as a restatement of testimony rather than a finding of fact. Rejected as unnecessary.
Findings Of Fact Based upon the parties' factual stipulations, the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: On August 28, 1992, Petitioner submitted to the Department its application for licensure as a mortgage lender. 1/ On October 28, 1992, the Department sent Petitioner a letter announcing its intent to deny Petitioner's application for licensure as a mortgage lender. The text of the letter read as follows: This is to inform you that your Application for Licensure as a Mortgage Lender for Citifirst Mortgage Corp. is hereby denied. The denial is based on Section 494.0072(2)(k), Florida Statutes. Section 494.0072(2), Florida Statutes, "Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection may be taken: . . . (k) Acting as a mortgage lender or correspondent mortgage lender without a current active license issued under ss. 494.006-494.0077." The Department's investigation revealed Citifirst Mortgage Corp. has acted as a mortgage lender without a current, active license. Please be advised that you may request a hearing concerning this denial to be conducted in accordance with the provisions of Section 120.57, Florida Statutes. Requests for such a hearing must comply with the provisions of Rule 3-7.002, Florida Administrative Code (attached hereto) and must be filed in duplicate with: Clerk Division of Finance Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350 (904) 487-2583 within twenty-one (21) days after receipt of this notice. Failure to respond within twenty-one days of receipt of this notice shall be deemed to be a waiver of all rights to a hearing. Should you request such a hearing, you are further advised that at such a hearing, you will have the right to be represented by counsel or other qualified representative; to offer testimony, either oral or written; to call and cross examine witnesses; and to have subpoenas and subpoenas duces tecum issued on your behalf. Petitioner timely requested a formal hearing on the proposed denial of its application. The matter was referred to the Division of Administrative Hearings, where it is still pending.
The Issue Petitioner seeks to discipline Respondents by cease and desist order, complaint, and administrative fine pursuant to Chapter 817, Part III, and Subsections 516.07(1)(g) [incorporating Part III of Chapter 817 F.S.] and (i) and 516.23(2)(b) and (c) F.S. for their refusal to permit the inspection of books and records in an agency investigation or examination or by refusal to comply with an agency subpoena; by failure to obtain a required bond and establish a trust account; by failure to obtain a signed contract with specific customers, and, more specifically, failing to obtain a signed contract with those customers which complied with certain named statutory requirements.
Findings Of Fact Respondent, Bonnie Lee Hall a/k/a Lamar Bonne Hall, Sr., established West Florida Financial Services in March 1989, as a "credit repair" service incidental to his insurance business. Mr. Hall is a Florida-licensed Life and Health Agent. Respondent's Exhibit R-6 is Respondent's "218" professional insurance license effective 04-01-90, at a time subsequent to the times material to this complaint. However, the undersigned accepts Respondent's unrefuted testimony that he was similarly licensed as an insurance agent and broker at the time of the incidents giving rise to the charges in this cause. At all times material, Mr. Hall operated West Florida Financial Services out of the same office as his insurance agency. West Florida Financial Services never has been incorporated. Respondent asserted that West Florida Financial Services has been registered under Florida's fictitious name statute, but the undersigned finds Respondent not credible on this point. On or about March 23, 1989, Rebecca Brown saw an advertisement in the Tallahassee Democrat which read "ERASE BAD CREDIT!" and which provided a telephone number for free details. She called the telephone number, and the telephone was answered "West Florida Financial Services" by a Chester Murray, who made an appointment to meet Ms. Brown at her residence that night. Murray offered to improve the credit reports of Ms. Brown and her daughter, Glenda Brown, for a total fee of $400. Rebecca Brown gave Murray a check for $200 postdated to March 30, 1989 (P-6) and agreed to pay the balance of $200 by the end of April. The check was made out to "West Florida Financial Services." That check was endorsed by Chester Murray, and although Rebecca Brown related a complex transaction as to how the cash therefrom was generated through another cashier's check, all that is relevant to these proceedings is that Chester Murray retained Rebecca Brown's $200 