The Issue The issues in this case include whether Respondent is guilty of having committed culpable negligence in a business transaction or failed to maintain trust funds in a proper account until disbursement was authorized and, if so, the appropriate penalty.
Findings Of Fact Respondent has been a licensed real estate broker in the State of Florida since 1983 and holds license number 0405933. His most current license was as a broker trading as Realty Trend. Respondent started Realty Trend in 1985 for the primary purpose of managing rental properties. Although he had little or no training or experience in accounting, Respondent retained considerable responsibility for the day-to- day bookkeeping associated with his business, though at times he employed a bookkeeper. Respondent maintained one account for sales transactions, in which he participated as the broker, and one account for property management activity. Respondent participated in few sales transactions and is phasing out of that part of the business. All escrow monies held by Respondent were kept in interest-bearing accounts. Although Respondent retained the interest, he disclosed this fact to the parties through the sales contract. Within about 18 months, Respondent had acquired about 100 properties to manage. Respondent decided to automate the bookkeeping and purchased a computer program that would write checks, track income and expenses, generate reports, and generally handle all aspects of bookkeeping. The program was designed to assist in property management operations. Emphasizing service to property owners, Respondent had always tried to send his checks for rent collected the past month between the tenth and fifteenth of each month. By August, 1989, Respondent had been warned by Petitioner that he had to allow two or three weeks for tenant's checks to clear and determine what emergency maintenance expenses might be incurred. Through a combination of ignorance about bookkeeping, his responsibilities as a broker holding escrow monies, and the property management computer program, Respondent mishandled his trust account. His repeated bookkeeping errors and failure to take corrective action allowed a sizable shortage to accumulate by the time Petitioner conducted a routine office audit on November 17, 1989. Respondent cooperated fully with the audit and promptly provided Petitioner's investigator with a box full of bank statements. His account was reaudited on January 8, 1990. Poor bookkeeping prevents a precise determination of the shortage, but it exceeds $10,000. It is difficult to understand how Respondent's books became so confused as to become nearly worthless. There was no evidence of fraudulent intent. It appears as likely that Respondent overpaid property owners as that he overpaid himself. Respondent's ongoing ignorance of his serious trust account shortages or, in the alternative, repeated failure to solve recognized trust account shortages represents culpable negligence. Even by the time of hearing, Respondent candidly admitted that he could not provide an accurate figure for the shortage and had not yet been able to repay the deficiency, although he intended to do so.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Florida Real Estate Commission enter a final order reprimanding Respondent; imposing an administrative fine of $500; requiring Respondent to complete an approved 60-hour course; suspending his license for a period of six months, commencing retroactive to the date on which Respondent cease operations due to the emergency suspension; and placing his license on probation for a period of three years following the conclusion of the suspension, during which time Respondent shall file escrow account reports with the Commission or other person designated by the Commission at such intervals as the Commission requires. DONE and ORDERED this 8 day of October, 1990, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8 day of October, 1990. COPIES FURNISHED: Darlene F. Keller Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, FL 32801 Attorney Steven W. Johnson Division of Real Estate Florida Real Estate Commission 400 W. Robinson St. Orlando, FL 32801-1772 Thomas I. McIntosh 13542 N. Florida Ave. Tampa, FL 33613 Attorney Neil F. Garfield Envirwood Executive Plaza, Suite 200 5950 West Oakland Park Blvd. Lauderhill, FL 33313 Kenneth E. Easley General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
Findings Of Fact Armando Clemente is licensed as a real estate broker, and has held license 315166 at the times pertinent to the allegations of the Administrative Complaint. Amigo Realty, Inc., was a corporation licensed as a real estate broker, and held license 229372. The Respondents' business address was 2728 Davie Boulevard, Fort Lauderdale, Florida. Mr. Clemente was the sole qualifying broker for Amigo Realty, Inc. In 1989, Mr. Clemente solicited and obtained the exclusive right to sell a residence located at 2840 Southwest Eighth Street, Fort Lauderdale, Florida. It was owned by Louise McNally, a widow who had recently obtained the property through foreclosure. The property was located in an undesirable neighborhood, and in need of cleanup and substantial repair and renovation before it could be sold or leased. Ultimately Mr. Clemente agreed with Ms. McNally that Clemente would repair the house and then try to sell it, or buy it himself. Mr. Clemente contacted an old friend of his, Candido Proenza, about the property. Both Mr. Clemente and Mr. Proenza are Cuban. Mr. Proenza agreed to undertake the renovations and repair of the property through his own labor, while Mr. Clemente was to find a buyer for the property. They agreed that Mr. Clemente would initially pay for the materials used in the repair and renovation, and the parties were to split the net profit equally after Mr. Clemente was repaid for materials from the sale proceeds. Mr. Clemente prepared a deposit receipt and contract for the sale and purchase of the property between himself and Mr. Proenza as buyers and Ms. McNally as the seller. The purchase price was $30,000 and the contract shows that a deposit of $500 had been made toward the purchase price and that the closing was to take place as soon as possible. The special clauses contained in the contract state house is being bought "as is" with not [sic] guarantee or insurance for anything in the house or on property. Buyers guarranty [sic] that they will fix the property under safe and living conditions. Seller does not have to pay any additional money to attorneys or real estate office. Buyers will pay 7% commission on $30,000, at closing to Century 21 Amigo Realty, Inc. and if the house is for sale after repairs have been done it has to be listed with Century 21 Amigo Realty, Inc. or its assigns. (Exhibit B). Although the contract shows on its first page that the deposit of $500 was to be held in trust by Century 21 Amigo Realty, Inc., the line on the final page of the contract which is meant to be signed by the broker to acknowledge the receipt of the deposit is not signed. The contract does bear the signature of both Mr. Clemente and Mr. Proenza as buyers and Ms. McNally as the seller. As will be explained more fully below, on January 10, 1990, Mr. Clemente executed a statement on the letterhead of Amigo Realty in his capacity as a real estate broker stating that Amigo Realty had received in its escrow account the sum of $5,000 towards the purchase price of the property, $2,000 having been received on November 6, 1989, and $3,000 received on December 7, 1989. See, Finding 9. None of these statements were true. The repairs were more expensive than anticipated. While the repairs and renovations to the property were being carried out, Mr. Clemente and Mr. Proenza began to have disputes about such matters as the color of the kitchen cabinets, which required repainting them. During the work Mr. Proenza hurt his back, and it was necessary to have work performed by others. The cost of the renovations also was increased by custom work done for a potential buyer who later was unable to qualify to purchase the property. Mr. Clemente had marital difficulties and while the renovation project was going on, Mr. Clemente separated from his wife. With the agreement of Mr. Proenza, Mr. Clemente moved into the partially renovated house. The divorce caused a financial strain on Mr. Clemente, who ultimately was forced to close down his real estate business, Amigo Realty. Mr. Proenza was as eager as Mr. Clemente to obtain his share of the profit from the renovation and Mr. Clemente needed a place to live because of his divorce. They decided that Mr. Clemente would apply for a mortgage and purchase the house himself. Mr. Clemente made application for a mortgage to the Continental Trust Mortgage Company, with which he had done business in the past. In his loan application which was executed on November 22, 1989, Mr. Clemente represented that a cash deposit towards the purchase price was being held by Amigo Realty in the amount of $3,000, not $500. He later signed a statement on January 10, 1990, certifying that Amigo Realty then held $5,000 towards the purchase price, which consisted of $2,000 deposited on November 6, 1989, and $3,000 on December 7, 1989. The inconsistency between this statement and the loan application is not explained in the statement, but neither are correct. There were never any moneys placed in the trust account by Mr. Clemente as a down payment for his purchase of the property. I do not find credible the testimony of Mr. Clemente that he was unable to recall the figure on the mortgage loan application for the amount in the Amigo Realty trust account, and reject Mr. Clemente's contention that the $3,000 figure was one inserted by Gonzalez on the application so that there would be something in the space. I also reject the argument that because Mr. Clemente was under emotional stress arrising out of his divorce during January, he did not understand the significance or appreciate the consequences of the statement he signed on January 10, 1990, that a total of $5,000 was held in the trust account of Amigo Realty towards the purchase of the property. That statement was given to the mortgage company for its use in determining whether to grant the mortgage loan. Mr. Gonzalez may not have testified directly that the representation that $5,000 was on deposit in Amigo Realty was material to the mortgage company in determining whether to grant the mortgage loan to Mr. Clemente. It is obvious that the mortgage company was sufficiently concerned to seek a certification from Amigo Realty about the monies on deposit as a follow- up to the mortgage application which Mr. Clemente submitted on November 22, 1989. It is reasonable to infer from this fact that Mr. Clemente's certification as the broker for Amigo Realty that it held $5,000 on deposit was a material representation made in connection with the loan application Mr. Clemente had made. That representation was made in the course of Mr. Clemente's activities as a broker, and the representation was false. When the sale of the McNally home was closed on February 2, 1990, only Mr. Proenza received title, which he took as trustee. A handwritten trust agreement says that Mr. Proenza will hold title solely for the use of Mr. Clemente, and will convey the property to Clemente when told to do so by Clemente. Exhibit H, page 4. The trust agreement says nothing about payment by Mr. Proenza of any fees, commissions, discount points or other charges for the benefit of Mr. Clemente. Ms. McNally received $28,423.70, which included the $500 which the contract had reflected as a deposit in the Amigo Realty trust account, but which had not been paid. No broker's commission was paid to Amigo or to Clemente and Ms. McNally had no basis for a complaint about the amount she ultimately received when the contract closed. Shortly after the closing of the sale of the house from Ms. McNally to Mr. Proenza, another transaction closed which passed title from Mr. Proenza, as trustee, to Mr. Clemente individually. Mr. Clemente purchased the renovated house for a gross price of $65,000. In this transaction, Amigo Realty received a commission of $3,250 which was deducted from the proceeds payable to Mr. Proenza (Exhibit E, line 703) as was an additional $2,996.42 loan discount fee of 4.5% of the mortgage amount which was paid to Continental Trust Mortgage, (Id., line 802), plus other miscellaneous charges. These charges had the effect of reducing the amount due to Mr. Proenza as seller by $9,802.80, (Id., line 1400) leaving cash due to him of $55,092.92 (Id., line 603). After deducting the $28,423.70 which Proenza had paid to Ms. McNally to acquire title to the property (Exhibit J), the net sales proceeds were $26,669.22. Mr. Proenza then paid Amigo Realty $13,160.58 for the materials Mr. Clemente had purchased for use in the renovations. This left a "profit" of $13,508.64. If the amount were divided equally between Proenza and Clemente each would have received $6,754.32. Mr. Proenza actually paid Clemente $6,348.14, which would appear to be $406.18 less than Clemente was entitled to receive if that amount were divided in two. Mr. Clemente is only "shorted" if one accepts that Amigo Realty was due a 5% commission from Proenza on the sale from Proenza, as trustee, to Mr. Clemente individually, and that Mr. Proenza was responsible for paying the 4.5% loan discount to Mr. Clemente's mortgage lender, Continental Trust Mortgage. The Trust Agreement signed by Mr. Proenza contains no such provisions. The Department has alleged in paragraph 11 of its Administrative Complaint that Proenza believes Clemente took advantage of his labor and that Proenza was short changed, and did not receive a fair share of the profit. Mr. Proenza's has limited fluency in English. He believes that he was entitled to $13,000 not $7,000. Without payments of the $3,250 commission Proenza paid to Amigo Realty and the $2,996.42 loan discount Proenza paid to Continental Mortgage Company for Mr. Clemente's mortgage loan Mr. Proenza would have been left with $6,246.46 more than the $6,160.50 he received, an amount much closer to the $13,000 Proenza believes he should have cleared when the sales of the house from Ms. McNally to him and then from him to Mr. Clemente had closed. Mr. Proenza's testimony that Mr. Clemente asked him to "lend" Amigo Realty money which Mr. Proenza had expected to receive, becomes understandable. Mr. Clemente manipulated the closing documents to charge Mr. Proenza $6,246.42 as (1) a real estate commission and (2) to pay the loan discount points on Mr. Clemente's mortgage, when he had no agreement from Mr. Proenza that Mr. Proenza should do so. The settlement statement which was used for the closing of the transaction from Mr. Proenza to Mr. Clemente is on a U. S. Department of Housing and Urban Development form which, at first, is quite difficult to understand. It provided a means by which Mr. Clemente was able to defraud the relatively unsophisticated Mr. Proenza. At the closing of the sale from Proenza to Clemente, Clemente also had to come up with money to replace the $5,000 he had represented to the mortgage company was already in the Amigo Realty escrow account. The title company would not accept Mr. Clemente's personal check, so he wrote a check on the Amigo Realty escrow account for the $1,750 shortage. Mr. Clemente deposited this amount into the Amigo Realty escrow account at a drive through teller window at a Fort Lauderdale bank on his way to the closing, but it was after 2:00 p.m. on Friday and the bank records reflected that the check was not credited to the account until the following Tuesday, February 6th. Mr. Clemente had no basis for drawing check #278 on the escrow account of Amigo Realty for $1,750 when he did so. He knew or should have known that the $1,750 had not actually been credited to the Amigo Realty escrow account. On May 2, 1990, the Amigo Realty escrow/trust account was audited. The audit showed and Mr. Clemente acknowledged that Mr. Clemente had never put the $500 earnest money deposit in his escrow/trust account toward the purchase of the McNally property, he had never put the $5,000 deposit in his escrow account which he had represented to his mortgage lender was on deposit in that account. The statement which he gave to his mortgage lender on January 10, 1990, certifying that there was $5,000 in the Amigo Realty trust account was fraudulent. No other shortages were found in the Amigo Realty escrow/trust account. The Respondents have previously been disciplined and paid a fine of $200 for culpable negligence for breach of trust, pursuant to a stipulation executed in April of 1989. Mr. Clemente contends that that stipulation was a plea of convenience which he entered into because the fine was nominal and would have cost him a great deal more than that amount to clear himself of wrongdoing at a formal hearing. Mr. Clemente is a member in good standing of the Fort Lauderdale Board of Realtors. He has not been the subject of any complaints other than the one which Mr. Proenza has filed with the Department. He no longer works as a broker, but now is a sales associate working under the supervision of broker Mike De Rosa.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that both Armando Clemente and Amigo Realty be found guilty of having violated Subsections 475.25(1)(b), (d), and (f), Florida Statutes, as charged in the Administrative Complaint. It is also recommended that Mr. Clemente be fined $1,500; that his license be suspended for two years. DONE and ENTERED this 27th day of November, 1991, at Tallahassee, Florida. WILLIAM R. DORSEY, JR. 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 27th day of November, 1991. APPENDIX TO RECOMMENDED ORDER Rulings on findings proposed by the Department: 1. Rejected as unnecessary. 2 - 4. Adopted in Finding 1. Adopted in Finding 2. Adopted in Finding 3, except for the last sentence which is rejected. I cannot understand how a promise to pay 10% interest was involved in this transaction. Adopted in Finding 4. Adopted in Finding 5. Adopted in Findings 6 and 9. Adopted in Findings 12, 13 and 17. 11a. Adopted in Finding 18. 11b. Adopted in Finding 9. 11c. Adopted in Finding 18. 12. Adopted in Findings 18 and 19. Rulings on findings proposed by the Respondent: Adopted in Finding 1. Rejected as unnecessary. Adopted in Findings 2 - 4. Adopted in Findings 4 - 6. Adopted in Finding 7. Adopted in Finding 8. 7 and 8. Adopted in Finding 9. Rejected, see, Finding 10. Adopted in Finding 12. Adopted in Findings 13 and 14, but see, Findings 15 - 17. Discussed in Finding 18. Adopted in Finding 19. Adopted in Finding 20. Adopted in Finding 21. Rejected, Mr. Proenza was injured financially. It is by no means clear that the mortgage company was uninjured. The evidence is not convincing that there was more equity in the house, as renovated, than the amount of the loan although that fact is not pivotal here. These facts are evaluated in the assessment of the penalty. COPIES FURNISHED: Steven W. Johnson, Esquire Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Karen Coolman Amlong, Esquire AMLONG & AMLONG, P.A. 101 Northeast Third Avenue Suite 203 Fort Lauderdale, Florida 33301 Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Darlene F. Keller, Division Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-6053
The Issue Is Respondent, Peter H. Myers, guilty of the allegations contained in the Administrative Complaint issued by Petitioner and, if so, what is the appropriate penalty.
Findings Of Fact Petitioner is the state agency charged with the responsibility and duty to prosecute administrative complaints pursuant to Section 20.165 and Chapters 120, 455, and 475, Florida Statutes. Respondent Myers is a licensed real estate broker, having been issued license number BK-0646846. Ocean Village Sales & Rentals, Inc. (Ocean Village) is a real estate broker corporation and Respondent is the qualifying broker for said corporation. Background Petitioner and Respondent were involved in earlier disciplinary cases in 1998 and 1999. On or about December 7, 1999, Petitioner and Respondent entered into a Stipulation which resolved DBPR Case Nos. 98-81236 and 99-80423. The Stipulation placed Respondent on probation for a period of one year from the effective date of the Final Order of the Florida Real Estate Commission (FREC), which adopted the stipulation and was issued on or about January 19, 2000. The Stipulation read in pertinent part as follows: Respondent agrees not to hold or maintain any escrow, trust or real estate related escrow or trust funds for the one(1) year probationary period. Respondent is permitted to be a signatory on the operating and payroll accounts for his brokerage firm only. Respondent shall place all escrow, trust or real estate related funds with a title company, attorney, or other proper depository as permitted under Chapter 475, Fla. Stat., and Fla. Admin. Code r. 61J2. Respondent further agrees not to be a signatory on any escrow, trust or real estate related account with the exception of the operating and payroll accounts for his brokerage firm for the one (1) year probationary period. In compliance with the terms of the stipulation, Respondent placed his escrow account with Joseph Roth, a certified public accountant and licensed real estate broker in the State of Florida. In the Stipulation, Respondent admitted to, among other things, 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. Escrow accounts audit Gail Hand is an Investigation Specialist II with the Department of Business and Professional Regulation (the department). She has approximately 16 years of regulatory and investigative experience with the department. When she started working with the department, she conducted from 20 to 30 trust account audits per month. She routinely conducts audits and inspections of the records of real estate brokers. When reviewing escrow accounts, Ms. Hand's review of escrow accounts has two components. First, she reviews the bank statement reconciliations which compares the statement balance to the checkbook balance. Next she reviews a comparison of the bank statement reconciliations with the broker's total trust liability. The broker's total trust liability is the total of all the money that the broker is holding in his trust or escrow account. On or about January 26, 2001, Ms. Hand conducted an office inspection and escrow account audit of Respondent's business, Ocean Village. Respondent and his daughter were present. During this inspection and audit, Ms. Hand requested to inspect financial documents of the company. Respondent and his daughter provided all documents requested and were very cooperative during the course of the audit. Ms. Hand inspected the November and December 2000 bank reconciliation statements from the escrow trust account of Ocean Village and determined that they were properly prepared. However, Ms. Hand determined that the determination of the broker's trust liability was not properly prepared in that she could not identify the broker's total trust liability from a review of the documents provided by Respondent. The calculations in Respondent's financial records included broker's money, bank fees, and negative owner balances. According to Ms. Hand, the reconciled checkbook to bank statement balance should be compared to a balance that does not include broker's money, bank fees or negative owner balances. Because of this, she could not identify the total broker's trust liability. She normally does not have trouble identifying a broker's total trust liability when conducting an audit. During the audit, Respondent could not identify the total broker's trust liability. Respondent deferred to his accountant, Mr. Roth. Ms. Hand did not discuss the financial documents which she reviewed as part of the audit with Mr. Roth because, "Mr. Myers was responsible." License renewal Respondent's renewal fees for his corporate registration and his individual broker's license became due in March 1999. Respondent renewed his corporate registration in March 1999 but failed to renew his individual broker's license. Respondent did not renew his individual broker's license until February 2001. At that time, he paid for the time period in which he was in arrears and for another 24 months in the future, as well as a late fee or penalty. Respondent continued to conduct real estate transactions during the period of time that his individual broker's license was in involuntary inactive status.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, the evidence of record and the demeanor of the witnesses, it is RECOMMENDED: That a final order be entered by the Florida Real Estate Commission finding the Respondent, Peter H. Myers, guilty of violating Sections 475.25(1)(e) and (o), and 475.42(1)(a), Florida Statutes, and imposing a fine of $2,500.00. DONE AND ENTERED this 4th day of September, 2002, in Tallahassee, Leon County, Florida. BARBARA J. STAROS 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 4th day of September, 2002.
