Findings Of Fact The Respondent licensee, Martin County Properties, Inc., was at all times material registered with the Commission as a real estate corporate broker and the Respondent licensee, Jackson L. Smith, was at all times material registered with the Commission as a real estate broker. On May 8, 1974, the G. H. I. Inc., as purchaser, offered to purchase property described as: "132 plus or minus lots, Parcel #1, and 154 plus or minus acres, Parcel #2, in the County of Okeechobee" for a purchases price of $567,600.00 from Nachman Tevlo, et al., seller. Accompanied with this officer, the corporation submitted a $10,000.00 security deposit to be held in trust by the Respondent, Martin County Properties, Inc. In count one of the complaint, it is alleged that the Respondents failed to place that deposit in a trust or escrow account and that on December 31, 1974, Respondent Smith issued a check to the buyer for $7,700.00, which was drawn from its escrow account and that said check was returned for insufficient funds. The complaint alleges that at the time of issuing this check, the Respondent Smith overdrew the firm's escrow account by $402.80 and that by reason thereof, Respondents are guilty of failing to immediately place upon receipt the monies received from persons they dealt with as brokers in an escrow account in violation of Section 475.25(1)(i), Florida Statutes. Robert F. Cochran, Secretary-Treasurer of G.H.I., Inc., the corporate purchaser, acknowledged tendering the deposit in connection with the above referenced transaction. The proposed offer was conditioned on acceptance by two undisclosed partners of which the corporate purchaser had no knowledge of and Respondent Smith was advised to retain the deposit check until such time as the two undisclosed partners accepted the terms of the contract. Respondent Smith was unable to obtain such approval from the undisclosed partners and when the transaction fell through, Respondent returned the original deposit check within one week of the time that he advised the purchasers that the proposed offer was not accepted. Mr. Cochran had no recollection of Respondent Smith ever tendering him a check drawn in the amount of $7,700.00 as alleged in count one of the administrative complaint. (See Commission's Exhibit #1). In count five of the administrative complaint, the Commission alleges in pertinent part that Respondent Smith issued Dwight L. Clemons a check from his trust account drawn in the amount of $4,842.95, which created a deficit in his escrow account of $1,202.20. By such act, it is alleged that the Respondent failed to maintain sufficient monies in his escrow or trust bank account, monies received and entrusted to them by persons dealing with them as brokers until disbursements are properly authorized in violation of Subsection 475.25(1)(i), F.S. Mr. Clemons acknowledged the transaction with Respondent Smith in which he received a return of an escrow deposit in the amount of $4,842.95 which was received in the form of a check which was returned by the bank for "uncollected funds." Mr. Clemons testified that he presented the check to the bank and knowing Respondent Smith, tendered the necessary funds to cover the deficiency and that Respondent Smith returned his money approximately one week later. (See Commission's Exhibit 2). In count six of the administrative complaint, it is alleged that William A. and Agnes Foster, as buyers, made an offer to purchase one half of a duplex in Jensen Beach, Florida, and to secure such offer, they made a security deposit of $1,000.00 to Respondent Smith. It is alleged that Respondent Smith failed to deposit the $1,000.00 in his escrow account and on October 10, 1974, he deposited only $500.00 in his account from this transaction. By reason thereof, it is alleged that the Respondent failed to immediately place in his escrow or trust bank account, upon receipt, monies etc. entrusted to him until disbursements thereof were properly authorized in violation of Subsection 475.25(1)(a), F.S. William Foster acknowledged the subject transaction and his tender of the $1,000.00 deposit. He testified that the seller, Miriam Fell, accepted his offer on or about November 8, 1974, and that the transaction closed without difficulty. However, an examination of Martin County Properties, Inc., trust account statement for the month ending October 1, 1974, reveals that on October 10, 1974, a $500.00 credit was entered on the subject trust account and an examination of the September 4, 1975, check drawn in the amount of $1,000.00 and issued by William A. Foster revealed that the check was deposited in Martin County Properties' trust account on October 10, 1974, the same date that the $500.00 deposit appears on the October trust account statement. Count eight alleges in pertinent part that Respondent Smith received an escrow deposit of $2,500.00 from Jansje Welm, toward the purchase of the "Gideon Property" on Indian River Drive in Jensen Beach. It is further alleged that approximately eight (8) days later, without permission of Jansje Welm, Respondent issued to Martin County Properties, Inc., a check in the sum of $1,000.00 which left a balance in his escrow account of approximately $1,597.00 and that by reason thereof, Respondent Smith is guilty of failing to maintain in an escrow or trust bank account monies received from persons dealing with him as a broker, where such funds should have been kept until properly disbursed or otherwise authorized, in violation of Subsection 475.25(1)(i), F.S. Mrs. Welm testified that she advanced Respondent Smith, a $2,500.00 deposit to secure an offer which she was led to believe consisted of a syndication of approximately six or either others who were interested in purchasing the "Gideon Properties." The transaction did not close and as of the hearing date she had not received a refund or her escrow deposit. An examination of Respondent Martin Counties, Inc., trust account for the month ending December 31, 1974, reveals that a $2,500.00 deposit was made on approximately December 12, 1974, and that for the month ending December 31, 1974, the account was overdrawn by $402.80. This of course covers the time period in which Mrs. Welm had tendered her $2,500.00 deposit toward the "Gideon Properties" and at no time during the period December 6 through December 31, did the statement reveal that Mrs. Welm's deposit was returned. It was noted that a deposit was made during the period December 23 through 27, in the amount of $5,000.00, however, this deposit apparently failed to clear based on insufficient funds. (See, Commission's Exhibit #9). It was also noted that the $2,500.00 check issued by Mrs. Welm was honored by her bank on December 16, 1974, and that during the period in which she drew her check i.e., December 9 through December 23, 1974, the firm's trust account at no time had a balance in excess of $2,297.20. (See, Commission's Exhibit #6). In count ten it is alleged that Respondent Smith also received from his salesman, Jack K. Follrath, a check in the amount of $2,500.00 to be held in escrow toward the purchase of the Gideon Properties. This check was issued by Jerry Warwin and was made payable to the firm's trust fund. It is alleged that on January 8, 1975, Respondent Smith exchanged that check for a cashier's check at the First National Bank and Trust Company which he placed in his personal account. It is further alleged that on March 18, 1975, Warwin's attorney demanded the return of the $2,500.00 which Warwin received on June 18, 1975. By this act it is alleged that the Respondents are guilty of failure to maintain in their escrow account funds entrusted to them in violation of Subsection 475.25(1)(i), F.S.; and are guilty of forming an intent, design or scheme to defraud, appropriate or otherwise convert properties entrusted to them in violation of Subsection 475.25(1)(a), F.S. Warwin testified that while he gave the Respondents no specific instructions to place the money in an escrow account, he was led to understand that the deposit would be escrowed until the sales transaction for the property closed. He testified