The Issue Whether Respondent Kenneth M. Mossell's real estate license should be disciplined because he allegedly engaged in dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction; collected money in connection with a real estate brokerage transaction except in the name of his employer and with the express consent thereof; registered as an officer of a corporation while licensed as a salesman; operated as a broker while licensed as a salesman; and failed to account and deliver any secret or illegal profit in violation of Subsections 475.25(1)(b) and (e); 475.42(1)(b) and (d), Florida Statutes; Rule Sections 21V-14.012(2) and (3), and 21V-5.016, Florida Administrative Code; and whether Respondent L. Jean Jones DuBrian's real estate license should be disciplined based upon the charge that she is guilty of dishonest dealing by trick, scheme, or device, culpable negligence or breach of trust in business transactions; operated as a broker under a trade name without causing said name to be noted in the Commission records and placed on her license; or operated as a member of a partnership or as a corporation or as an officer or manager thereof, without said partnership or corporation holding a valid current registration; failed to prepare and sign required written monthly escrow reconciliation statements, all in violation of Subsections 475.25(1)(b) and (e); 475.42(1)(k), Florida Statutes, and Rule Sections 21V-14.012(2) and (3), Florida Administrative Code.
Findings Of Fact Petitioner is the state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of Florida, specifically Chapters 120, 455 and 475, Florida Statutes, and rules and regulations promulgated thereunder. Respondent DuBrian is now, and was at all times material hereto, a licensed real estate broker in the State of Florida having been issued license number 0306696 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker, c/o United Team, Inc. t/a ERA, 5844 Main Street, New Port Richey, Florida. Respondent Mossell is now, and was at all times material hereto, a licensed real estate salesperson in Florida, having been issued license number 0538751. The last license issued was as a non-active salesperson, 3432 Lori Lane, New Port Richey, Florida. Linda Sychowski, Frederick Reimer and Mary Patricia Mossell were officers of Majestic Realty and Leasing, Incorporated (Majestic), which was formed during May of 1989. Respondent Mossell was the primary financial investor. On or about April 16, 1990, Sychowski filed Majestic's annual report for 1990 with the Secretary of State listing Mary Patricia Mossell as Director/Treasurer, Sychowski as Director/President and Reimer as Director/Vice President. Respondent DuBrian was never an officer, director or shareholder of Majestic. During August 1989, pursuant to a verbal agreement, Respondent DuBrian became qualifying broker for Majestic. During August 1989, Sychowski notarized Respondent DuBrian's signature on a document titled "State of Florida, Department of Professional Regulation, Division of Real Estate, Application and Request for Licensure of a Real Estate Brokerage Corporation or Partnership." Respondent DuBrian's name appears on the portion of the form listing all corporate officers and directors. During October 1989, Respondent Mossell opened an escrow account at Citizens and Southern Bank (C & S) on behalf of Majestic. Respondent Mossell and Sychowski were signatories on the C & S account and Respondent Mossell signed as Secretary of the corporation. On September 20, 1990, Sychowski notified the Department of Professional Regulation that Respondent DuBrian had been terminated as broker of record for Majestic. President Linda Sychowski denies that she had any understanding that Respondent DuBrian would operate an independent real estate company outside of Majestic or that DuBrian would receive commissions for real estate activities except through Majestic. Sychowski is not a real estate licensee and relied upon Respondent DuBrian's competency as a broker. During April 1990, Sychowski signed check numbers 119 and 120 drawn on Majestic's escrow account. Those checks were payable to Respondent Mossell's wife, Mary Patricia Mossell, as reimbursement for the return of a security deposit and cleaning services. Sychowski learned, subsequent to Respondent DuBrian's termination, that DuBrian operated a real estate brokerage company out of her home independent of her activities as a broker with Majestic. She learned of DuBrian's other brokerage activities during a deposition in conjunction with a civil suit filed by DuBrian against Majestic. During October 1989, Jonathan Rummey entered into a lease agreement to rent property at 5416 Aloha Boulevard. Rummey paid monthly rent pursuant to the agreement and vacated the property during October 1990. Initially Rummey paid rent to Majestic