The Issue In this disciplinary proceeding, the issues are whether Respondents, who are licensed real estate brokers, failed to reconcile their brokerage escrow account properly; failed to maintain trust funds in an escrow account as required; filed a false report or record; obstructed or hindered Petitioner’s investigator in an official investigation; failed to account for and deliver trust funds; committed various acts of fraud, misrepresentation, dishonest dealing, or culpable negligence in any business transaction; or committed any of these enumerated offenses, as alleged by Petitioner in its Administrative Complaint.
Findings Of Fact The Parties Respondent Rudolph Dyer (“Dyer”) is a licensed real estate broker subject to the regulatory jurisdiction of the Florida Real Estate Commission (“Commission”). Respondent Golden Key Realty, Inc. (“Golden Key”) is and was at all times material hereto a corporation registered as a Florida real estate broker subject to the regulatory jurisdiction of the Commission. Dyer is the president and a director of Golden Key, and at all times relevant to this case he had substantial, if not exclusive, control of the corporation. Indeed, the evidence does not establish that Golden Key engaged in any conduct distinct from Dyer’s in connection with the transactions at issue. Therefore, Respondents will generally be referred to collectively as “Dyer” except when a need to distinguish between them arises. Petitioner Department of Business and Professional Regulation, Division of Real Estate, has jurisdiction over disciplinary proceedings for the Commission. At the Commission’s direction, Petitioner is authorized to prosecute administrative complaints against licensees within the Commission’s jurisdiction. Escrow Account Irregularities and Related Misconduct On or about November 14, 2001, Petitioner conducted a routine audit of Dyer’s records. Pursuant to the audit, Catherine Rivera (“Rivera”), Petitioner’s investigator, determined that as of October 31, 2001, the balance in Dyer’s escrow account was $127. Rivera determined further that Dyer’s trust liability, i.e. the total amount of money that Dyer should have been holding in escrow on his clients’ behalf, was $2,870. Thus, there existed a shortfall of $2,743 in Dyer’s escrow account. In light of this discovery, Rivera requested that Dyer provide additional records, including previous bank statements and the reconciliation statements that licensed brokers must prepare each month showing either that their trust liabilities and bank balances are in agreement or explaining why they are not. Dyer was unable to produce these records, whereupon Rivera advised him that Petitioner would initiate disciplinary proceedings. On or about April 26, 2002, after being formally notified of pending administrative charges arising from the aforementioned deficiencies concerning his escrow account and associated records, Dyer sent Rivera a letter in which he a) admitted having failed to reconcile his bank balances and trust liabilities and b) informed Rivera that “immediately after the audit [on November 14, 2001,] steps were taken to close out all escrow deposit accounts being held by the company.” In fact, Dyer continued to use his escrow account to hold funds in trust through June 2002; as it happened, the escrow account would not be completely closed until July 29, 2002. The undersigned is not convinced, however, that Dyer lied to Petitioner about closing the escrow account, as Petitioner here contends. Rather, given the ambiguity of the language used (“steps were taken”), the undersigned accepts Dyer’s explanation that what he intended to communicate was that activity in the escrow account was being allowed to wind down in an orderly fashion——which was substantially true. Continuing to investigate the matter, Rivera arranged to meet with Dyer at his office on June 19, 2002, to review the previously requested bank records and files. When Rivera arrived on that date, however, Dyer again failed to provide the desired documents. As a result, Rivera scheduled yet another appointment to inspect records at Dyer’s office. The next such meeting would take place on July 29, 2002. In the meantime, Petitioner served a subpoena duces tecum on Dyer’s bank and obtained a complete set of bank records, including canceled checks, pertaining to Dyer’s escrow account. On July 29, 2002, Dyer finally provided reconciliation statements for his escrow account pursuant to Rivera’s longstanding request. These statements were self-contradictory and woefully inadequate, but, if nothing else, they clearly demonstrated (and the undersigned finds) that the escrow account balance fell significantly short of Dyer’s total trust liability during the months of May through August 2001, inclusive. Indeed, there is no dispute (for Dyer admitted at final hearing), and it is hereby found, that at all times relevant to this case, Dyer was commingling trust funds with other funds, to the point that the escrow account effectively became an operating account of Golden Key. Dyer also produced documents purporting to be copies of checks drawn on his escrow account. At least seven of these copies were not genuine reproductions of the respective originals but were, instead, fakes.1 Specifically, in five instances, the payee of an escrow-account check was, according to the copies that Dyer produced, an individual whom, the inference is clear, Dyer owed escrowed funds. In reality, each such check actually had been made payable to and been uttered by Golden Key, which latter facts are irrefutably established by the bank-produced records.2 Dyer admitted that the above-described copies of checks he had produced to Petitioner were fakes, but he denied having personally altered the underlying documents to create the false copies, blaming an unnamed accountant for that misdeed, and he disclaimed advance knowledge of the tampering. The undersigned, however, does not fully believe Dyer’s explanation. Dyer had exclusive authority over the escrow account and substantial control over Golden Key’s operations. The undersigned finds it inconceivable that a stranger to the subject transactions could have knowingly falsified these particular checks, in the manner shown, without Dyer’s active assistance. Therefore, while acknowledging the possibility that Dyer himself might not have altered the documents in question, the undersigned finds that he was, at the very least, aware of and knowingly complicit in the attempted deception. The Fanfan Transactions On or about June 13, 2001, Dyer facilitated a contract between Herinslake, as seller, and Francique Fanfan (“Fanfan”), as buyer, for the purchase and sale of real property commonly known as 5435 Northwest Tenth Street, Plantation, Florida. The contract called for an initial deposit of $500 and an additional deposit of $500 to be placed with Dyer within ten days after the buyer’s acceptance. Dyer received $500 from Fanfan on June 19, 2001. In evidence as Petitioner’s Exhibit 9 is a $500 money order dated June 18, 2001, which names the sender (maker) as “Fan Fan” and lists as his address “601 W Oakland Pk Blvd, Ft Lauderdale 33311.” The undersigned infers that Petitioner’s Exhibit 9 is, in fact, a copy of the money order that Fanfan tendered to Dyer on June 19, 2001, as a deposit on the contract to purchase property from Herinslake. Petitioner alleges (and Dyer disputes) that some time after June 19, 2001, Dyer collected the agreed-upon second $500 deposit from Fanfan, making a total of $1,000 being held in escrow on Fanfan’s behalf. Petitioner asserts that Petitioner’s Exhibit 7, which is a $500 money order dated July 9, 2001, payable to Golden Key, is proof of the second deposit. Petitioner further alleges that after the contract between Herinslake and Fanfan failed to close (which is undisputed), Dyer returned $500 to Fanfan and kept $500 (which is disputed). Taken together, the testimony of Dyer and that of his former salesman, Elysee Joseph, is imprecise, confusing, and somewhat in conflict as it relates to Fanfan. They agree, however, that when the Herinslake-Fanfan transaction fell apart, Dyer returned Fanfan’s entire deposit——of $500. Dyer also points out that months later he assisted Fanfan in the purchase of a condominium unit located at 2800 Northwest Fifty-Sixth Avenue, Lauderhill, Florida. His testimony is corroborated by the settlement statement from that transaction, which is in evidence as part of Petitioner’s Exhibit 11. The settlement statement identifies the seller as Evelyn Goodison; names Francique Fanfan, “a single man,” as buyer; and indicates that the transaction closed on April 10, 2002. According to the settlement statement, Fanfan had placed a $1,000 deposit against the purchase price, and the testimony at final hearing established that Dyer had held this sum in escrow pending the closing. The undersigned finds that Petitioner has failed to prove, clearly and convincingly, that Dyer retained $500 belonging to Fanfan in connection with the aborted contract between Herinslake and Fanfan, for several reasons. First, the money order dated July 9, 2001, a copy of which is in evidence as Petitioner’s Exhibit 7, appears not to have been tendered by Francique Fanfan, the alleged victim here. This particular money order identifies the sender as “Michelle Fanfan” and gives as her address “2076 Kimberly Blvd, N Lauderdale, Fl 33068.” There is no evidence whatsoever in the record regarding Michelle Fanfan, and hence no finding can be made that she was in any way related to Francique Fanfan, who (the evidence shows) was a single man. Moreover, Michelle Fanfan’s address does not match Francique Fanfan’s address as reported in Petitioner’s Exhibit 9. Second, the undersigned believes that it is highly unlikely Fanfan would have continued to do business with Dyer if, as Petitioner alleges, Dyer had cheated him out of $500 on an earlier deal. Thus, the very fact that Fanfan purchased the Goodison property through Dyer tends to refute Petitioner’s charge. Finally, Fanfan, the alleged victim, did not testify at the final hearing, and consequently there is no direct evidence that Dyer took $500 from Fanfan. The Charges In counts I and VII of its Administrative Complaint, Petitioner accuses Respondents of having failed to properly prepare monthly escrow-reconciliation statements. Petitioner’s position is that in maintaining records showing significant shortages in the escrow account for a period of approximately six months, and by failing to take corrective action regarding the shortages, Respondents failed to comply with Rule 61J2- 14.012, Florida Administrative Code, and hence violated Section 475.25(1)(e), Florida Statutes. In counts II and VIII, Petitioner alleges that Respondents committed 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. Petitioner’s position is that Respondents committed fraud or misrepresentation when they tendered false or forged documents to Rivera during the course of her official investigation. In addition, Petitioner asserts that Respondents committed culpable negligence towards the individuals who placed their funds in trust with Respondents. In counts III and IX, Petitioner asserts that Respondents obstructed or hindered the enforcement of Chapter 475, Florida Statutes, in violation of Section 475.42(1)(i), Florida Statutes, and therefore in violation of Section 475.25(1)(e), Florida Statutes. Petitioner’s position is that Respondents willfully interfered with Rivera’s investigation by submitting fraudulent documents to the investigator. In counts IV and X, Petitioner accuses Respondents of having made or filed a report or record which the licensee knew to be false, in violation of Section 475.25(1)(l), Florida Statutes. Petitioner’s position is that Respondents knowingly tendered false copies of canceled checks to Rivera. In counts V and XI, Petitioner charges Respondents with failing to account for and deliver trust funds, in violation of Section 475.25(1)(d)1., Florida Statutes. Petitioner’s position is that Respondents failed to account for and deliver the second deposit allegedly received from Fanfan in connection with the Herinslake-Fanfan transaction. In counts VI and XII, Petitioner accuses Respondents of having failed to maintain trust funds in the real estate brokerage escrow account until disbursement was properly authorized, in violation of Section 475.25(1)(k), Florida Statutes. Petitioner’s position is that during the six months of concern, Respondents’ escrow account funds were regularly several thousand dollars less than the trust liability. Ultimate Factual Determinations Dyer failed to prepare written monthly reconciliation statements as required by Rule 61J2-14.012, Florida Administrative Code, and thus he violated Section 475.25(1)(e), Florida Statutes. Petitioner therefore has established the charges set forth in counts I and VII of its Administrative Complaint, by clear and convincing evidence. The evidence does not establish that Dyer committed fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction. There is no persuasive evidence that Dyer intended to harm (or actually harmed) any of his clients. While Dyer did participate in a dishonest