that after making repeated demands for the return of his deposit, first by himself and ultimately through his attorney, it was returned. Jack Follrath, a salesman for Jackson County Properties, acknowledged receipt of the $2,500.00 check from Jerry Warwin and expressed his opinion that the money was not to be deposited until sufficient escrow deposits were received to effect the closing. The check representing the deposit made by Jerry Warwin was introduced and an examination thereof reveals that it was drawn on January 5, 1975, in the amount of $2,500.00 and was paid by his bank on January 8, 1975. An examination of the firm's trust account statement reveals that on January 8 a $2,500.00 deposit was in fact made, however, on January 13 the account balance was $293.20 which was the same amount remaining in the account as of January 31, 1975. And, of course, at no time during the period of January 8 through January 31, 1975, was Mr. Warwin's $2,500.00 deposit returned. In count eleven, it is alleged in pertinent part that on February 6, 1975, Respondent Smith issued check no. 259 on his trust account made payable to Commercial Trend Development, Inc., for $750.00 and marked "refund - Carter"; that on February 18, 1975, Respondent Smith deposited from the firm's operating account $457.00 in the said trust account and that on February 23, 1975, the check for $750.00 written previously cleared, leaving a total balance of $18.20 in Respondent Smith's trust account. It is alleged that based on the foregoing, Respondents failed to maintain trust funds in their escrow account until such were properly disbursed in violation of Subsection 475.25(1)(i), F.S. Roy Glancy, the real estate salesman who was involved with the Respondent in connection with the Carter transactions, testified that he intended to purchase a piece of property from the Carters which is located in the Dixie Park Subdivision of South Stuart. He acknowledged payment of the $750.00 deposit and indicated that when the transaction did not close, he received a refund of his deposit. It is alleged in count four that on July 15, 1974, Respondent Smith received a deposit of $2,200.00 to be held in trust on the purchase of property known as the "Krueger" property by C & D Contractors, which he (Smith) deposited in his escrow account; that on July 16, 1974, without the permission of C & D Contractors, issued check no. 236 from his escrow account in the amount of $900.00 payable to Martin County Properties, Inc., leaving a balance in his escrow account of $1,360.83 as of July 31, 1974, which amount represented the closing balance for the firm's escrow account for the month of July. It is further alleged that on September 6, Respondent Smith issued a check drawn on his trust account to C & D Contractors in the amount of $2,200.00 marked "deposit refund on Krueger Property" which was returned for uncollected funds. Thereafter on September 23, 1974, Respondent Smith paid C & D Contractors by cashier's check, the sum of $2,200.00 which represented the earnest money deposit placed on the Krueger property. Robert Coy, President of Coy and Deggeller Construction Co. of Stuart, Florida, testified that he made an offer to purchase the Krueger properties to Respondent Smith which offer was accompanied by an earnest money deposit of $2,200.00. Mr. Coy testified that his offer was tendered to Respondent Smith on July 16, 1974, and that when he did not receive any notification from Respondent Smith regarding whether or not his offer had been accepted, he demanded the return of the deposit which occurred during early September 1974. Commission's Exhibit #15 reveals that the $2,200.00 deposit above referred to was deposited into Respondent's trust account on the same date on which the check was drawn, i.e., July 16, 1974. (See, Commission's Exhibits #15 and #11). On that same day, a $900.00 check and/or debit was made to the account leaving a balance of $1,360.83. The firm's account statement reveals that this balance ($1,360.83) was constant throughout the period from July 17 to July 31. During the period July 17 through July 31, Mr. Coy did not receive a refund of his $2,200.00 deposit. Mrs. Betty White, the head bookkeeper of Jensen Beach Bank, the banking institution in which the Respondent Martin County Properties, Inc., maintains its trust account, testified that she provided the firm's account statements pursuant to subpoena and that the account's statements were under her custody and control, and that they were kept and maintained during the normal course of the bank's business. While the Respondent's counsel objected to the introduction of copies of the firm's trust account statements, Mrs. White creditably testified that the original of such account statements were forwarded to the firm (depositor) at the end of each month and that the bank has at its disposal, only microfilm of the originals. Based thereon, Respondent's counsel's objection to the introduction of copies was overruled.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby recommended as follows: That the Respondents be found not guilty of the allegations contained in counts one, two, three, seven, nine and eleven of the administrative complaint and, therefore, that they be dismissed. That the Respondents be found guilty of the allegations contained in counts four, five, six, eight, ten, twelve and thirteen of the administrative complaint filed by the Petitioner. That the Respondent Smith's registration with the Florida Real Estate Commission as a real estate broker be revoked. That the Respondent Martin County Properties, Inc.'s, registration as a real estate corporate broker with the Florida Real Estate Commission be revoked. DONE AND ENTERED this 30th day of March 1977 in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of March 1977. COPIES FURNISHED: Frederick H. Wilsen, Esquire 2699 Lee Road Winter Park, Florida 32789 R. J. Randolph, Sr., Esquire R. Jerry Randolph, Jr., Esquire Randolph and Randolph, P.A. 201 East Osceola Street Stuart, Florida 33494
Findings Of Fact The parties stipulated to facts set forth in paragraphs 1-8, below. Stipulated Facts The Petitioner is the Division of Real Estate of the Department of Professional Regulation. As such, Petitioner acts as the licensing and regulatory agency for real estate broker licensees. The Respondent is Harriet M. Arndt, holder, at all times pertinent to these proceedings, of license number 0002216 issued by Petitioner. Her address of record is One South Ocean Boulevard, Suite 322, Boca Raton, Florida 33431. On January 28, 1987, Respondent received in trust an earnest money deposit in the amount of $39,000 from a buyer for a piece of property listed with another realtor, Merrill Lynch Realty, Inc. At closing of the sales transaction on February 25, 1987, Respondent delivered a check drawn on her trust account in the amount of $15,600 and made payable to Merrill Lynch Realty, Inc. This payment represented payment of one half of the $31,200 real estate brokerage commission. The check was subsequently returned to Merrill Lynch Realty, Inc. due to "non-sufficient funds." On March 27, 1987, Respondent delivered a cashier's check in the amount of $15,600 to Merrill Lynch Realty, Inc., to replace the February 25, 1987, check. The Respondent's real estate brokerage trust account was overdrawn from January 8, 1987 through March 4, 1987, by amounts ranging from $12,991.39 to $14,306.53 on various days during that period. The Respondent failed to maintain the $39,500 earnest money deposit in her trust account from February 2, 1987 until February 25, 1987, because the trust account's daily balance was less than that amount during that period. The Respondent subsequently failed to maintain the $15,660 due to Merrill Lynch Realty Inc., in the trust account from February 25, 1987, through March 25, 1987, because the trust account's daily balance was less than $15,600. From March 19, 1987, through October 29, 1987, Petitioner's investigator requested Respondent to produce for inspection and copying those books and papers relating to Respondent's trust account which are maintained