fee intended for West Florida Financial Services. On April 14, 1989, Rebecca and Glenda Brown went in person to the offices of West Florida Financial Services where Respondent Hall was operating the credit repair service out of his insurance office. At that time, Mr. Hall admitted that Mr. Murray had previously worked for him in West Florida Financial Services, that Murray had taken money from another client of that business, and that Murray was therefore no longer associated with the business. At that time, Mr. Hall also represented that he, personally, could still help Mesdames Brown improve their credit reports. Mr. Hall quoted much higher fees of $1,160 to improve Rebecca Brown's report and $825 to improve her daughter's report. He also offered to try to get back Rebecca Brown's $200 from Chester Murray. Both women signed a Service Contract Agreement with Respondent Hall, who signed on behalf of West Florida Financial Services. Rebecca Brown did not keep a copy of her contract, but a copy of Glenda Brown's signed contract with Hall and West Florida Financial Services was admitted as Exhibit P-7. This exhibit was identified by Rebecca Brown as a contract identical to the one she herself had signed except as to the client name. Rebecca Brown also was able to identify her daughter's and Mr. Hall's signatures on Exhibit P-7 because she was present when they signed Exhibit P-7 and because she was long familiar with her daughter's signature. The Service Contract Agreement of Glenda Brown which was admitted as Exhibit P-7 did not contain a cancellation clause, an information statement, or any other information required by Sections 817.702, 817.703, and 817.704 F.S. By inference, the undersigned finds that the identical agreement entered into by Rebecca Brown was similarly lacking. Rebecca Brown paid $100 in cash to Mr. Hall to continue to work on the credit problems of herself and her daughter. She recognized this amount was merely a down payment. Respondent Hall had not effectuated any improvement of Rebecca Brown's or her daughter's credit reports as of the date of formal hearing, nor had Rebecca Brown seen any effort he put forth toward that end. Mr. Hall admitted putting her $100 down payment into his business checking account and not into a trust or escrow account as required by law. Mrs. Brown's and Mr. Hall's testimony concurs that after April 14, 1989, she never asked for the return of her $100 or actively pursued having Mr. Hall work at credit repair for herself or her daughter because he had quoted such high fees. However, he also never returned her $100. On April 17, 1989, an advertisement appeared in the Tallahassee Democrat which read "ERASE BAD CREDIT!" and provided a telephone number for free details. The telephone number was that of West Florida Financial Services. This advertisement ran in the newspaper for several weeks before and after that date and was probably the same advertisement to which Rebecca Brown had replied the preceding month. Although Mr. Hall asserted that it was Chester Murray's advertisement which had appeared in the Tallahassee Democrat, he admitted that he had run virtually the same advertisement in The Thrifty Nickel, and there is no dispute that when Ms. Lynn Chang, a financial administrator with the Department of Banking and Finance, called the same number as appeared in the April 17, 1989 Tallahassee Democrat advertisement, the telephone was answered "West Florida Financial Services" on April 19, 1989 by Respondent Hall. There is also no dispute that during their conversation, Mr. Hall stated that he could help with credit problems and that he had a 97% success rate. In order to determine Respondents' compliance with Chapter 817, Part III, F.S., Ms. Chang caused a subpoena duces tecum to be served May 11, 1989 upon Respondents. The subpoena specified, among other things, the production of their surety bond, proof of trust account, and copy of an information statement and customer contract, and was returnable May 25, 1989. It did not specify copies of all signed contracts that Respondents had on file. Respondent Hall appeared at Mrs. Chang's on May 25, 1989. As of that date, West Florida Financial Services and its principal, Mr. Hall, had no surety bond, no trust account, and no information statement as required by Florida law. Mr. Hall did, however, provide copies of a blank contract (P-4) and a promotional flyer (P-5). Neither item fully met the applicable statutory standards for a contract and disclosure statement. Ms. Chang cautioned Mr. Hall that he must have a trust account and surety bond and that he must conform his contract or he would be violating Florida law, but apparently no further request for signed contracts or files was made. There is evidence that Mr. Hall and Ms. Chang had