and later DuBrian notified him that she had moved to another real estate company and that the rent was to be paid directly to her. Rummey understood that DuBrian was acting as an agent for the landlord and, as such, was receiving a commission from the landlord. Respondent Mossell was aware that Respondent DuBrian was conducting a real estate rental business from her home. Mossell knew this when DuBrian was hired as the qualifying broker for Majestic. Mossell permitted DuBrian to continue operating her independent rental brokerage business. Mossell allowed this since he thought that it would not be financially prudent for DuBrian to leave her ongoing business and hire on with a new firm, Majestic, which had no rental accounts. During April 1989, Scott Spoerl entered a lease agreement with Respondent DuBrian for rental property he owned. The agreement provided that rental payments would be made to Respondent "L. Jean DuBrian, Registered Real Estate Broker." Respondent DuBrian received ten percent of the rents collected as her fee for providing rental services to Spoerl. Spoerl received checks for his portion of the rent from Respondent DuBrian's account entitled "L. Jean Jones DuBrian Escrow Account." During May 1990, DPR Investigator Marjorie May conducted an inspection and escrow account audit of Majestic. At the time, Respondent DuBrian was Majestic's qualifying broker. During that audit, Investigator May discovered that Respondent DuBrian was not preparing and signing monthly reconciliation reports. During October 1988 Walter Hankinson, Jr., and his wife entered into an agreement to rent property for $500 per month from DuBrian. The Hankinson's paid monthly rent to Respondent DuBrian personally. The Hankinsons vacated the property during January 1992. The bank account entitled "Kenneth Mossell or Jean DuBrian, Special Account Number One," account number 1519555601 maintained at Barnett Bank had statements dated October 11, 1989, and November 9, 1989. No other statements were issued for that account. Two checks were drawn on the above-referenced account, one payable to and endorsed by Kathy Renquist and one dated October 23, 1989, payable to cash. The latter check was endorsed and cashed by Respondent Mossell. The referenced account was a personal and not a business account. Escrow accounts are usually identified as such. Banks label escrow accounts as such because the account is not directly charged. When bank accounts are set up, the account is designated as the customer instructs. The customer signs the signature card after the account title is typed in. During July 1989, Arthur Wagenseil entered a lease agreement to rent property from Respondent DuBrian. Respondent DuBrian represented the landlord and the monthly lease payments were paid directly to her. In July 1989, James Irwin entered a one year lease agreement with Wagenseil. As part of the agreement, Irwin paid Respondent DuBrian a ten percent (10%) commission of rents received. Typically, Respondent DuBrian received the rent from the tenant, deducted the necessary expenses and her commission, and remitted the balance to the landlord (Irwin). Respondent DuBrian advised Irwin that she had arranged with Majestic to keep her clients and business the way she was doing it at the time. During July 1989, Edmund Lekowski entered a two year lease agreement to rent property, paying $390 per month in rent to Respondent DuBrian as agent for the landlord. In May 1989, Frederick Reimer participated in the formation of Majestic as a director and principal. The other officers of the corporation were Sychowski and Mary Patricia Mossell. Majestic was established to engage in the business of renting and leasing realty. Reimer is not licensed as a real estate salesperson or broker. Reimer met Respondent DuBrian when she applied for and was hired as the broker for Majestic. Respondent Mossell was a part owner of Majestic and, as noted, was the primary financial investor. The corporate escrow account was maintained at C & S Bank and Respondent DuBrian was not a signatory on the account. Respondent DuBrian was employed at Majestic to meet the requirement of having a broker on staff. Reimer relied on Respondent DuBrian's knowledge of real estate law. Reimer was unaware of Respondent's DuBrian's operation of a separate rental/leasing business from her home. Respondent DuBrian was not an officer of Majestic nor did she inform Reimer of the legal requirement that she be an officer of the corporation and a signatory on the escrow account. Leo Huddleston, an investigator with Petitioner, met with Respondents DuBrian and Mossell on March 19, 1991, at which time Respondent DuBrian acknowledged that she was not a signatory on the Majestic escrow account because she was not a stockholder or shareholder. During the March 19, 1991 interview, Respondent