in connection with Respondent's real estate activities. The Respondent failed to make the requested trust account books and records available at any time. Other Facts The Respondent offered mitigating testimony establishing that she was initially licensed in 1978 and has never been censured by Petitioner for any professional violations. She is 57 years of age and her real estate license is her sole source of support. Further, Respondent has borrowed money from her children to make up the deficit in her trust account. The testimony of Respondent also established that she was introduced to a gentleman named Robert H. Lajoie by another realtor in December of 1986. Subsequently, on or about December 8, 1986, Respondent entered into a nefarious arrangement with Lajoie. Under terms of the arrangement, Lajoie gave Respondent a check for $25,500 as a deposit to purchase a property listed with Respondent. In turn, Respondent gave Lajoie back a cash deposit of $10,000 from her trust fund in connection with a contract between the two of them whereby Respondent was to purchase a property of Lajoie's. The closing of the sale of Lajoie's property to Respondent would not take place until May, 1987. Lajoie returned to his native Canada shortly after receiving the $10,000 cash payment from Respondent and died. Shortly thereafter, payment on Lajoie's $25,500 check to Respondent was stopped. The Respondent is not sure whether this action was taken by Lajoie prior to his death or by his estate subsequent to that event. It is Respondent's contention that the loss of the $10,000 cash deposit to Lajoie resulted in a negative net balance in her trust account and eventually all of her financial difficulties in this case. The Respondent was sent an overdraft notice by her bank on January 8, 1987, stating that her trust account was overdrawn by $13,500 and that a check for $25,500 had been returned. Subsequent overdraft notices dated January 13, 1987 and January 21, 1987, were received by Respondent noting the rejection of two of Respondent's checks; one in the amount of $294.90 and the other in the amount of $34.35. The notice of January 13, 1987, indicated a hold on the account in the amount of $2,862.94 against the account's balance of $3,006.19. The January 21, 1987, notice continued this hold on the account's balance of $2,891.45. The Respondent related a series of personal matters at hearing that had prevented her from keeping appointments with Petitioner's investigators to inspect her records. She agreed to make access to those records immediately available.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered finding Respondent guilty of the offenses charged in the administrative complaint, imposing an administrative fine of $1,000 and suspending her license for a period of six months. DONE AND RECOMMENDED this 22nd day of July, 1988, in Tallahassee, Leon County, Florida. DON W. DAVIS 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 22nd day of July, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-1472 The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings 1-2. Included in finding 1. 3-8. Included in findings 3-8 respectively. Respondent's Proposed Findings 1. Included in finding 2. 2-5. Included finding 10. Included in finding 3. Included in finding 4, 5, and 10. Included in finding 8 and 12. 9-10. Rejected. 11. Included in finding 9. COPIES FURNISHED: Steve W. Johnson, Esquire Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802 Robert E. Gordon, Esquire 2601 Tenth Avenue North Suite 314 Lake Worth, Florida 33461-3197 William O'Neil, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Darlene F. Keller, Acting Director Department of Professional Regulation Division of Real Estate 130 North Monroe Street Tallahassee, Florida 32399-0750
The Issue Whether Respondents committed the offenses set forth in the six-count Administrative Complaint dated October 15, 2003; and, if so, what penalty should be imposed.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made: The Department of Business and Professional Regulation, Division of Real Estate (the "Department"), is the state agency charged with enforcing the statutory provisions pertaining to persons holding real estate broker and sales associate's licenses in Florida, pursuant to Section 20.165 and Chapters 455 and 475, Florida Statutes (2003). At all times relevant to this proceeding, Respondent Richard R. Page, was a licensed Florida real estate broker/officer, having been issued broker license no. KB-0148248. He was the qualifying broker for Aztec Realty. At all times relevant to this proceeding, Respondent Aztec Realty, was a corporation registered as a Florida real estate broker, having been issued corporate registration no. CQ-0156640. Aztec Realty's business location was 4456 Tamiami Trail, Charlotte Harbor, Florida 33980. Barbara Kiphart was a 13-year employee of the Department who had performed thousands of audits of broker records. After conducting agent interviews on an unrelated matter in the office of Aztec Realty, she informed Mr. Page that she planned to perform an audit of the corporation's escrow accounts. Ms. Kiphart testified that it was routine for the Department to perform such audits when visiting brokers' offices for other reasons. Ms. Kiphart informed Mr. Page that she would need all documents necessary to complete an audit of Aztec Realty's escrow accounts, including bank statements, account reconciliations, and liability lists. Mr. Page referred Ms. Kiphart to Cheryl Bauer, Aztec Realty's financial manager. With Ms. Bauer's assistance, Ms. Kiphart completed the audit on June 12, 2003. Three accounts were examined: the sales escrow account; the security deposit account; and the property management account. The sales escrow account was found to be in balance, with liabilities equal to the bank balance of $382,300.52. The security deposit account was found to have liabilities of $45,533.29 but only $16,429.84 in its bank balance, a shortage of $29,103.45. The property management account was found to have liabilities of $22,545.54 but only $16,594.71 in its bank balance, a shortage of $5,950.83. Ms. Kiphart testified that the security deposit account had not been reconciled in the year 2003, and she had no way of saying when it was last reconciled. She determined the account's balance from Aztec Realty's bank statements, but had to extrapolate the liabilities from a computer printout of security deposits. Ms. Bauer testified that she handles the finances for all aspects of Aztec Realty's real estate sales business, including the sales escrow account, and that she was able to provide all the information Ms. Kiphart needed to audit that account. However, Ms. Bauer had no responsibility for the other two accounts, both of which related to the rental property management side of Aztec Realty's business. She had to obtain information about those accounts from Jill Strong, her newly- hired counterpart in property management. At the time she provided the computer printout on the property management accounts to Ms. Bauer and Ms. Kiphart, Ms. Strong told them that she knew the numbers were inaccurate. Aztec Realty had purchased Tenant Pro, a new rental management software package, in 2001. In the course of approximately 18 months, Aztec Realty had three different employees in Ms. Strong's position. One of these short-term property managers had misunderstood the software for the security deposit account. Opening balances were entered for accounts that had, in fact, already been closed out with the deposits returned. This had the effect of inflating the apparent liabilities in that account. The previous property manager was also unable to print checks on the printer attached to her computer terminal. Ms. Bauer would print the deposit refund checks on her own printer, with the understanding that the property manager was recording these entries against the security deposit account. Ms. Strong discovered that these entries had not been recorded. Thus, monies that had been paid out to owners, renters, and vendors were never recorded anywhere besides a sheet that Ms. Bauer