scheme to deceive Rivera by producing false copies of his canceled checks, this particular wrongdoing occurred, not in a business transaction, but rather in connection with a regulatory investigation. Thus, Dyer did not violate Section 475.25(1)(b), Florida Statutes. Counts II and VIII were not proved. Dyer attempted to obstruct or hinder Rivera’s investigation by producing copies of canceled checks that he knew were false and misleading. Petitioner has clearly established that Dyer violated Section 475.42(1)(i), Florida Statutes, which in turn constitutes a violation of Section 475.25(1)(e), Florida Statutes, as charged in counts III and IX of the Administrative Complaint. The evidence does not support the charge that Dyer violated Section 475.25(1)(l), Florida Statutes, which prohibits the filing false reports and records, because the altered documents that Dyer produced to Rivera were not signed by Dyer—— at least not in the sense contemplated by the statute, which specifies that “such reports or records shall include only those which are signed in the capacity of a licensed broker or salesperson.” Counts IV and X thus were not proved. The evidence does not clearly establish that Dyer failed to return a deposit of $500 to Fanfan after his deal with Herinslake fell through. Thus, counts V and XI, which allege violations of Section 475.25(1)(d)1., Florida Statutes, were not proved. Dyer failed to maintain trust funds in a segregated escrow account, in violation of Section 475.25(1)(k), Florida Statutes. Petitioner therefore has established the charges set forth in counts VI and XII of its Administrative Complaint, by clear and convincing evidence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order that: (a) finds Respondents guilty as charged in counts I, III, VI, VII, IX, and XII of the Administrative Complaint; (b) revokes Respondents’ respective real estate licenses; and (c) imposes an administrative fine of $3,000 against Respondents, jointly and severally. DONE AND ENTERED this 11th day of June, 2003, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 11th day of June, 2003.
Findings Of Fact Respondent (all references to Respondent are to Respondent Simmonds) is a licensed real estate broker in the State of Florida holding license numbers 0404486 and 0245930. His most current licenses are as a broker, c/o the corporate Respondent. He has been licensed about six years in Florida. The corporate Respondent (all references to the corporate Respondent are to Respondent L. G. Simmonds Realty, Inc.) is a corporation registered as a real estate broker in the State of Florida holding license number 0245825. At all material times, Respondent was licensed and operating as a qualifying broker and officer of the corporate Respondent. He is the sole shareholder of the corporate Respondent and the only broker employed by the corporate Respondent. Respondents were brokers in three sales transactions in which they received competing claims for earnest money deposits that they held in trust. The three contracts are the sale from Durant to Durant by contract dated February 13, 1987, and amended December 7, 1987; the sale from Dyer to James by contract dated August 27, 1988; and the sale from Kollar and Nilands Bar & Package, Inc. to Hamilton by contract dated October 11, 1988. Each of the three contracts is on a standard printed form. Each contract requires the corporate Respondent to hold the earnest money deposit in escrow and disburse it at closing, at which time the corporate Respondent earns its commission. Each contract provides that the corporate Respondent may interplead the funds in circuit court in the event of a dispute and further provides that the corporate Respondent shall comply with Chapter 475, Florida Statutes. The Durant contract provides for the corporate Respondent to hold a $1000 earnest money deposit. A dispute between the parties to the Durant contract arose, and Respondent contacted the Florida Real Estate Commission for advice. By letter dated November 22, 1988, Respondent informed the Florida Real Estate Commission of a demand by the seller for the deposit because the buyer had failed to follow through on his mortgage application. The letter states that Respondent is convinced that the seller is entitled to the deposit and that Respondent intends to pursue interpleader. By Notice dated February 2, 1989, the Florida Real Estate Commission informed Respondents that it could not issue an Escrow Disbursement Order because of the unenforceability of certain contractual language. Referring to Rule 21V-10.32, the letter advised Respondents that, within 30 days of receipt of the letter, they must pursue arbitration, with the consent of all parties, or a judicial adjudication, such as through interpleader. At some point, Respondents obtained an application for arbitration and sent it to the parties. By letter dated June 12, 1989, Respondents informed the Florida Real Estate Commission that they had sent an arbitration contract on March 21, 1989, to the seller, who had not yet responded to the request to arbitrate. Subsequently, Respondents retained counsel at their expense to discuss interpleading the funds in circuit court. Counsel advised them that the relatively modest sum involved, as a practical matter, precluded the judicial remedy because the attorneys' fees would exceed the amount in dispute. Eventually, the parties to the Durant contract settled their dispute, and Respondents disbursed the funds pursuant to the parties' stipulation. There is no evidence of a complaint about Respondents' handling of the earnest money deposits, nor is there any evidence that Respondent failed to account or deliver the deposit to any person as required by law. The Dyer contract also involved an earnest money deposit of $1000, which was later increased by addendum to a total of $3000. The Dyer contract, which also failed to close, provides for the corporate Respondent to hold the earnest money deposit. By letter dated March 2, 1989, Respondents informed the Florida Real Estate Commission that, as of the same day, they had received conflicting demands for the earnest money deposit. By Notice dated August 28, 1989, the Florida Real Estate Commission informed Respondents that it could not issue an Escrow Disbursement Order because of factual disputes that the Commission is not empowered to resolve. The Notice states that Respondents must "immediately" choose one of the remaining alternatives--arbitration or interpleader in circuit court. By letter dated September 8, 1989, Respondents informed the Florida Real Estate Commission that they would seek help through the Arbitration Society of Florida, Inc. It is unclear whether Respondents sent an arbitration application to the parties in the Dyer contract, but no arbitration ensued. The parties to the Dyer contract resolved their dispute in March, 1990, and Respondents disbursed the funds pursuant to the parties' stipulation. There is no evidence of a complaint about Respondents' handling of the earnest money deposits, nor is there any evidence that Respondents failed to account or deliver the deposit to any person as required by law. The Kollar contract resulted in the receipt by the corporate Respondent of an earnest money deposit of $10,000. This contract also failed to close. By letter dated January 19, 1989, Respondents informed the Florida Real Estate Commission of conflicting demands received the same day. The Commission issued an Escrow Disbursement Order on August 16, 1989, with which Respondents promptly complied. There is no evidence of a complaint about Respondents' handling of the earnest money deposit, nor is there any evidence that Respondents failed to account or deliver the deposit to any person as required by law. On January 30, 1990, Petitioner's investigator visited Respondents' office pursuant to a complaint that never provided any basis for disciplinary action. Respondent said that he was ill and asked her to reschedule the visit. They agreed to reset it for February 6, 1990. On February 6, 1990, Petitioner's investigator met Respondent at his office and asked for copies of all pending contracts, bank statements, deposit slips, cancelled checks, and similar materials so that she could reconcile the trust account. Respondent supplied her with all of these materials except for the cancelled checks, which he said were at the accountant's office. Respondent gave the investigator access to his office copier so that she could copy whatever she needed. She apparently copied various documents, but failed to copy the pending contracts. From February, 1988, through February, 1990, Respondents held 6-10 earnest money deposits. On February 6, Respondents had only three pending contracts for which they held deposits. These were the Dyer contract and two unidentified contracts with $3500 and $500 earnest money deposits. Respondents did not handle other trust funds, such as property management funds. Petitioner's investigator determined that the trust account was short $2897.73. She found pending contracts indicating that Respondents should be holding a total of $7000 in earnest money deposits, but she found a bank balance of only $4102.27, which included a deposit of $1392.26 made on February 5. Respondents' trust account has been short previously. For example, in August, 1989, the Dyer, Durant, and Kollar contracts, which were still outstanding, generated a trust account liability of $14,000, but the account balance was as low as $700. Respondent admits that he improperly removed funds from the trust account, without the parties' knowledge, to apply toward personal medical expenses that he had incurred. In the fall of 1989, he deposited into the trust account proceeds from a loan he had recently received. However, he removed additional trust funds when he later incurred more medical expenses. By February 6, Respondent knew that the trust account was short, but evidently did not know precisely by how much. His repeated vagueness concerning the specifics of trust account withdrawals and deposits from August, 1989, through February, 1990, discredits his testimony that he never withdrew more than the amounts of pending commissions, which were unearned in any event when withdrawn by Respondent. On February 7, Respondent deposited $2897.73 into the trust account to eliminate the deficiency found by Petitioner's investigator. During the following week, the investigator returned to Respondents' office. She requested Respondent to produce the same documents that she had examined previously, but Respondent refused on the grounds that he had already produced all the documents once and he was seeking legal counsel. The investigator contacted Respondent a couple more times concerning the requested documents, but Respondent continued to refuse to cooperate. Petitioner next tried to compel the production of the requested documents by service of an administrative subpoena. By subpoena duces tecum issued February 19, 1990, and served February 21, 1990, Petitioner demanded that Respondents produce, on February 26, 1990: All current pending sales contracts, on L. G. Simmonds Realty Escrow Account #144100004792 all bank deposit slips from 2/1/88-2/1/90, the check book for account #14410004792. Upon receipt of the subpoena, Respondent contacted his attorney, who prepared a petition to invalidate subpoena, which was served by mail on February 25, 1990, and received by Petitioner on February 28, 1990. The basic objections are that the subpoena is "unreasonably broad in scope and/or requires the production of irrelevant material" and that Respondents are entitled to know what complaint is being investigated prior to producing the information. Petitioner issued another administrative subpoena on March 12, 1990, which was served upon Respondents on March 26, 1990, and requested, by March 30, 1990: On L. G. Simmonds Realty Escrow Account #14410004792: All sales contracts for which L. G. Simmonds Realty, Inc. is holding escrow deposits, the 1/90 and 2/90 bank statements, cancelled checks, number 177 through 270. On March 29, 1990, Respondents' attorney served the same objections to the petition, and Petitioner received the objections on April 4, 1990.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Florida Real Estate Commission enter a final order reprimanding Respondents; imposing on each Respondent an administrative fine of $3000 (for a total from the two Respondents of $6000); requiring Respondent to complete an approved 60-hour course; suspending the licenses of both Respondents for a period of six months, commencing retroactive to when their licenses were revoked pursuant to the emergency order; placing both licenses on probation for a period of three years commencing the conclusion of the suspension; and requiring, during the period of suspension, that Respondents provide the Florida Real Estate Commission, or its signated representative, with escrow account status reports at such intervals as the Commission shall require. DONE and ORDERED this 9th day of October, 1990, in Tallahassee, Florida. ROBERT E. MEALE 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 9th day of October, 1990. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-4438 Treatment Accorded Proposed Findings of Petitioner 1-7: adopted. 8: rejected as subordinate. 9-10 (first sentence): adopted. 10 (second and third sentences): rejected as unsupported by the greater weight of the evidence. In fact, Respondent supplied the investigator with copies of the contracts on February 6, but refused subsequent requests to produce them. He indicated that he wanted to obtain advice of counsel. 11: rejected as subordinate. In addition, the implication that files of the Division of Real Estate were the sole source of information regarding the contracts is rejected as unsupported by the greater weight of the evidence. The investigator found in the EDO files of the Division of Real Estate a copy of the Dyer contract, which, as noted in the recommended order, was one of the three contracts generating the escrow account liability that the investigator calculated on February 6. Although she saw the other two contracts (in order to generate the liability), she never received copies of them, even through the final hearing. 12-19: adopted or adopted in substance. 20-21 (with respect to each paragraph, first sentence and first clause of second sentence): adopted. 20-21 (with respect to each paragraph, remainder): rejected as irrelevant. 22: adopted. 23: rejected as irrelevant. 24-27 and 30-33: adopted. 28 and 34: rejected as unsupported by the greater weight of the evidence and unnecessary. 29: rejected as unsupported by the greater weight of the evidence. Treatment Accorded Proposed Findings of Respondents 1-12: adopted or adopted in substance. 13: rejected as subordinate. 14-15: adopted. 16 and 19: rejected as unsupported by the greater weight of the evidence and legal argument. 17: rejected as unsupported by the greater weight of the evidence. 18: adopted. 20: rejected as irrelevant. 21: rejected as subordinate. 22: adopted. 23-24 and 26-27: rejected as recitation of testimony. 25: rejected as unsupported by the greater weight of the evidence. 28-33 (first clause of second sentence): adopted. 33 (second clause of second sentence): rejected as unsupported by the greater weight of the evidence and legal argument. 33 (remainder): adopted. 34-35: except as to the fact of the issuance of the subpoena and petition to invalidate, rejected as unnecessary. 36: rejected as unclear. Respondent gave the investigator a chance to see the three pending contracts generating the February 6 trust account liability, but never gave her copies of any of them when she later discovered that she had failed to copy them. She found a copy of the Dyer contract in the EDO file, but she never received copies of the other two contracts, even at the final hearing. The last sentence is rejected as unnecessary. The determination in the recommended order on this point was not dependent upon Respondents' handling of the subpoenas, but on their handling of repeated and reasonable requests for relevant information. 37: rejected as irrelevant. 38: adopted. 39: rejected as unnecessary. 40-43: adopted or adopted in substance. 44: adopted. 45: rejected as unnecessary. 46-49: adopted or adopted in substance. COPIES FURNISHED: Attorney Thomas V. Infantino Infantino and Berman Post Office Drawer 30 Winter Park, Florida 32790-0030 Darlene F. Keller Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Attorney James H. Gillis Division of Real Estate Florida Real Estate Commission 400 W. Robinson St. Orlando, Florida 32801-1772 Kenneth E. Easley General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 *Previously assigned DOAH Case No. 90-4319 closed as a duplicate.
The Issue Whether Petitioner is qualified for licensure as a real estate salesperson.
Findings Of Fact Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made: Petitioner is fifty-two years of age. He became licensed as a real estate salesperson in the State of Florida in 1981, after returning to the state (where he was born and raised) from New Jersey. The following year he obtained a license that allowed him to operate as a real estate broker in Florida. In or about 1984, Petitioner formed Landmark Realty, Inc. (Landmark), which operated in Broward County, Florida, as a Century 21 franchise. On or about June 29, 1989, in DPR Case Nos. 0163964 and 0164128, the Department of Professional Regulation, Division of Real Estate, issued an Administrative Complaint against Petitioner and Landmark containing the following allegations: 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 0344112 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker c/o Landmark Realty, Inc., 1860 N. Pine Island Road, Plantation, Florida 33322. Respondent Landmark Realty, 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 0239155 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 1860 N. Pine Island Road, Plantation, Florida 33322. COUNT I The Department of Professional Regulation conducted a routine office inspection/escrow account audit of Respondents' escrow accounts between June 15, 1989 and June 16, 1989. Respondents' escrow account number 55322000377 is held at First Union National Bank of Florida. Respondents' escrow account number 55322000377 had a balance of $1,368.36 on June 16, 1989. The pending sales files revealed that the escrow monies balance should have been $65,250 on June 16, 1989. The escrow account had a shortage of $63,881.64. . . . Respondent Caprio claims he transferred $80,700 from Respondents' escrow account number 55322000377 to the Keys & Keys trust account number 0304301543 on the advice of counsel. . . . Kathy Clements, Operations Officer for County National Bank of South Florida furnished a written letter that the Keys & Keys trust account number 0304301543, had a current balance of $101,901.43 on June 20, 1989. . . . The Respondents failed to furnish any validated documents detailing the dates and amounts of deposits into the aforementioned Keys & Keys trust account from the aforementioned Respondents' escrow account. The Respondents' escrow account number 55322000377 is a commercial money market investment account with the interest going to Landmark Realty, Inc., without the consent or prior knowledge of all parties. . . . The Respondents failed to timely notify the Florida Real Estate Commission of conflicting demands on the earnest money deposit on the contract, dated July 17, 1988, between David B. Perry, as seller, and Earle A. and Yvonne M. Levy, as buyers. The buyers entrusted an earnest money deposit of $1,000 with the Respondents on or about July 17, 1988, and an additional earnest money deposit of $20,000 was entrusted to the Respondents on or about August 22, 1988. The Respondents received a demand letter f[rom] the buyers on December 13, 1988 and a demand letter from the seller's attorney on February 21, 1989. . . . On or about April 19, 1989, the Respondents received or should have received a total earnest money deposit of $4,000 from Perry Silver, as buyer, and Charles Hennessey, as seller. The audit revealed no proof that the additional deposit of $2,000 as required by the contract dated April 19, 1989 was received by the Respondents. . . . The Respondents failed to timely notify the Florida Real Estate Commission of conflicting demands on the earnest money deposit on the contract, dated May 31, 1989, between C. McCanes and J. Steele, as sellers, and Jacqueline W. Mayers, as buyer. The buyer entrusted an earnest money deposit of $1,000 with the Respondents on or about May 31, 1989. The additional deposit of $4,000 as called for in the contract was never received by the Respondents. On June 1, 1989, the buyers made a demand on the earnest money deposit and on June 6, 1989 the seller made a demand for the earnest money deposit. . . . The Respondents, on or about May 16, 1989, did unlawfully disburse check number 0963 from the Respondents' escrow account number 55322000377 to the Respondents' operating account to cover office expenses. The Administrative Complaint further alleged that, "[b]ased upon the foregoing," Petitioner and Landmark were guilty of "fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction in violation of Subsection 475.25(1)(b), Florida Statutes"; "having failed to account and deliver a deposit in violation of Subsection 475.25(1)(d), Florida Statutes"; "having failed to maintain trust funds in [their] real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Subsection 475.25(1)(k), Florida Statutes"; and "having failed to notify the Florida Real Estate Commission upon receiving conflicting demands or having a good faith doubt as to who is entitled to an earnest money deposit according to Rule 21V-10.032, Florida Administrative Code and therefore in violation of Subsection 475.25(1)(e), Florida Statutes." Petitioner had never before had a complaint filed against him. On December 21, 1989, the Florida Real Estate Commission issued a Final Order in DPR Case Nos. 0163964 and 0164128 finding Petitioner guilty of the violations alleged in the Administrative Complaint and revoking his license, notwithstanding his unblemished disciplinary record. The Final Order read, in pertinent part, as follows: On December 5, 1989, the Florida Real Estate Commission heard this case to issue a Final Order. On or about June 29, 1989, an Administrative Complaint was filed against Respondents. The Respondents admitted the allegations of fact. . . . The Respondents were properly served with the Notice of Hearing, appeared and presented matters in mitigation. Based upon the allegations of fact and upon the information provided to the Commission at its meeting of December 5, 1989, the Commission finds the Respondents guilty of violating s.475.25(1)(b), 475.25(1)(d), 475.25(1)(e), and 475(1)(k), Florida Statutes, and Rule 21V-10.032, Florida Administrative Code, as charged in the Administrative Complaint. Therefore, the Commission ORDERS that the license of Respondent Philip Caprio be revoked. The Commission further ORDERS that Respondent Landmark Realty Inc. be reprimanded and that said Respondent pay an administrative fine of $1000.00 within 30 days of the date of this Order. Petitioner did not appeal the Final Order. Following the issuance of the Final Order, reimbursement was made to the victims of the violations of which Petitioner and Landmark had been found guilty. The loss of Petitioner's real estate license has adversely affected his ability to make a living and support his family. Petitioner is married to Teresa Caprio. He and Teresa have a twenty-five year old disabled daughter, who requires assistance in performing the normal activities of daily living. Before the revocation of Petitioner's license, the Caprios' daughter lived at home with them. Teresa was able to stay at home and care full-time for her daughter. After Petitioner's license was revoked, however, she no longer was able to do so, inasmuch as she needed to work outside the home to supplement the family income. The Caprios therefore had to place their daughter in a group home. Although Petitioner has not been able to earn nearly as much as he did when he had his real estate license, he has been gainfully employed since the revocation of his license. From 1989 to 1995, he worked for Potamkin Toyota (Potamkin), an automobile dealership. He started as a salesman at Potamkin. After approximately six months at the dealership, he was promoted to customer relations manager/weekend sales manager. He left the employ of Potamkin in 1995, following a change in management at the dealership. Petitioner is now, and has been since July of 1995, employed by Central Florida Investments, Inc., d/b/a Westgate Miami Beach (Westgate), a seller of timeshare plans. He currently is a salaried employee occupying the position of finance manager, a position to which he was promoted after his first six months with the company. He will be unable to advance further in the company if he does not obtain a Florida real estate license. In his position as finance manager, Petitioner takes deposits made by purchasers and prospective purchasers2 and delivers them to Westgate's contract office, which is approximately 20 feet from his office. Using hidden security cameras, Westgate management closely monitors the workplace activities of Petitioner and his coworkers. Petitioner has performed his job duties in a manner that has impressed Westgate management. He has proven to be a competent, reliable, responsible, honest, and trustworthy employee.3 Petitioner is involved in community activities. He and his wife volunteer their time to operate the Rainbow Foundation, a non-profit organization that they formed two years ago to promote the growth of residential facilities for the developmentally disabled in the South Florida area. It appears that since the revocation of his real estate license, Petitioner has rehabilitated himself and that therefore it is not likely that his relicensure would endanger the public.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission issue a final order finding that Petitioner is qualified to practice as a real estate salesperson. DONE AND ENTERED this 26th day of September, 1997, in Tallahassee, Leon County, Florida. STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 26th day of September, 1997.