DuBrian advised Huddleston that she was conducting a rental business, as a broker, separate and distinct from Majestic. During the March 19, 1991, meeting, Respondent DuBrian advised Investigator Huddleston that she was unaware that radon and agency disclosures and written monthly reconciliations were required. Also, during that meeting with Investigator Huddleston, Respondent Mossell advised that he was a signatory on the Majestic escrow account and that he withdrew $310 from that escrow account when a Mr. Schlatterman vacated some rental property that was leased from Majestic. Respondent Mossell's withdrawal was based on repayment and reimbursement to his wife for cleaning the Schlatterman's vacated apartment and a $250.00 cash refund of a security deposit that Mary Mossell had given to the tenant, Schlatterman. Respondent Mossell did not provide Investigator Huddleston with documentation for the claim on the Schlatterman's security deposit. In this regard, the Schlatterman's experienced an emergency and had to vacate on a weekend when the banks were closed. At the time of Investigator Huddleston's interview of Respondents during March 1991, Respondent DuBrian acknowledged that while she was employed as qualifying broker for Majestic, she was also operating an independent rental business. Investigator Huddleston's investigation of the Petitioner's records revealed that Respondent DuBrian was only registered as qualifying broker for Majestic and for no other company.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding that: Respondent L. Jean Jones DuBrian's real estate license be suspended for a period of six (6) months and that she be issued a written reprimand and ordered to complete 24 hours of post licensure education within the period of suspension or as soon thereafter as is practicable. Respondent Kenneth M. Mossell be reprimanded and ordered to complete 18 hours of post licensure education within one year of the issuance of the Final Order. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 5th day of October, 1992. JAMES E. BRADWELL 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 5th day of October, 1992. APPENDIX TO RECOMMENDED ORDER CASE NOS. 92-1072 AND 92-1322 Rulings on Petitioner's Proposed Recommended Order: Paragraph 17, rejected as unnecessary. Paragraph 19, rejected as unnecessary and irrelevant. Paragraph 37, rejected as unnecessary. Paragraph 57, adopted as modified, Paragraph 40, Recommended Order. COPIES FURNISHED: Janine B. Myrick, Esquire Senior Attorney Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 L. Jean Jones DuBrian 7326 Baltusrol Drive New Port Richey, Florida 34654 Kenneth Milton Mossell 3432 Lori Lane New Port Richey, Florida 34655 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792 Darlene F. Keller Division Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801
The Issue The issue for consideration in this case is whether the Respondents' Florida licenses as real estate broker, salesperson and brokerage corporation, respectively, should be disciplined because of the matters alleged in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Division of Real Estate, was the state agency in Florida responsible for the regulation of the real estate profession and the licensing of real estate professionals. Respondents Frank E. Smith, Elaine M Smith, and Sunshine Properties of Tampa, Inc., were licensed real estate professionals, a broker, a sales person, and a brokerage corporation respectively. Respondent Frank E. Smith was the qualifying broker for Respondent, Sunshine Properties of Tampa, Inc.. On or about July 23, 1991, the Respondents and Carolyn Chaple entered into a management agreement whereby Respondent agreed to rent and manage Ms. Chaple's residence located in Tampa. The terms of the management agreement signed by Ms. Chaple and Ms. Smith called for the company to render a monthly statement of receipts, charges and disbursements, and to remit the net proceeds each month to Ms. Chaple whose address was listed in the agreement as P.O. Box 12003, Brooksville, Florida 34601. For performing this service, Respondents were to receive a commission of 8% of the monthly gross receipts. The agreement also called for the Respondents to: ... hire, discharge and pay all engineers, janitors and other employees; to make or cause to be made all ordinary repairs and replacements necessary to preserve the premises in its present condition and for the operating efficiency thereof and all alterations required to comply with lease requirements, and to do decorating on the premises; to negotiate contracts for nonrecurring items not exceeding $100.00 and to enter into agreements for all necessary repairs, maintenance, minor alterations and utility services; and to purchase supplies and pay all bills. An amendment to the