kept for printing out checks, again inflating the account's apparent liabilities. Ms. Strong had been working for Aztec Realty for about one month at the time of the audit. She was still in the process of sorting out the problems in the security deposit account, hence her statement to Ms. Bauer and Ms. Kiphart that she knew the numbers were inaccurate. Subsequent to the Department's audit, Ms. Bauer and Ms. Strong commenced their own audit of the security deposit and property management accounts. Their efforts were complicated by a storm and tornado that struck the area on June 30, 2003. The offices of Aztec Realty suffered over $100,000 in damage, including water damage to the roof that caused the office to be flooded. Records were soaked and Ms. Strong's computer was destroyed. By mid-July 2003, Ms. Bauer and Ms. Strong had completed their corrected audit of the security deposit account. They concluded that the actual shortfall in the account was $13,764.43. That amount was immediately transferred from the real estate operating account to the security deposit account to bring the latter account into balance. The real estate operating account was essentially Mr. Page's personal funds. As to the property management account, also referred to as a "rental distribution" account, Ms. Bauer and Ms. Strong performed a subsequent audit indicating that the account was out of balance on the positive side. They discovered that there were items paid out of the property management account that should have been paid from escrow and vice versa. When the audit brought the accounts into balance, the property management account was approximately $200 over balance. In an audit response letter to Ms. Kiphart dated July 16, 2003, Mr. Page acknowledged that the property management account had been improperly used to pay occasional expenses, but also stated that the practice had been discontinued. At the hearing, Mr. Page conceded that no reconciliations had been performed on the security deposit account or the property management account from at least January 2003 through May 2003. Mr. Page and Ms. Bauer each testified that the corrective actions taken in response to the audit have been maintained and that there have been no accounting problems since June 2003. Aztec Realty has contracted to sell its property management department. The evidence established that no client of Aztec Realty or other member of the public lost money due to the accounting discrepancies described above. Neither Mr. Page nor Aztec Realty has been subject to prior discipline. Mr. Page has worked in the real estate business in the Port Charlotte area for nearly 30 years and is a past president of the local association of realtors. He credibly expressed remorse and testified that, given his position in the community, he was "mortified" at having allowed his company to be placed in this position. Aztec Realty has operated for nearly 30 years and currently has 20 employees and approximately 65 agents.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order: Dismissing Counts II and III of the Administrative Complaint against Mr. Page; Dismissing Counts V and VI of the Administrative Complaint against Aztec Realty; Imposing an administrative fine against Mr. Page in the amount of $1,000 for the violation established in Count I of the Administrative Complaint; and Imposing an administrative fine against Aztec Realty in the amount of $1,000 for the violation established in Count IV of the Administrative Complaint. DONE AND ENTERED this 27th day of July, 2004, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of July, 2004.
The Issue The issues are whether Respondents committed fraud, in violation of Section 475.25(1)(b), Florida Statutes; failed to prepare monthly trust account reconciliations, in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code; failed to account for or deliver funds, in violation of Section 475.25(1)(d)1, Florida Statutes; and failed to preserve books and accounts, in violation of Rule 61J2-14.012(1), Florida Administrative Code.
Findings Of Fact At all material times, Respondent Maria L. Nuevo (Respondent) was a licensed real estate broker, holding license number 3006548. Respondent was first licensed, as a real estate salesperson, in Florida in 1984 and became a broker in 1986. Respondent is president of, and qualifying broker for, Respondent Realco Realty, Inc. (Realco Realty), which is a corporation registered as a real estate broker, holding license number 1011738. In late August or early September 2000, Respondent prepared a Residential Sales and Purchase Contract (Contract) on behalf of Omar Canizares, as buyer, to purchase a residence at 10620 Southwest 139th Street in Miami (Property). The Contract provided for a purchase price of $260,000 and a deposit of $1000 to be held by Realco Realty. Respondent presented the Contract to Zoila de Castro, a real estate broker who was representing Antonio and Lorraine Lambo, and Mrs. Lambo. The record is poorly developed on these points, but it appears that Mr. and Mrs. Lambo jointly owned the Property and that both of them never signed the Contract. Respondent left the Contract with Mrs. Lambo because Mr. Lambo was out of town. A few days later, Ms. de Castro returned the Contract to Respondent, intending to convey a counteroffer that raised the purchase price to $265,000 and the deposit to $5000--to be paid within three days after the inspection. However, the Contract delivered by Ms. de Castro to Respondent is notable for two omissions--a signature of one of the Lambos and a deadline for Canizares' acceptance of the counteroffer. Ms. de Castro's testimony that she delivered to Respondent the only original contract with signatures of both Lambos is discredited for two reasons. First, Respondent would likely use the better version of the Contract--i.e., the one with both sellers' signatures--when providing a copy to the appraiser. Second, Ms. de Castro appears to have maintained, at best, an imperfect grasp of all that was transpiring in this attempted transaction and may be claiming to have delivered a fully signed contract--though still without a deadline for Mr. Canizares' acceptance--in order to place herself in a better light. At this point in the transaction, the lack of an enforceable agreement between Mr. Canizares and the Lambos should have been obvious to the Lambos' real estate broker, but it was not. The testimony depicts a series of unanswered letters and unsatisfied demands, as the Lambos initially tried to get the deal to close and eventually tried only to get the deposits, which they believed now totalled $5000. In fact, neither Respondent held any deposit. Although relieved from the obligation to collect another $4000 in deposit, due to the failure of the parties to come to an agreement, Respondents had misrepresented to the Lambos and Ms. de Castro that they held the initial $1000 deposit. Although Petitioner has failed to prove other fraudulent acts by either Respondent toward the Lambos or Ms. de Castro, Petitioner has proved another fraudulent act by Respondents in connection with this transaction. Exploiting Ms. de Castro's lack of diligence, Respondents appear to have shopped the Contract. On September 22, 2000, Respondent ordered an appraisal on a form showing the purchase price as $325,880. At the request of the appraiser, Respondent sent to the appraisal a copy of an altered Contract, which provided for a purchase price of $310,100 and reflected total deposits of $5000. The Lambos-Canizares sale never closed, and the Lambos never received any money representing the deposit that they claimed to be owed. Respondents opened an escrow account in September 2000, but had never performed written monthly escrow reconciliation for their trust account through the date of the audit in February 2001. Additionally, at the time of the audit, Respondents were unable to produce any documentation pertaining to their real estate practice. However, Respondents later produced banking records and reconciliations for January and February 2001, which were undoubtedly prepared after the February 2001 audit.