Findings Of Fact In 1981, Barry Kandel, an employee of Allied Publishing Group, Inc., solicited Petitioners to purchase stock in Allied, a Florida Corporation. On May 1, 1981, Petitioners purchased one share of stock in Allied for $13,500. By mid-1982, Allied had gone out of business. Petitioners made unsuccessful demands for the return of their money on Brian E. Walker, the Secretary of Allied; on Thomas W. Kuncl, the President of Allied; and on Kandel. On November 19, 1984, Petitioners filed suit against Kandel, Kuncl, Walker, and Allied. The Civil Complaint filed in Case No. 84-6932 in the Circuit Court of the Fifteenth Judicial Circuit of Florida, in and for Palm Beach County, contained general allegations of fraud. On February 20, 1985, Petitioners obtained a default judgment against Allied only. No evidence was offered in this cause regarding the disposition of the litigation as to the individual defendants. The default judgment contains no factual determinations and does not specify a violation of either section 517.07 or section 517.301, Florida Statutes. Kandel currently resides in Fort Lauderdale, Florida, and Kuncl currently resides in the Gainesville, Florida, area. Kuncl was the last known person to have custody of and control over Allied's books and records. Petitioners filed a claim with Respondent, seeking reimbursement for $10,000 from the Securities Guaranty Fund, pursuant to sections 517.131 and 517.141, Florida Statutes. Their claim was denied by letter dated July 8, 1987, for failure to meet the statutory conditions. Neither Allied nor any individual associated with Allied who dealt with Petitioners was registered or licensed by the State of Florida pursuant to chapter 517, Florida Statutes, in any capacity. Petitioners did not cause a writ of execution to be issued against Allied nor the individuals associated with Allied. Petitioners did not attempt a reasonable search as to whether Allied possessed real or personal property or other assets which may be set off against a proposed claim to the Securities Guarantee Fund. Don Saxon, Director of the Division of Securities and Former Assistant Director, has been the only individual responsible for administering the Securities Guaranty Fund since 1983. The Department's interpretation of section 517.131(2), Florida Statutes, is that it requires a claimant to demonstrate findings of a violation of section 517.07 and/or section 517.301, Florida Statutes, by a licensed dealer, a licensed investment adviser or a licensed associated person. The Department's interpretation of section 517.131(3)(a), Florida Statutes, is that it requires a claimant to provide the Department with a certified copy of a judgment demonstrating a violation of section 517.07 and/or section 517.301, Florida Statutes. The Department's interpretation of section 517.131(3)(b), Florida Statutes, is that it requires a claimant to submit a copy of the writ of execution to the Department. During Saxon's tenure in administering the Securities Guaranty Fund, the Department has not waived any of the statutory requirements for claiming monies from the Fund. Section 517.131 and section 517.141, Florida Statutes, were enacted in 1978 and have remained virtually intact. The legislature did substitute the term "associated person" in place of the term "salesman" in section 517.131(2), Florida Statutes, without comment, although the order of licensed entities in that section was altered. The legislative intent behind the establishment of section 517.131, Florida Statutes, was to eliminate the bonding requirement for "individuals registered to be broker/dealers or investment advisers ... substituting therefor, a 'Security Guaranty Fund' to be funded through an assessment imposed upon them." The legislative intent behind section 517.141, Florida Statutes, was that disbursement from the Securities Guaranty Fund would be made to any person suffering monetary damages as a result of "some violation by a registrant."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a Final Order be entered denying Petitioners' claim for payment from the Securities Guaranty Fund. DONE and RECOMMENDED this 25th day of April, 1988, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of April, 1988. COPIES FURNISHED: Gerald Lewis, Comptroller Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350 Charles E. Scarlett, Esquire Office of the Comptroller Suite 1302, The Capitol Tallahassee, Florida 32399-0350 Richard O. Breithart, Esquire 818 U.S. Highway One, Suite 8 North Palm Beach, Florida 33408 Charles L. Stutts, Esquire Office of the Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350
Findings Of Fact The following are the facts which the parties agree should be considered in resolving the legal issues raised in the instant case: The Department is a state government licensing and regulatory agency. Respondent Marsh A. Ferreira is now, and has been since 1990, a licensed real estate broker in the State of Florida. He holds license number 0523079. Since becoming a licensed broker, the only complaint that has been made against him in connection with the practice of his profession is the complaint that is the subject of the instant case. At all times material to the instant case, Respondent Ferreira was licensed and operating as a qualifying broker and officer of Respondent M A F Realty, Inc. (Realty). Realty is now, and has been at all times material to the instant case, a corporation registered as a real estate broker in the State of Florida under license number 0263255. The license reflects that Realty's address is 4143A S.W. 74th Court, Miami, Florida 33155. Like Respondent Ferreira, Realty has an unblemished disciplinary record to date. On or about July 31, 1991, Hector Schwerert, an investigator with the Department, conducted an office inspection/audit of Realty during business hours. The inspection/audit was routine. It was not prompted by any complaint against Respondents. Schwerert gave no advance warning of his visit. Nonetheless, Respondents gave him their full cooperation and did not seek to postpone or delay the inspection/audit. Schwerert's inspection/audit revealed the following: Realty's sales escrow account #20207038305 had an approximate shortage of $8,359.31. Its total trust liability was $8,500.00, but there was only $140.69 in the account. Respondent Ferreira was the sole employee of Respondent. He, and he alone, had access to the escrow account, as well as Realty's operating account. On occasion, he would "unintentionally confuse the checkbooks" of the two accounts and inadvertently use monies in the escrow account for operational purposes and monies in the operating account for escrow purposes. It was this "unintentional confusion" that caused the shortage in the escrow account. During the period from January, 1990, when Realty was incorporated, to the date of the inspection/audit, Respondent Ferreira, on behalf of Realty, prepared and signed written escrow account statements/reconciliations on a monthly basis. On two, and only two, of these statements/reconciliations, the escrow account balance did not equal the amount of Realty's trust liability and there was no explanation given for the discrepancy, nor any indication that corrective action would be taken. On August 1, 1991, immediately upon realizing that he had inadvertently deposited trust funds in Realty's operating account instead of its escrow account, Respondent Ferreira withdrew $10,000.00 from the operating account and deposited it into the escrow account to eliminate the shortage in the escrow account. Since the July 31, 1991, inspection/audit Respondent Ferreira has taken a 30-hour broker's course in which he received an above average score and has met his continuing education requirements. 1/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law it is hereby recommended that the Commission enter a final order finding Respondents guilty of the violations alleged in the Administrative Complaint and imposing upon them, for having committed these violations, the penalties proposed by the Department in its proposed recommended order, which are recited above. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 16th day of April, 1993. STUART M. LERNER 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 16th day of April, 1993.