agreement, initialed by Ms. Chaple only, made the provision subject to a lease agreement purportedly attached but which was not offered into evidence. Ms. Chaple contends that lease provided she would be responsible only for those repairs costing in excess of $250.00 and which she had approved. This added provision was not, however, initialed by Respondents and, therefore, never became a binding part of the management agreement, regardless of what Ms. Chaple intended. Ms. Smith asserts that if Ms. Chaple had insisted on that change, she would not have entered into the agreement. It is found, therefore, that there was no agreement limiting Ms. Chaple's liability for repairs. Pursuant to the management agreement, Respondents solicited and obtained tenants for Ms. Chaple's property. Respondent admittedly did not send a copy of the first lease to Ms. Chaple, but the tenancy was short lived and terminated when the tenant moved out owing rent. Ms. Chaple claims the Respondents did not advise her of this situation. Instead, she claims, she heard of it from neighbors. However, on December 30, 1991, Respondents obtained another lessee for the property at a rental of $600.00 per month for 12 months. Respondents' fee was %8 of that ($48.00) resulting in a net monthly rental to Ms. Chaple, exclusive of repair expenses if any, of $552.00 per month. Ms. Chaple claims that though she repeatedly asked for a copy of the management agreement she had signed, she never got one. When she began to ask for accountings, she says she got some but not all. By the same token, she claims she did not get all the receipts relating to the repair work done on her property. Between December 4, 1991 and August 16, 1992, Ms. Chaple wrote several detailed letters to the Respondents requesting information on the status of the first tenancy and efforts being made to receive compensation, and detailed explanations for expenditures made and charged to her on the account statements that were sent. She also complained of the lateness of the statements, of the Respondents' notice of intended termination of the agreement, and an explanation of large expense charged almost every month. Respondents claim they furnished Ms. Chaple a copy of the management agreement on at least 3 separate occasions by mailing a copy to her Brooksville address, that address listed for her in the agreement. Ms. Chaple, however, was living in Houston, Texas during all this period and requested the use of the Brooksville address, apparently her father's post office box. Respondents also claim they sent Ms. Chaple a monthly statement of account along with her net rent check each month. Every check sent was cashed by Ms. Chaple indicating she received them. There is no explanation as to why she did not also receive the account statements. In light of Ms. Chaple's moves, and the use of an intermediary to transmit mail, it cannot be said Respondents did not send the agreements. This is not to say Ms. Chaple did receive them all, merely that the Respondents dispatched them to her. Ms. Chaple also claimed she never got a copy of a lease from the Respondents. Respondent, Elaine Smith, admits this indicating she did not send copies of leases to owners as a matter of practice. It is noted that Ms. Chaple repeatedly requested itemized explanations for the major expenditures deducted from the rent each month and characterized on the account statement solely as "maintenance." The management agreement obliging the owner to pay for such expenditures as a deduction from rent is silent on the need on the Respondents to explain such deductions. The agreement obliges the agent to "render a monthly statement of receipts, disbursements and charges and to remit each month the net proceeds to the [owner]." While it may be true the monthly statement of accounting showing "maintenance" might be acceptable evidence to the Internal Revenue Service, when, as here, such expenses are relatively large and frequent, it is not at all unusual or unreasonable for the owner to request and expect to receive an explanation of those deductions. To be sure, Respondents did send some receipts as requested, but it is clear they did not do so in all cases. Clearly the mere use of the word, "maintenance" does not constitute a sufficient showing of "disbursements" or "charges" as are called for in the agreement. This is so especially in light of the fact Respondents also operated a maintenance company through which they contracted for almost all maintenance and repair work except air conditioning. The charge to the owners was cost plus 10%. Ms. Chaple ultimately filed a complaint with the Division which, on March 18, 1992, sent its investigator, J.L. Graham, to the Respondents' office. As a part of her investigations, Ms. Graham did an audit of the Respondents' escrow accounts maintained at the