Recommendation It is RECOMMENDED that the Florida Real Estate Commission enter a final order revoking the real estate broker licenses of Maria L. Nuevo and Realco Realty, Inc. DONE AND ENTERED this 29th day of May, 2003, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of May, 2003. COPIES FURNISHED: Nancy P. Campiglia, Acting Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street, Suite 802, North Orlando, Florida 32801 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202 Christopher J. DeCosta Senior Attorney Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street, Suite N-809 Orlando, Florida 32801 Michael H. Wolf Michael H. Wolf & Associates, LLC. 3832 North University Drive Sunrise, Florida 33322
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times material to these proceedings, petitioner, now 26 years of age, has been a resident of the State of Florida. Although he has never been declared incompetent, petitioner has suffered emotional and psychological problems before and since the execution of the Trust Agreement in dispute herein. The Agreement was executed and acknowledged in December of 1971, shortly after petitioner attained his majority. Originally names as trustees were petitioner's mother and Manufacturers Hanover Trust Company of New York, a corporate fiduciary having its principal place of business in New York City. Since the death of petitioner's mother in 1973, petitioner's uncle, James T. Lewis, Jr., and a New York attorney, Thomas P. Ford, have served as co-trustees with Manufacturers Hanover Trust Company. The situs of the trust corpus is New York. Pursuant to the provisions of Florida Statutes Chapter 199, petitioner filed intangible personal property tax returns for 1974 and 1975 reflecting the assets held under the Trust Agreement. (Exhibits 1 and 2). For the year 1974, petitioner paid intangible taxes in the amount of $3,268.29. The amount of $2,069.54 was paid for the year 1975. Contending that the intangible personal property taxes were paid in error, petitioner filed with the respondent Office of the Comptroller a request for refund. (Exhibit 4). By letter dated August 18, 1976, respondent Office of the Comptroller agreed with the position taken by the respondent Department of Revenue and denied petitioner's request for a refund. The basis for the Department of Revenue's determination was that petitioner had a taxable beneficial interest in the trust since his power to revoke and amend was not limited within the meaning of F.A.C. Rule 12B-2.02(3)(e). (Exhibit 5) Petitioner's right of revocation is reserved in Article Tenth of the Trust Agreement, which provides as follows: "The Settlor shall have the right at any time and from time to time, by an instru- ment in writing duly acknowledged and delivered to the Trustees, to revoke or amend this Agreement, in whole or in part with the written consent of the Trustees." (Exhibit 3, page 19) Article Ninth of the Trust Agreement provides that the Trust shall be governed and construed under the laws of the State of New York. (Exhibit 3) It was the testimony of one of the individual trustees and one of the officers of the corporate trustee (both residents of New York) that while there was no condition precedent to the initial request by petitioner for revocation or amendment of the Trust Agreement, the same could not be accomplished without the consent of the trustees. It would be the responsibility of the trustees to exercise their discretion as to whether the request was in the best interest of petitioner. These trustees did not consider their consent to be simply a ministerial duty, but rather a sound exercise of discretion. (Exhibits 6 and 7)
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that the Office of the Comptroller refund to petitioner the 1974 and 1975 intangible personal property taxes paid by him in the total amount of $5,337.83. Respectfully submitted and entered this 24th day of June, 1977, in Tallahassee, Florida. COPIES FURNISHED: Gerald A. Lewis, Comptroller State of Florida The Capitol Tallahassee, Florida 32304 Manley P. Caldwell, Jr. Caldwell, Pacetti, Barrow, and Salisbury Royal Park Building 324 Royal Park Way Palm Beach, Florida 33480 Edwin J. Stacker Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 DIANE D. TREMOR Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675
The Issue In this disciplinary proceeding, the issues are whether Respondents, who are licensed real estate brokers, failed to preserve and make available certain records relating to trust accounts and real estate transactions, and/or obstructed or hindered Petitioner's investigators in an official investigation, as alleged by Petitioner in its Administrative Complaint. If Petitioner proves one or more of the alleged violations, then an additional question will arise, namely whether disciplinary penalties should be imposed on Respondents, or either of them.
Findings Of Fact The Parties Respondent Nestor G. Mendoza ("Mendoza") is a licensed real estate broker subject to the regulatory jurisdiction of the Florida Real Estate Commission ("Commission"). Respondent Diamonds Realty of Miami Beach, Inc. ("Diamonds Realty") 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. Mendoza is an officer and principal of Diamonds Realty, 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 Diamonds Realty engaged in any conduct distinct from Mendoza's in connection with the charges at issue. Therefore, Respondents will generally be referred to collectively as "Mendoza" except when a need to distinguish between them arises. Petitioner Department of Business and Professional Regulation ("Department"), Division of Real Estate, has jurisdiction over disciplinary proceedings for the Commission. At the Commission's direction, the Department is authorized to prosecute administrative complaints against licensees within the Commission's jurisdiction. On January 15, 2008, Veronica Hardee, who was then employed by the Department as an investigator, conducted an audit of Mendoza's records at Mendoza's real estate brokerage office, which was located in Miami Beach. Ms. Hardee was accompanied by her supervisor, Brian Piper. Ms. Hardee knew Mendoza because, in the latter part of 2007, she had investigated a consumer complaint against him, which arose from a transaction that had taken place in the fall of that year. In the course of that investigation, which focused on the period from August 20, 2007 through November 30, 2007, Mendoza had provided Ms. Hardee with business records, including bank statements and documents relating to the brokerage's escrow account. Ms. Hardee's previous investigation had not resulted in charges of wrongdoing being brought against Mendoza. During the audit, Ms. Hardee asked to review some of Mendoza's business records. She testified about this on direct examination as follows: Q. All right. Did you tell [Mendoza] what he would need to bring——or what he could expect from an audit? A. I don't remember, but usually procedure [sic], I would tell them we need to see older escrow accounts, older operating accounts, deposit slips, deposit checks, anything that has to do with their financial matters. Final Hearing Transcript ("TR.") 40-41 (emphasis added). On cross examination, Ms. Hardee elaborated: Q. (BY MR. MENDOZA) . . . I remember quite well that you did not ask me for the whole year of——for instance, of 2004, you never asked me for whole year, you asked me for a certain month; is that correct? * * * THE WITNESS: During the investigation I requested certain documents, yes. You're correct, I asked you for certain months, you had different issues with the Department that I was looking at. . . . * * * You didn't provide all the months requested and we came to the audit, you didn't provide——at that time, we asked you to see all of your accounts, it just wasn't for the investigation, we wanted to see your escrow account so you should have had for——I don't remember the——we wanted 1-15-08, we would have done from January of '08 to six months prior, let's just say. I don't remember what dates we gave you at the time. But then you would have a file with those documents in your escrow reconciliation statement, with all of your checks, all of your deposits with the bank statement attached, you know, organized. But it wasn't so and you said that you wanted to organize it properly and that's why we allowed you to organize it. So the question, did you provide me documents, yes, you provided me documents in the investigation but not all of the documents requested. TR. 58-60 (emphasis added). The undersigned attempted to elicit from Ms. Hardee a more detailed description of the materials requested during the audit, giving rise to the following exchange: THE HEARING OFFICER: Okay. And can you describe for me what it was in particular that you did request on that day in January of 2008? What did you ask [Mendoza] for? THE WITNESS: Yeah. We asked him for his escrow documents, reconciliation statements, such as the one that you see in [Petitioner's Composite] Exhibit 3. We asked about those months that were missing. We asked him——I don't know if we asked him for six months or one year. I don't remember the time frame we gave him, but pretty much when we go in to do an audit, we get the last six months, usually the months that are particularly