The Issue Should Respondent's license as an insurance agent in the State of Florida be disciplined for the alleged violation of certain provisions of Chapter 626, Florida Statutes, as set forth in the Administrative Complaint and, if so, what penalty should be imposed?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: The Department is the agency of the State of Florida vested with the statutory authority to administer the disciplinary provisions of Chapter 626, Florida Statutes. Respondent, at all times material to the dates and occurrences referenced in the Administrative Complaint, was licensed as an insurance agent in the State of Florida. Respondent is also currently licensed in the State of Florida as a life and life and health insurance agent. During the late 1990's, Respondent became a selling agent for an entity known as Alliance Trust, which later merged with Chemical Trust, and is now known as Chemical Trust. Respondent first learned of Chemical Trust through Jim Hicks of West Shore Agency of Michigan. Jim Hicks provided Respondent with selling and marketing materials for the investments, which were marketed as "guaranteed contracts" (Guaranteed Contract marketing materials). Respondent gave the Guaranteed Contract marketing materials to Imogene Skipper, Edward Dandignac, Dorothy Dandignac, Theodore Dostal, Alice Lowe, Robert Marsh, Julia Marsh, Raymond Grossman and Mildred Grossman and had each of them sign a compliance verification form to that effect. The Guaranteed Contract marketing materials contained a six-page U.S. Guarantee Corporation (U.S.G.C.) Balance Sheet, dated July 13, 1999, which listed several financial representations, including U.S.G.C.'s Accounts Receivable, Real Estate, Partnerships, Total Assets, Liabilities, Net Equities, Total Net Liabilities and Net Equity, Certificates of Deposit, and various accounting representations. Respondent did not have a background in financials. However, he made no effort to verify the accuracy of U.S.G.C's financial statements in order to protect his customers' investments. U.S.G.C. did not have the financial wherewithal to guarantee investors' investments. The Guaranteed Contract marketing materials listed several members of its "Staff," including Barry Goldwater, Jr. (Vice President/Director); Kenneth R. Pinckard (Executive Director/Vice President); Stephen M. Hammer (Chief Financial Officer); Kenneth Turner (Vice President/Comptroller); etc. Respondent did not verify that any of these individuals was actually on the staff of U.S.G.C. The Guaranteed Contract marketing materials asserted that U.S.G.C. had provided financial support to various charitable organizations, including Compassion International, St. Mary's Food Bank, World Missions, Salvation Army, Food for the Poor, Tennessee, US, etc. Respondent made no attempt to verify these representations. The Guaranteed Contract marketing materials, in the "Explanation of the Trust" section, falsely states, "This is a Trust and has satellite offices throughout the USA. This Trust has been providing clients steady streams of interest and the return of their principal since its inception." Respondent made no effort to verify which, if any, of these clients existed or if the clients were being provided steady streams of interest and return of their principal. The Guaranteed Contract marketing materials, in the Explanation of the Trust section, falsely states, "Profits are made by the Trust by buying and selling financial instruments and physical properties. The US Government sells Investment Grade Paper Backed by Treasury Notes on a daily basis and the Trust has Buyers purchasing large blocks at discounts. " Respondent did not know what Investment Grade Paper Backed by Treasury Notes was, and made no attempt to determine what this term implied. The Guaranteed Contract marketing materials, in the "Explanation of the Trust" section, falsely states: "The Trust also buys distressed properties with plans already drawn for conversion and then sell at a profit immediately. The Bonding Company approves all investments. This insures the integrity of each investment and its guarantee. There is in excess of SIX Billion Dollars security on the investor's investment." Respondent made no effort to verify these financial representations in order to protect his clients. Respondent made no effort to determine if U.S.G.C. was authorized to transact insurance in the State of Florida. Respondent, after reviewing the Guaranteed Contract marketing materials, considered U.S.G.C. to be a legitimate corporation. However, Respondent made no effort to determine if U.S.G.C. was a legitimate corporation, notwithstanding his testimony to the contrary, which lacks credibility. At all times material hereto, U.S.G.C. was not licensed as an insurance company or a bonding company, and, although a registered corporation in the State of Nevada, it was not a registered corporation in the State of Florida. Respondent received a document from Clifton Wilkinson, Trustee for Alliance Trust dated August 1, 1999, which stated: "News and Information Regarding Misinformation and Opinions of Some State Agencies Concerning the Nature of Alliance Trust and Similar Entities. They are exempt from State Securities Laws." Therefore, sometime around August 1, 1999, Respondent was made aware that some state agencies took the position that the investments (Guaranteed Contracts) being offered by Alliance Trust (n/k/a Chemical Trust) were securities and were not exempt from state securities laws and regulations. Respondent did not seek advice from the agency of the State of Florida charged with the responsibility of regulating securities as to whether the State of Florida considered these investments to be securities and subject to securities regulations. Likewise, Respondent did not seek any legal advice from an independent counsel as to whether these investments were in fact securities and subject to state securities regulations. Respondent made no independent inquiry into whether these investments were in fact securities and subject to securities laws and regulations, but relied solely on information received from Chemical Trust and two other agents for Chemical Trust in coming to the conclusion that these investments were not securities and not subject to securities laws and regulations. Respondent did not personally invest in the Chemical Trust investments. However, he did tell Edward Dandignac and Theodore Dostal that he had personally invested in Chemical Trust investments. Respondent earned a commission from the sale of the Chemical Trust investments. Respondent's commission from the sale of Chemical Trust investments constituted properties involved in Virgil Womack's violation of Title 18, United States Code, Section 1956(h), and were subject to forfeiture pursuant to Title 18, United States Code, Section 982(a)(1). Respondent made a payment of $63,302.29, through his attorney to the Receiver on June 18, 2001. Chemical Trust's investment product (Guaranteed Contract) was an investment contract and thereby a security as defined under Subsection 517.021(19)(q), Florida Statutes. As a security, the Guaranteed Contract was required to be registered in the State of Florida under Section 517.07, Florida Statutes, unless it was exempt from registration under Section 517.051 or 517.061, Florida Statutes. The Guaranteed Contract was neither an exempt security under Section 517.051, Florida Statutes nor an exempt transaction under Section 517.061, Florida Statutes. Therefore, the Guaranteed Contract was required to be registered in the State of Florida. An individual must be licensed in the State of Florida in order to sell or offer securities in the State of Florida. Respondent was neither licensed to sell nor to offer securities in the State of Florida. The monies paid to Chemical Trust for the investments were deposited in the personal bank accounts of Virgil Womack, Clifton Wilkinson, Lewey Cato, and Alvin Tang, the principals of Chemical Trust, and used for their personal benefit and to promote the fraudulent scheme. The Florida Department of Banking and Finance had information concerning previous securities violations by Virgil Womack and Clifton Wilkinson. Womack committed securities violations in Georgia in 1997, and Wilkinson committed securities violations in North Dakota, Iowa, Kansas, and Illinois in June 1999. This information was contained in the National Association of Securities Dealers Regulation Central Registration Depository (NASDAQ CRD) database that was accessible to the public in general, and to the Respondent specifically, through the Florida Department of Banking and Finance through telephonic communication. Imogene Skipper, age 74, of Dover, Florida, is a retired school custodian. Skipper worked as a custodian for 19 years. Skipper met Respondent in 1997 when he came to her home as a representative of Remington Estate Services, Inc., Fort Worth, Texas, to assist her in setting up a revocable living trust. The trust agreement would allow her to plan an orderly distribution of her assets without having to go through probate. In 1999, Respondent persuaded Skipper to liquidate the existing annuities with American Investors and transfer the funds to Chemical Trust. In doing so, Skipper suffered $1,665.49 in surrender charges for policy number 303313 and $1,171.25 for policy number 303467. Respondent told Skipper that Chemical Trust would reimburse her these surrender charges. Skipper purchased these annuities when her children were young. The annuities were funded by a $5.00 deduction from Skipper's weekly paycheck. Skipper was reluctant to transfer her annuity funds to Chemical Trust. However, Respondent kept reminding her that the 10 per cent return on her investment was good. Also, Skipper considered Respondent to be an honest, decent, and well respected man. Skipper invested $17,820.00 in Chemical Trust through Respondent. This figure represented two checks, each written to Chemical Trust by Skipper, in the amount of $8,910.00 each. In return Chemical Trust issued two Guaranteed Contracts in the amount of $10,158.00 each for a total of $20,316.00. The difference in amount of the two contracts ($20,316.00) and the amount of Skipper's checks ($17,820.00) was $2,496.00, which was supposed to reimburse Skipper for the surrender fees on her annuities. However, the surrender fees were $2,836.74, which resulted in Skipper not being reimbursed for surrender fees in the amount of $340.74. Respondent supplied Skipper with documents explaining the Chemical Trust investments. Respondent had Skipper sign a compliance verification stating that Respondent had fully explained and delivered documentation concerning the Guaranteed Contracts. The Cover Page of the Guaranteed Contract marketing material had "Chemical Trust" in bold print. At the bottom of the same page, the language "A Guaranteed Contract" appeared along with Respondent's name, address, and telephone number. The second page was entitled "Explanation of the Trust." The third page was titled "CHEMICAL TRUST" and consisted of information concerning "QUALIFICATIONS," "FINANCIAL STRENGTH," and "BOND PROVIDER." This page contains certain terms such as: (a) "After funds have cleared, you will receive your Contract and Surety Bond"; (b) "With over $725 million in assets to protect clients, Chemical Trust is dedicated to provide you the safety, liquidity, and protection you expect in today's uncertain environment"; (c) "U.S. Guarantee Corporation's financial statement is in excess of 2.4 billion dollars"; and "Please note: Due to confidentially U.S. Guarantee Corporation and Fidelity National will be unable to provide any information to you without the consent of the Trust. ***If you wish to contact either of these it must be coordinated by Chemical Trust." (Emphasis furnished) After her funds cleared, Skipper was provided a "Certificate of Grantor" for each investment. The first page had a bold CHEMICAL TRUST" logo and was identified as a "Certificate of Grantor." Among the terms were: (a) "SIMPLE INTEREST AT THE FIXED RATE OF 10 PERCENT PER ANNUM"; and (b) THIS PRINCIPAL AMOUNT IS SECURED BY A SURETY BOND ISSUED BY U.S. GUARANTEE CORPORATION." The guarantee of ten percent per annum interest was higher than the amount Skipper was receiving on the annuities that she had liquidated. The second page had the U.S. Guarantee Corporation logo at the top and was titled "Payment Surety Bond" with Chemical Trust as Principal, U.S. Guarantee Corporation, as Surety, and Imogene