Sun Bank in Tampa. She discovered that Respondents maintained a security escrow account which had a shortage of $5,780.00 and a rental escrow account which had a shortage of $4,261.31. Respondents admit a shortage had existed ever since the business was purchased in 1986 and claim that due to the shrinking inventory of properties they managed, the need to pay $500.00 a month on the purchase price, and $1,300.00 a month on obligated rent, they did not have sufficient income from operations to reimburse the accounts the amount of the shortages. There is no evidence that Respondents misappropriated any of the funds represented by the shortages and it is accepted they did not cause or increase either shortage. However, it is equally true they did nothing to eradicate or reduce either, routinely drawing their lawful commissions which were placed in the company's operating account and used to pay routine expenses. In any event, within 2 days of Ms. Graham's inspection, Respondents borrowed the money to reimburse the escrow accounts for the amount of the shortages in full. Ms. Graham also found that Respondents failed to prepare and sign written monthly reconciliations of the escrow accounts and had no supporting documentation for the accounts other than the check register, leases and the management agreements. Respondents' books were primarily kept in a computer and the information in support of the escrow accounts was not being kept in a manner readily accessible to the Division's representatives. Mr. Smith admits he did not do the required reconciliations, claiming that between the computer records and the bank statements, he knew what was going on. This is insufficient to satisfy the Division's requirements. Mr. Smith contends that immediately after the audit, he began doing the required reconciliations and would be willing to furnish them to the Division on a repeated basis if necessary. Respondents also failed to prepare and furnish to the tenants of clients' properties the required disclosure of agency relationship, notifying the tenants in writing that they, Respondents, represented the respective landlords, not them. Respondents asserted they made it clear to each tenant that they did not own the units being rented, but this does not meet the rule or statutory requirement. Review of the corporation records also revealed that Mrs. Smith, a licensed salesperson, was listed as an officer of the brokerage corporation. Respondents admit this but claim they did not know it was improper and that their accountant failed to so advise them. Gennie Amick has known and been friends with Respondents for more than 7 years. She has used their services in the past as managers of property she then owned and both her son and her daughter do so at the present time. They have had absolutely no complaints about the Respondents' management. Ms. Amick knows Mrs. Smith very well and considers her to be a very honorable person. Respondent's integrity has never been questioned, to the best of Amick's knowledge, and she goes out of her way to help her clients, doing more than her contract requires of her. Mr. Smith is also an honorable person. Because of Ms. Amick's trust in the Respondents, she loaned them $6,000.00 when she learned of their difficulties with the Division and this loan was repaid when Respondents thereafter mortgaged their home. Respondents have owned Sunshine Properties of Tampa, Inc. since they bought it in 1986, paying $20,000.00 for the business. They put $1,500.00 down and agreed to pay the balance off at $500.00 per month. They also agreed with the seller to rent his office for $1,300.00 per month. It was these commitments, and the shrinking of the client list, which prevented them from making up the shortages in the escrow accounts. Mr. Smith has been in the real estate business, both in Florida and elsewhere, since 1967. He has been licensed as a broker since 1988 and he and his wife have operated Sunshine, which does not handle sales, only property management, since 1986. It is their livelihood. He became the qualifying broker for the firm in 1988. Neither he nor Mrs. Smith has been the subject of a complaint before now. At no time did either Respondent intend to break any rules or to unlawfully profit by their improper actions. They claim any infractions are as a result of ignorance rather than design and so it would appear. Their relationship with Ms. Chaple was less than an acceptable business relationship, yet Ms. Chaple did not make a good witness. It appeared she had her own agenda to follow and her memory of facts seemed selective. She appears to be difficult to deal with and it is reasonable to believe that much of the difficulty she had with the Respondents was as a result of her own attitude and approach.