discussed, the checks or the deposits that we're looking into for an investigation. * * * So pretty much that's what we asked, all of his escrow operating account that we had for the company, which includes the reconciliation statement, bank statement, deposit checks, as the statute statues here. THE HEARING OFFICER: Okay. You're standard procedure would have been you say in an audit like this, to have asked for the last six months of records right? So you're nodding your head, that's a yes? THE WITNESS: Yes. In this case we asked for the months that I was missing and plus I wanted to do a whole——we were going to do a whole audit. I don't remember right now if I asked him for six months or twelve months, I don't remember that part, but usually we ask for all the documents. THE HEARING OFFICER: And if I could just ask you to clarify do there's no mistake about this, when you say the months that are missing, what months are you referring to? THE WITNESS: I'm sorry, November of '04 and December of '04. TR. 73-75 (emphasis added). The Department did not, at the time of the audit, reduce its request for records to writing, which is unfortunate for the Department because, as the above-quoted testimony shows, Ms. Hardee's memory of specifically what Mendoza had been asked to produce was spotty. Although Ms. Hardee did identify two particular months——November and December of 2004——for which contemporaneous records were sought, this detail is practically random (because no context was given to explain the description of these periods, which predated the audit by more than three years, as "missing" months) and, in any event, fails to make the testimony as a whole explicit or distinctly remembered. The undersigned finds that Ms. Hardee's testimony was insufficiently precise to constitute clear and convincing evidence concerning the particular items that the Department wanted to see. Even if Ms. Hardee's testimony were sufficient on the previous point, however, the proof regarding Mendoza's alleged failure to produce records, which is a separate issue, is less compelling. Ms. Hardee's testimony was that Mendoza made available some but not all of the documents she and Mr. Piper wanted to see. (Actually, a fairer characterization of Mendoza's relative compliance, accepting Ms. Hardee's testimony as true, would be that he produced most of the documents requested, namely six-to-12 or 13 months' worth, failing only to make available documents associated with the last two or three months of 2004.) Mendoza then requested, and was given, additional time to assemble the rest of the materials. For some reason, Mendoza never contacted the Department thereafter to produce the items he could not locate on January 15, 2008, which caused the Department to initiate the instant proceeding. The undersigned largely credits Ms. Hardee's testimony regarding this overview of the events, with the qualification that Mendoza's compliance, while less than 100 percent, was nevertheless substantial. (He might, after all, have produced satisfactorily as much as 13 months' worth of documents, according to Ms. Hardee's testimony.) Given that Mendoza is alleged to have failed only to produce specific documents relating to the particular period from October through December 2004, the undersigned infers that he produced everything else that the Department wanted to see. The Department did not, however, at the time of the audit (or later), prepare an inventory of the records Mendoza made available (or failed to produce), take copies of the materials Mendoza produced, or otherwise reduce to writing the particulars of his noncompliance (e.g. by sending him a letter, soon after the audit, reminding him of the obligation to produce the materials that were not accessible on January 15, 2008, and listing or describing those materials). The absence of a contemporaneous written record of Mendoza's alleged failure to make documents available at the audit is unfortunate for the Department because, on the question of what Mendoza did and did not produce, Ms. Hardee testified as follows: THE HEARING OFFICER: All right. And when you went back in January of 2008 to see the ——Mr. Mendoza at his office and audit his books and records, he produced nothing to you and your supervisor whatsoever on that date in response to the things that you requested to see? THE WITNESS: He may have provided certain documents but were incomplete. I do not remember which documents he provided. * * * I'm not saying he didn't provide me with anything. He didn't provide us with all of the documents we requested. TR. 71-72 (emphasis added). In sum, the evidence against Mendoza consists of the testimony of Ms. Hardee, who in a nutshell says that, while she cannot clearly remember exactly what the Department asked Mendoza to produce, she knows that she requested documents relating to November and December of 2004, and that, while she cannot remember what documents Mendoza made available, she is sure he did not produce everything associated with the fourth quarter of 2004. Assuming for argument's sake that the Department requested the specific documents Mendoza is charged with failing to produce (which is not entirely clear), and accepting that Mendoza did not produce everything that the Department asked to see, the Department's evidence is still too conclusory to support disciplinary action, in view of Ms. Hardee's testimony that the temporal scope of the Department's request for documents was not limited to the three-month period comprising the fourth quarter of 2004 and indeed might have covered 15 months or more. Because, as found above, Mendoza did produce a substantial, albeit indeterminate, amount of documentation, and because there is no clear proof regarding the contents of the records that Mendoza made available, the undersigned is unable to find, based on clear and convincing evidence as the law requires, that Mendoza failed to produce the documents he has been accused of failing to produce. The Charges In Counts I and V of the Administrative Complaint, the Department alleges that Mendoza and Diamonds Realty are guilty of failing to preserve and make available to the Department all deposit slips and bank statements associated with the broker's trust account(s), in violation of Florida Administrative Code Rule 61J2-14.012(1), which is a disciplinable offense under Section 475.25(1)(e), Florida Statutes. In Counts II and VI, it is alleged that Mendoza and Diamonds Realty failed to prepare written monthly statements comparing the broker's total trust liability to the bank balance(s) in the broker's trust account(s), in violation of Florida Administrative Code Rule 61J2-14.012(2)-(3). This alleged violation is a disciplinable offense under Section 475.25(1)(e), Florida Statutes. In Counts III and VII, the Department accuses Mendoza and Diamonds Realty of having failed to preserve and make available to the Department books, accounts, and records pertaining to the brokerage business, in violation of Section 475.5015, Florida Statutes. This alleged violation constitutes a disciplinable offense under Section 475.25(1)(e), Florida Statutes. In Counts IV and VIII of its Administrative Complaint, the Department asserts that Respondents obstructed or hindered the enforcement of Chapter 475, Florida Statutes, in violation of Section 475.42(1)(i), Florida Statutes, which is a disciplinable offense under Section 475.25(1)(e), Florida Statutes. Ultimate Factual Determinations As found and explained above, the evidence is insufficient to prove, clearly and convincingly, that Respondents failed to make available the specific records they are alleged to have withheld. At most the evidence establishes that Respondents were unable, on January 15, 2008, to produce an imprecisely identified (and not clearly proved) subset of the universe of documents that the Department's investigators sought to examine during the audit. This is insufficient to prove, much less clearly and convincingly to demonstrate, that Respondents failed to keep or preserve any particular documents. There is no persuasive evidence that Respondents obstructed or hindered the Department's audit. To the contrary, the evidence shows that Mendoza cooperated with the Department's investigators and substantially complied with their demands. Ultimately, therefore, it is found that Respondents are not guilty of the offences charged in Counts I through VIII of the Administrative Complaint.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order finding Mendoza and Diamonds Realty not guilty of the offenses charged in the Administrative Complaint. DONE AND ENTERED this 30th day of June, 2009, 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 30th day of June, 2009. COPIES FURNISHED: Patrick J. Cunningham, Esquire Department of Business and Professional Regulation 400 West Robinson Street Hurston Building-North Tower, Suite N801 Orlando, Florida 32801 Nestor G. Mendoza Diamonds Realty of Miami Beach 12501 Southwest 26th Street Miami, Florida 33175 Thomas W. O'Bryant, Jr., Director Division of Real Estate 400 West Robinson Street, Suite 802, North Orlando, Florida 32801 Reginald Dixon, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 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 Whether Petitioner is entitled to licensure as a real estate salesperson.