some miscommunication over what he would or would not do at this point, but it is insufficient to constitute refusal to permit inspection by the agency. On or about May 10, 1989, Ms. Sylvia Gilbert had contacted Mr. Hall at West Florida Financial Services upon advice from a friend. Mr. Hall told her that for a fee of $600, he could improve her credit reports, so Ms. Gilbert signed a Service Contract Agreement with West Florida Financial Services. She was not given a copy of the agreement by Mr. Hall, but knew she could request one and pick it up at his office at any time. At formal hearing, she was able to identify Exhibit P-4 (a blank form provided Ms. Chang by Mr. Hall) as the type of contract she had signed. Upon that identification, and Mr. Hall's evidence of which type of agreement he was using at various times, it is found that the agreement entered into by Ms. Gilbert and Mr. Hall on behalf of West Florida Financial Services did not contain a cancellation clause, an information statement, or any other information required by Sections 817.702, 817.703, and 817.704 F.S. Ms. Gilbert paid Mr. Hall $550 in fees in three installments. On May 10, 1989, she paid $200 (P-8); on July 6, 1989, she paid $100 (P-9); and on September 29, 1989, she paid $250 (P-10). On several occasions thereafter, she spoke with Mr. Hall, who made himself readily available to her and assured her work was being done. In his testimony, Mr. Hall explained that his work for Ms. Gilbert involved letters he prepared that she did not sign and payments she did not make on his advice to clear up her credit rating. Ms. Gilbert conceded that Mr. Hall had done some work for her, but as of the date of formal hearing, she had received no refund from Respondents and was unaware of any improvement in her credit report. Ms. Joyce Garmon Horne paid Respondents $400 to clear up credit problems she had and was satisfied with Mr. Hall's services. She could not identify what type of Service Contract Agreement she signed or whether the agreement or services had been rendered in 1989 or 1990. Sometime in December 1989, Respondents obtained a $10,000 surety bond from Western Surety Company. This bond, dated November 22, 1989, had become effective November 17, 1989 and was purchased for Respondents by Bernice Newton. On December 15, 1989, a trust checking account at Industrial National Bank (INB) in Tallahassee was opened for West Florida Financial Services with an initial deposit of $100 cash contributed by Bernice Newton. The record is not clear whose social security number or what entity's tax identification number was used, but the INB account clearly required both Ms. Newton's and Mr. Hall's signatures to draw funds. She was listed as "bookkeeper," and he was listed as "manager." Although Mr. Hall testified that as of August 1989, he had established, with money from one Ralph Hadley, another type of account "to protect clients" at another bank, it is not clear from the record whether the clients he sought to protect were insurance or credit repair clients, whether the account was a business or escrow account, or in what institution (federally insured or not) the account was located. Upon such vagueness and upon Mr. Hall's testimony that whatever and wherever this prior account was, it was not labelled "trust account," it is found that existence of such an account is immaterial to these proceedings. Bernice Newton paid for Respondents' occupational license. Bernice Newton also paid Respondents' $160 telephone bill one month. Bernice Newton is what is called in the financial world "an opportunity seeker," that is, she is always on the lookout for legitimate business ventures but with a penchant for "start your own business" and other "get rich quick" schemes. She met Messrs. Hall and Murray at an educational/promotional meeting organized by a Californian known as "Mr. Gold" for persons interested in starting credit repair service businesses. Throughout her testimony, Ms. Newton referred to her association with Mr. Hall as trying to establish a "credit bureau" in which she would hold an investment interest, which interest she could later resell for profit. The record is not clear whether "credit bureau" was merely a misnomer on Ms. Newton's part or whether she thought a "credit bureau" and a "credit repair service" are one in the same thing. In any case, her testimony was clear that she was helping Mr. Hall in his credit repair business and that she had no further association with Mr. Murray after their initial meeting. In June or July 1989, Ms. Newton became part of "West Florida Financial Services" without ever holding a corporate office or definable business interest in the credit repair services. As previously related, she eventually paid for the trust account and surety