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore recommended that a Final Order be entered placing all Respondents' licenses on probation for a period of 1 year under such terms and conditions as may be prescribed by the Division and imposing an administrative file of $500.00 upon each Respondent Smith for a total fine of $1,000.00. RECOMMENDED this 18th day of February, 1993, in Tallahassee, Florida. ARNOLD H. POLLOCK 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 18th day of February, 1993. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-3898 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: 1. - 5. Accepted and incorporated herein. Accepted and incorporated herein except for the word, solicited. & 8. Accepted and incorporated herein, Rejected as not established by clear and convincing evidence. Accepted and incorporated herein. Accepted and incorporated herein. FOR THE RESPONDENT: 1. - 4. Accepted and incorporated herein 5. Accepted to the extent that the evidence shows the agree-ment and accountings were sent to the best evidence available to the Respondents. 6. Not a Finding of Fact but a Conclusion of Law, 7. & 8. More a comment on the state of the evidence, than a Finding of Fact. 9. & 10. Accepted and incorporated herein. 11. - 14. Accepted. Rejected as implying the disclosures made satisfied the rule requirements. Accepted. & 18. Accepted as to what Respondent's did and that no harm to the public or any client resulted, but rejected to the extent public benefit is asserted. 19. & 20. Accepted but relevant only to the quantum of punishment to be imposed. 21. - 23. Accepted. 24. - 26. Accepted and incorporated herein. COPIES FURNISHED: James H. Gillis, Esquire DPR, Division of Real Estate Hurston Building - N308 400 West Robinson Street Orlando, Florida 32801-1772 Sheldon L. Wind, Esquire 110 E. Hillsborough Avenue Tampa, Florida 33504 Jack McRay General Counsel DPR 1940 North Monroe Street Tallahassee, Florida 32399-0792 Darlene F. Keller Division Director Division of Real Estate 400 W. Robinson Street P.O. Box 1900 Orlando, Florida 32802-1900
The Issue Whether respondent committed the acts alleged in the Administrative Complaint, and, if so, whether respondent's license should be revoked, suspended or otherwise disciplined.
Findings Of Fact At all times pertinent to the charges, Reynold Diaz was a licensed real estate broker in the State of Florida, having license number 0379909. The respondent was registered under the trade name of "Progressive Developers" from August 20, 1983 to July 25, 1986. Respondent, in his capacity as a real estate broker, managed four rental units owned by John H. Stephen located at 3405-3407 Nebraska Avenue, Tampa, Florida. Mr. Stephen initially met Mr. Diaz when Mr. Stephen purchased the rental properties from him in 1984, and Mr. Stephen retained respondent to manage the properties at a fee of ten percent of the monies collected. At the end of April, 1985, respondent rented one of the units owned by Mr. Stephen to Ms. Roslyn Thompson. During the course of Ms. Thompson's tenancy, the respondent received from Ms. Thompson a total of $630.00, which represented two months rent and a security deposit of $180.00. None of this money was returned to Ms. Thompson and none of it was delivered to Mr. Stephen by respondent. When Mr. Stephen inquired about the rental money from the unit, in June or July of 1985, Mr. Diaz advised Mr. Stephen that the tenant had not paid her rent for a couple of months. Thereafter, Mr. Stephen went to the rental unit to talk to Ms. Thompson about her payments. Ms. Thompson advised Mr. Stephen that she had paid her rent and produced receipts for the $630.00 which she had paid to respondent. Mr. Stephen terminated respondent's services in June of 1985. In September of 1985 Mr. Stephen met with Mr. Diaz in an attempt to obtain an accounting of the monies received by respondent from Mr. Stephen's tenants. Although respondent had provided monthly statements and payments to Mr. Stephen throughout 1984, respondent stopped providing statements in 1985. Thus, Mr. Stephen had not received a statement in April, May, or June of 1985. When Mr. Stephen met with respondent in September, respondent failed to provide a full accounting of the money he had received from Mr. Stephen's tenants and failed to deliver the money he had received. However, subsequent to the meeting, Mr. Stephen did receive from respondent the amount he was owed on two of the rental units. However, respondent failed to deliver the money he had received from Ms. Thompson. Respondent contends that of the $630.00 he received from Ms. Thompson, he paid Mr. Stephen $225.00 in September and then paid the $405.00 balance in two installments. However, the evidence does not support this contention, and I accept Mr. Stephen's testimony that he never received any rent payments on the Thompson unit. Further, although