Findings Of Fact Respondent is the agency of the State of Florida responsible for the licensure of real estate professionals. On October 19, 1993, Petitioner submitted to Respondent his application for licensure as a real estate salesperson. In his application, Petitioner disclosed that he had been disbarred as a member of the Florida Bar by decision of the Florida Supreme Court. The actions for which Petitioner was disbarred were described in detail by the Florida Supreme Court's decision in The Florid Bar v. Ellis S. Simring, 612 So.2d 561 (Fla. 1993). The Florida Supreme Court found that there was clear and convincing evidence that Petitioner had repeatedly and intentionally violated trust accounting procedures, had commingled trust and personal funds, and had misappropriated client funds for his personal use. The Florida Supreme Court further found that the Petitioner had violated the Court's order that temporarily suspended him from practice. Petitioner denied that he misappropriated funds from any client, but he admits the other major violations found by the Supreme Court. Petitioner testified that he was suffering from chronic fatigue syndrome and flu-like symptoms when the trust account violations occurred during 1988 and 1989. As a result of a recommendation from an acquaintance, he took large doses of Vitamin C, which aggravated his hemorrhoidal condition and resulted in bleeding. Petitioner testified that his ability to practice law was limited by his medical condition and that his income from his practice suffered as a consequence. Petitioner testified that his secretary acted as his administrative assistant during that period of time and that she was responsible for maintaining his trust account, but he did not attempt to blame her for the admitted deficiencies pertaining to his trust account. Petitioner failed to keep or retain appropriate trust account records, caused the proceeds from the sale of his personal property and from loans he had taken out to be deposited in the trust account, and caused office expenses and personal expenses to be paid out of his trust account. Petitioner settled a personal injury action in which he represented a minor child by the name of Barnett. The proceeds of the settlement in the amount of $45,000 was transferred from his trust account to that of another lawyer who was a non-practicing retired lawyer and friend of the Petitioner. The purpose of that transfer was to hide those funds from the Internal Revenue Service. The Florida Supreme Court found that Petitioner misappropriated a portion of these funds. Petitioner disputes that finding. The misconduct to which Petitioner admitted at the formal hearing and his disbarment from the practice of law by the Florida Supreme Court create a presumption, pursuant to Section 475.17(1)(a), Florida Statutes, that he is not qualified for licensure as a real estate professional. Petitioner did not offer any competent, substantial evidence which would establish that he is honest, truthful, trustworthy, and of good character or that would otherwise rebut the presumption of disqualification.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner's application for licensure as a real estate salesperson should be denied. DONE AND ENTERED this 6th day of September, 1994, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 6th day of September, 1994. COPIES FURNISHED: Ellis Stewart Simring, pro se 3785 Westminister Street Hollywood, Florida 33021 Manuel E. Oliver, Esquire Assistant Attorney General Office of the Attorney General Suite 107 South Tower 400 West Robinson Street Orlando, Florida 32801 Darlene F. Keller, Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Jack McRay, Acting General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issue is whether Mr. Powell should be disciplined for irregularities in the handling of an escrow deposit by a real estate firm for which he was the qualifying broker.
Findings Of Fact The Respondent, Willie Powell, was at all relevant times a licensed real estate broker in the State of Florida, holding license number 0070494. Mr. Powell was the sole qualifying broker of Future Investments & Development II Co., Inc., trading as ERA Thompkins and Saunders Realty Company (hereafter, T & S), 2734 N.W. 183rd Street, Suite 206, Miami, Florida 33056. On or about November 12, 1990, Guillermo Castillo, a licensed real estate broker for Emerald Enterprises, Inc., received a listing agreement from Horace B. Miller to sell residential property (a duplex) owned by Miller located at 2331 N.W. 103rd Street, Miami, Florida. The property was listed with the Multiple Listing Service. On or about February 27 or 28, 1991, Mr. Castillo received a telephone call from Willie J. Thompkins of T & S saying he wanted to show the Miller property to a prospective buyer. On or about February 28, 1991, Mr. Castillo received through the mail slot at his office a written offer from George R. Howell of Dorchester, Massachusetts, to buy the Miller property, with a business card of Jerry Saunders of T & S. On or about March 6, 1991, Guillermo Castillo met with Horace Miller to review the Howell offer. At Miller's request, Castillo made some changes to the contract to reflect that Miller was selling the duplex in "as is" condition. Miller signed the contract and initialed the changes, and Mr. Castillo signed the contract on behalf of Emerald Enterprises, and called Willie J. Thompkins to tell him the contract had been signed. The next day, Mr. Castillo went to the office of T & S and dropped off the contract for the buyer to consider the seller's changes. A day or two later, a representative of T & S telephoned Guillermo Castillo and told Mr. Castillo that the buyer had accepted the seller's changes to the contract; Mr. Castillo then notified Miller. Mr. Castillo later received from T & S the signed contract with Mr. Miller's changes initialed by Mr. Howell. The contract was also signed by Mr. Thompkins of T & S. The contract called for a $1,000 deposit to be held in escrow by T & S (Exhibit 5, Paragraph IIa). Guillermo Castillo contacted T & S to check on the progress of the sale. He learned that J.P. Mortgage was handling the buyer's mortgage loan application. Castillo contacted J.P. Mortgage and was told that the loan was proceeding normally. After the contractual closing date of April 29, 1991, had passed without the closing taking place, Castillo contracted J.P. Mortgage again, but was told that they were no longer processing the loan. Castillo requested that J.P. Mortgage send him a letter to that effect, and he received a letter dated May 2, 1991, stating that J.P. Mortgage was withdrawing as the lender because the buyer failed to return the mortgage loan application. Castillo informed Horace Miller of the situation and Miller instructed Castillo to write to T & S making a claim to the buyer's deposit under the contract of sale. On May 4, 1991, Castillo sent a letter to T & S claiming the deposit for the seller. Paragraph Q of the contract provided for the seller to retain the buyer's deposit as liquidated damages if