bond and occasionally loaned Mr. Hall money. Beyond this, her entire involvement was apparently only to answer the phones a few hours each day, and on one occasion, she took a credit repair fee of $15 from a client on behalf of Respondents. In exchange for these services, she got free use of Respondents' office equipment for her other investment projects. Substantially all she observed from June or July 1989 until December 1989 in the West Florida Financial Services office was credit repair work, although she was also aware that Mr. Hall discussed insurance with clients. She has never been paid a salary as Respondents' employee or been reimbursed for her direct payments on their behalf. Mr. Hall maintained Ms. Newton was never intended to be part of West Florida Financial Services regardless of listing her as "bookkeeper" on the escrow account in December 1989. Apparently, Ms. Newton also did not regard herself as part of the credit repair business. It may be inferred that Respondents did not amend their Service Contract Agreement to include the required cancellation notice and a handwritten information statement to clients until after they obtained the surety bond in December 1989, because their revised Service Contract Agreement specifies they are a bonded service, identifying the Western Surety Company as the bonding agent. (R-1) The form Service Contract Agreement which was utilized by Respondents at least until December 1989 (P-4) provided that the clients authorized West Florida Financial Services to prepare all the necessary correspondence (and negotiation) in settlement or clarification of derogatory information which might be contained in the clients' credit report. The information flyer (P-5) put out by Respondents states that persons can, with Respondents' help, "improve their credit bureau reports and practically erase bad credit." This literature also states that as a result of years of research, Respondents have "the experience and background that can offer consumers assistance in removing inaccurate, erroneous, outdated, obsolete, incomplete and misleading information from their credit bureau reports." Respondents were operating a "credit service organization," as defined by statute, regardless of whether or not it was incidental to Mr. Hall's insurance business. From March 1989 to November 1989, they did so without having a $10,000 surety bond. For the period of time from March 1989 to December 1989, they did so without having a trust account for customer monies in an appropriate institution. For the period of time from March 1989 to December 1989, they did so without a customer contract which contained all of the information required by Sections 817.702, 817.703, and 817.704, F.S. The overwhelming weight of the evidence, particularly the receipts retained by Ms. Gilbert and the testimony of Ms. Newton, render incredible Mr. Hall's assertion that he and West Florida Financial Services had no credit repair clients between Mr. Hall's May 25, 1989 interview with Ms. Chang and their receipt of the agency's December 14, 1989 Cease and Desist Order a few days after its issuance. Respondent Hall testified that he has been on total disability since January of 1990 but presented no supportive evidence to that effect.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered finding Respondents guilty of three violations of Subsection 817.7005(1) and Sections 817.702, 817.703, and 817.704 F.S. and not guilty of any charges related to failure to respond to a subpoena or cooperate in an investigation and imposing $3,000 administrative fine to be paid jointly and severally by the Respondents within 120 days of the Final Order. RECOMMENDED this 3rd day of January, 1991, at Tallahassee, Florida. ELLA JANE P. DAVIS, 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 3rd day of January, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-1570 The following constitute specific rulings pursuant to Section 120.59(2) F.S. upon the parties' respective proposed findings of fact (PFOF): Petitioner's PFOF: 1 Accepted, but unnecessary. 2-5 Accepted. 6 Rejected as not supported by the record. Modified to conform with the credible evidence as a whole. Second No. 4 on pages 4-5 Modified to conform with the evidence as a whole. Second No. 6 on page 5 and 7 Accepted as modified to conform with the evidence as a whole; otherwise rejected. 8-10 Accepted. 11-17 Except for unnecessary and cumulative detail, accepted. Respondents filed no PFOF COPIES FURNISHED: Margaret S. Karniewicz Assistant General Counsel Department of Banking and Finance Legal Section, The Capitol Tallahassee, Florida 32399-0350 Mark H. Zilberberg, Esquire 313 Williams Street, Suite 2 Tallahassee, Florida 32303 Hon. Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350