R. Skipper, as Trustee. Skipper identified the guarantee of ten percent interest and her full trust in Respondent as the factors that influenced her decision to make the Chemical Trust investments. Skipper lost her entire investment with Chemical Trust. Edward Dandignac, age 70, of Inverness, Florida, is a retired Boar's Head provision carrier. Dorothy Dandignac is the spouse of Edward Dandignac. Dorothy Dandignac, age 67, of Inverness, Florida, is a retired housewife. The Dandignacs first had contact with Respondent when he came to their home to set up a revocable living trust in April 1998. Several months after setting up the irrevocable living trust, Edward Dandignac told Respondent that he was having problems with his Oppenheimer funds, Fidelity funds, and other funds. Respondent advised Edward Dandignac that he would probably do better with an investment in some annuity. Subsequently, Respondent sold Edward Dandignac an annuity with Bradford Life and an annuity with United Life. Later, Respondent approached Edward Dandignac concerning Chemical Trust and reviewed the Chemical Trust documents with Edward Dandignac and explained to him that he could make a better return, up to ten percent. Respondent also advised Edward Dandignac that Chemical Trust would cover the surrender charges. Respondent went through the Guaranteed Contract marketing materials with Edward Dandignac. As to the integrity of Chemical Trust and U.S. Guarantee Corporation, Respondent advised Edward Dandignac the companies were "backed" and "protected." Based on Respondent's representations and the Guaranteed Contract marketing materials, Edward Dandignac determined that an investment with Chemical Trust would be secured and guaranteed. Subsequently, Edward Dandignac decided to invest part of his and his wife's life savings in Chemical Trust through Respondent. Edward Dandignac liquidated one of his annuities and had the funds transferred to Chemical Trust. Respondent advised Edward Dandignac that he had personally invested in Chemical Trust. Because Respondent had worked with the Dandignacs in getting them the annuities, which were making better money than their stock, and the fact that Respondent had also invested in Chemical Trust, the Dandignacs trusted Respondent in regard to their investment in Chemical Trust. One of the business cards given to the Dandignacs by Respondent listed "Insurance," "Estate Plans," and "Investments" as the areas in which he was involved. Edward Dandignac identified the Guaranteed Contract marketing material as being similar to the documents given to him by Respondent. This material was the same as the Guaranteed Contract marketing material provided to Skipper by Respondent. The Dandignacs expected a return on their investment with Chemical Trust but instead lost $25,444.89. Theodore Dostal, age 74, of Port Richey, Florida, first had contact with Respondent in October 1997, when Respondent delivered a revocable living trust to him through Senior Estates Services. Shortly thereafter, Respondent and Dostal discussed other investments. Between October 28, 1997, and July 27, 1998, Dostal transferred varying amounts from his revocable living trust to purchase three different annuities from Respondent with Bradford Life. Subsequently, Respondent furnished Dostal the Guaranteed Contract marketing materials identical to those provided to Skipper by Respondent. Based on the Guaranteed Contract marketing materials and Dostal discussions with, and his trust in Respondent, Dostal invested in Chemical Trust. Dostal's investment in Chemical Trust involved the purchase of: a Certificate of Grantor dated September 24, 1999, in the amount of $17,327.00; (2) a Certificate of Grantor dated September 28, 1999, in the amount $92,010.00; (3) a Certificate of Grantor dated October 11, 1999, in the amount of $10,000.00 and; (4) a Certificate of Grantor dated November 10, 1999, in the amount of $37,120.00. Each Certificate of Grantor was issued by Chemical Trust and was backed by a Payment Surety Bond backed by U.S. Guarantee Corporation Other than the terms specific to Dostal, the Certificate of Grantor and the Payment Surety Bond referenced above are the same as those issued to Skipper. Of the monies he invested with Chemical Trust, Dostal lost $56,000.00. Respondent told Dostal that he had personally invested in Chemical Trust Alice Lowe, an elderly lady, is a retired office manager. Lowe currently lives in Orlando, Florida. Lowe purchased an annuity product from Respondent in April 1998. Subsequently, Lowe liquidated her annuity and at the suggestion of Respondent invested $39,914.95 in the Chemical Trust investments, which she lost plus the surrender charges in the amount of $4,350.73 for a total loss of $44,229.85. Lowe could not recall receiving the Guaranteed Contract marketing materials. However, she did recognize her signature on the verification form which confirms that she received the Guaranteed Contract marketing materials. As such, the documents she received would have contained the same terms as the documents received by Skipper. The ten percent interest per annum was a factor in Lowe's decision to invest in Chemical Trust investment along with her confidence in Respondent. Robert Marsh, an elderly man, is a retired mechanic, and is married to Julia Marsh. Currently, the Marshes live in Bradenton, Florida. The Marshes became acquainted with Respondent about May 2, 1998, when Respondent delivered a revocable living trust to them through Remington Estate Services. After this initial contact, the Marshes' interaction with Respondent consisted of Respondent's stopping by a few times, talking to Respondent on the telephone, and discussing investments with Respondent. During all visits with Respondent, both Robert Marsh and Julia Marsh were present. Likewise, the Marshes discussed all financial matters jointly before making a final decision concerning financial matters. The Marshes had an existing annuity that was earning interest at the rate of 2.37 or 3.00 percent, which they were not pleased with. Subsequently, the Marshes transferred some of the money from the existing annuity to purchase an annuity with Respondent. Afterwards, Respondent visited with the Marshes every two to three months. During this time, Respondent discussed Chemical Trust investments with the Marshes and advised them that Chemical Trust was a "good company" that the company "had been around a long time" and "the investments" were a "good deal." The Marshes transferred, through Respondent, their funds from two annuities and an IRA to Chemical Trust. The Marshes invested over $23,000.00 in Chemical Trust investments. Originally the Marshes lost all of their investment. However, they recouped all but $2,300.00 through the efforts of the U.S. Government. The $2,300.00 was surrender charges for early withdrawal of their annuities. Based on Respondent's representations, the Marshes expected to be reimbursed for surrender charges, receive ten percent interest per annum, the principal amount to be secured by a surety bond, and to receive a $700.00 bonus. The Marshes were provided Chemical Trust's Guaranteed Contract marketing materials from Respondent, which was identical (contained the same terms) to the Guaranteed Contract marketing material provided to Skipper. Mildred Grossman, age 79, of Debary, Florida, is a retired secretary. Raymond Grossman, age 80, also of Debary, Florida, is the spouse of Mildred Grossman. Raymond Grossman is retired Methodist minister. The Grossmans became acquainted with Respondent when he came to their home to deliver a revocable living trust as a representative of Remington Estate Services, Inc. After his initial contact with the Grossmans, Respondent visited them every one to three months to check on their needs. Because the Grossmans were seriously considering the possibility that one of them would be going into a nursing home or some type of assisted living facility, Respondent encouraged the Grossmans to purchase annuities. Consequently, the Grossmans cashed in their life insurance policies and their certificates of deposit and purchased annuities from Respondent through American Investors. After they purchased the annuities, the Grossmans were still concerned as to whether they could afford potential retirement home expenses. The Grossmans discussed their concerns with Respondent, and he advised them that they could get a better return on their investment if they switched to Chemical Trust investment. Respondent represented to the Grossmans that their principal investment was protected by a surety payment bond issued by U.S. Guarantee Corporation, that they would receive a guaranteed ten percent interest per annum return for seven years, and that they would be reimbursed for surrender charges incurred when they transferred their funds to Chemical Trust. The Grossmans lost approximately $36,900.00 from their investment with Chemical Trust through Respondent. This amount constituted their life savings, leaving them about $2,000.00 in the bank. Respondent strongly suggested that the Grossmans invest in Chemical Trust. In fact, one of strongest motivating factors for the Grossmans' decision to invest in Chemical Trust was their faith and trust in Respondent. The Guaranteed Contract marketing materials provided to the Grossmans were identical (containing the same terms) to those provided to Skipper. As a result of the lost investments, the Grossmans: (1) were forced to move from a condo to mobile home; (2) cannot provide financial help to their children; and (3) can no longer afford an assisted living home. The Chemical Trust enterprise was a deliberate and largely transparent scheme to swindle Florida residents. Respondent either knew or should have known, had he made good faith attempt to verify the representations contained in the Guaranteed Contract marketing materials and the information furnished to him by other agents, employees, officers or staff of Chemical Trust, that Chemical Trust investments were worthless. Respondent failed to make a due diligence inquiry in this regard. Respondent employed either his past or then current insurance/client relationship with Imogene Skipper, Robert and Julia Marsh, Raymond and Mildred Grossman, Alice Lowe, and Edward and Dorothy Dandignac to gain their trust and then abused that trust by his failure to properly research and verify the claims made by Chemical Trust, a fellow insurance agent, others associated with Chemical Trust investments, and those otherwise contained in the Guaranteed Contract marketing materials. Respondent was the source of injury to Imogene Skipper, Robert and Julia Marsh, Raymond and Mildred Grossman, Alice Lowe, and Edward and Dorothy Dandignac by inappropriately attempting to act in multiple roles as their insurance agent and as an agent for Chemical Trust. As a result of Respondent's actions, Imogene Skipper, Robert and Julia Marsh, Raymond and Mildred Grossman, Alice Lowe, and Edward and Dorothy Dandignac were sold an investment that was nothing more than a scheme to swindle those who invested. The aggregate loss to the Chemical Trust investment scheme by Skipper, the Marshes, the Grossmans, Lowe, the Dandignacs, and Dostal was approximately $200,000. Under the circumstances of this case, the participation of Respondent in the sale of Chemical Trust investments to Skipper, the Dandignacs, Dostal, Lowe, the Marshes, and the Grossmans was "in the conduct of business under the [insurance license]" and "in the course of dealing under the [insurance] license."
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, and after careful consideration of both aggravating and mitigating factors set forth in Rule 4-231.160(1), Florida Administrative Code, it is RECOMMENDED that the Department enter a final order finding Respondent, Donald Dean Hooley, II, guilty of violating Subsections 626.611(4), (7), (8), (9), and 626.621(2), Florida Statutes, and revoking his license and eligibility for licensure as a life and life health insurance agent in the State of Florida. DONE AND ENTERED this 28th of January, 2002, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 2002. COPIES FURNISHED: Charles D. Hinton, Esquire Deane & Hinton, P.A. Post Office Box 7473 St. Petersburg, Florida 33739 Anthony B. Miller, Esquire Department of Insurance Division of Legal Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Honorable Tom Gallagher State Treasurer/Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
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