the buyer failed to perform the contract. On or about May 9, 1991, Guillermo Castillo received from Mr. Thompkins, the manger of T & S, a letter dated May 1, 1991, but postmarked May 6, 1991, ". . . requesting that the . . . file be cancelled" due to ". . . communication problems with . . . Mr. Howell," and citing unsuccessful attempts to contact Howell by telephone and by mail. When Castillo received that letter he contacted T & S to point out the seriousness of the matter and to press for forfeiture of the buyer's deposit. On May 9, 1991, Castillo received a telefax from Mr. Thompkins of T & S stating that the Howell deposit check had been returned for insufficient funds and attaching a copy of the returned check. Prior to his receipt of this telefax, Castillo had not taken any independent steps to verify whether T & S had actually received the Howell deposit. He had relied on the contract, which had been executed by a licensed salesman and believed he did not require further verification that the escrow deposit had been made. Neither Mr. Castillo nor Mr. Miller dealt with the Respondent, Mr. Powell, at any time concerning the sale of the Miller property. T & S received George Howell's $1,000 deposit in the form of a check on March 4, 1991, drawn on a Massachusetts bank and deposited it in its account with First Union National Bank which was used as the escrow account, account number 15462242336, on March 5, 1991. The check was charged back to the account twice, on March 11, 1991, and on March 26, 1991. Mr. Powell was a signatory on that escrow account. After Guillermo Castillo received the May 9, 1991, telefax, he notified Horace Miller. Mr. Miller had not taken any steps on his own to verify whether T & S had received the deposit because he had confidence in his broker to let him know right away if there were any problems with the sale. By May 9, 1991, Horace Miller had already incurred expenses preparing the property for closing, and had lost rent by terminating a tenancy in the property. Because the transaction never closed, Mr. Miller sustained financial damage, some of which he might have avoided if he had been notified earlier of the buyer's dishonored escrow deposit check. On or about May 28, 1991, Miller filed a complaint with the Department of Professional Regulation, which Sidney Miller investigated. He found that the person introduced to him during his investigation at T & S as Willie Powell was not actually the Respondent. In March 1991, Mr. Powell had not seen the bank statements for the T & S escrow account for several months, and had not signed the written monthly escrow account reconciliation statement for the month of October 1990 or for any subsequent month. Mr. Powell was serving as the qualifying broker of T & S for a salary of $75 per month and no commissions. He was not active in the management of the firm. He would come to the office of T & S approximately three days per week to check files and sign listing agreements, and he would call in to see if there were any problems, messages or documents to sign. He essentially loaned his brokers' license to those who operated T & S as an accommodation because he had known the Thompkins family for 25 years. Mr. Powell argues in his proposed order that "the adequacy of [Mr. Powell's] monthly reconciliations were impeded by frauds perpetrated upon him by persons at [T & S]" (PRO at page 9, paragraph 5). It is obvious that there were problems at T & S, since a person there misrepresented himself to the Department's investigator as Mr. Powell. The full extent of the misconduct there is unclear. There is no proof in this record that salespersons at T & S had fabricated escrow account statements for Mr. Powell. Had Mr. Powell proven that he performed monthly reconciliations with what turned out to be falsified records of T & S, his argument might be well taken. The record, unfortunately, shows that no reconciliations were done. Had Mr. Powell done them, the problem here should have been uncovered.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be issued finding Willie Powell guilty of violating Section 475.25(1)(b), Florida Statutes, finding him not guilty of violating Section 475.25(1)(d), Florida Statutes, and taking the following disciplinary action against him: Issuance of a reprimand. Imposition of an administrative fine in the amount of $1,000 to be paid within 30 days of the date of the final order adopting the recommended order. Placement of the license of Mr. Powell on probation for a period of one year beginning on the date of the final order and providing that during that period he shall provide satisfactory evidence to the Florida Department of Professional Regulation, Division of Real Estate, Legal Section, Hurston Building, North Tower, Suite N-308, 400 West Robinson Street, Orlando, Florida 32801-1772, of having completion a 30-hour postlicensure education course in real estate brokerage management, in addition to any other education required of him to remain current and active as a real estate broker in the State of Florida, and that he be required to submit to the Commission during that year his monthly trust account reconciliations. Cf. Rule 21V-24.002(3)(i), Florida Administrative Code, on penalties for violation of Rule 21V-14.012(2), Florida Administrative Code. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 16th day of July 1992. 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 day of July 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-0192 Rulings on Findings proposed by the Commission: Adopted in Findings 1 and 2. Adopted in Finding 2. Adopted in Finding 3. Adopted in Finding 4. Adopted in Finding 5. Adopted in Finding 6. Adopted in Findings 7 and 8. Adopted in Finding 9. Adopted in Finding 12. Adopted in Finding 13. Adopted in Finding 11. Adopted in Finding 15. Rulings on Findings proposed by Mr. Powell: Adopted in Finding 1 with the exception of the license number. Adopted in Finding 3. Adopted in Finding 2. Adopted in Finding 4. Rejected as unnecessary. Adopted in Finding 5. Adopted in Finding 4. Adopted in Finding 6. Generally adopted in Finding 6. Implicit in Finding 10. Adopted in Finding 6. Adopted in Finding 6. Adopted in Findings 7 and 8. Adopted in Finding 9. Adopted in Finding 10. Rejected as subordinate to Finding 10. Adopted in Finding 13. Rejected as unnecessary, the reconciliation was not one done shortly following the month of March reconciling the account for March 1991. It was done during the investigation conducted by Mr. Miller and took place between approximately June 20 and July 10, 1991. Adopted in Finding 15. Rejected as unnecessary. Adopted in Finding 14. Rejected as unnecessary, or subordinate to Finding 10. Rejected as unnecessary. Rejected as unnecessary. COPIES FURNISHED: Theodore R. Gay, Esquire Department of Professional Regulation Suite N-607 401 Northwest 2nd Avenue Miami, Florida 33128 Harold M. Braxton, Esquire Suite 400, One Datran Center 9100 South Dadeland Boulevard Miami, Florida 33156 Darlene F. Keller Division Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792