the evidence does show that respondent paid Mr. Stephen $405.00 in two checks, these payments were for the money owed on the other rental units. Mr. Diaz has failed to account for or deliver to Mr. Stephen the $630.00 received from Ms. Thompson. Respondent, in his capacity as a real estate broker, also managed rental property owned by Sandra K. Nelson located at 1208 East Chelsea Street, Tampa, Florida. Ms. Nelson first met Mr. Diaz when she purchased the rental property, and she retained respondent to manage the property at a fee of ten percent of the monies collected. In August of 1984, the respondent rented the Nelson property to Joseph Ira Pasco. At the time of renting the unit, the respondent received from Mr. Pasco a security deposit of $325.00. However, Mr. Diaz advised Ms. Nelson that Mr. Pasco had not paid his security deposit, and withheld $275.00 from a rental payment to hold as a security deposit. Subsequently, after Ms. Nelson started eviction proceedings, she discovered that Mr. Pasco had a receipt signed by Mr. Diaz for a $325.00 security deposit. However, despite Ms. Nelson's demands, the respondent failed to deliver to Ms. Nelson the $325.00 security deposit or any portion thereof. Further, the security deposit was not returned to Mr. Pasco. However, respondent did ultimately deliver to Ms. Nelson the $275.00 that he had retained from the rental payment. Respondent maintained an escrow account at the Hay Gulf Federal Credit Union from August 8, 1984 until November 26, 1984, when the account was closed. When petitioner's investigator, Leo Huddleston, requested of the respondent all documentation associated with the Stephen and Nelson transactions, respondent produced the carbon copies of three deposit slips and twenty checks drawn on the Bay Gulf account. The documents covered only the months of September and October of 1984, and none of the documents appear to be connected to the Stephen and Nelson transactions. The respondent failed to produce his real estate brokerage escrow account statements, his business records, leases, contracts or other documentation required to be kept by the respondent and produced to the petitioner upon request. At no time did respondent place or maintain the $325.00 security deposit on the Nelson property in an escrow or trust account. Further, since respondent's escrow account was closed at the times respondent collected the rent money and deposit from Ms. Thompson, it is apparent that none of the $630.00 was placed in an escrow or trust account. Respondent admitted that he did not properly handle the funds received from the Nelson and Stephen properties, stating that he managed the properties on the basis of friendship rather than a professional basis. However, he did admit retaining ten percent of all the money collected. From August 20, 1983, until July 25, 1986, the respondent was registered with the Real Estate Commission under the trade name "Progressive Developers." However, at various times during this period, the respondent transacted business both as "Progressive Real Estate Developers" and "Progressive Real Estate Developers, Inc." These names were not registered with the Real Estate Commission.
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 suspending respondent's license for a period of two (2) years and imposing an administrative fine of $1,150 to be assessed as follows: Counts I and VI, $200 for each count; Counts II and VII, $200 for each count; Counts III and VIII, $100 for each count; Count IV, $100; and Count V, $50. Respectfully submitted and entered this 9th day of March, 1987, in Tallahassee, Florida. DIANE A. GRUBBS 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 9th day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3775 Petitioner's Proposed Findings of Fact: Accepted in paragraph 1. Accepted in paragraph 2. Accepted in paragraph 3. Accepted in paragraphs 5 and 6. Accepted in paragraph 7. 6-7. Accepted in paragraph 8. Accepted generally in paragraphs 6 and 8. Accepted in paragraph 10. Accepted in paragraph 9. Accepted in paragraph 11. Respondent's Proposed Findings of Fact: Accepted that respondent managed Mr. Stephen's property. Second sentence rejected as irrelevant; further, the evidence established that Mr. Stephen first met Mr. Diaz when Mr. Stephen purchased the subject property from Mr. Diaz and retained him to manage it. Third sentence accepted in paragraph 10. Fourth sentence rejected as to the money received from Ms. Thompson, but accepted that money was delivered to Mr. Stephen in paragraph 6. Last sentence rejected as not a finding of fact. Accepted that $275 was paid to Ms. Nelson in paragraph 8; however, reject by contrary finding that the $275 payment was partial payment on the $325 security deposit. Reject, for lack of any evidence that improper name registration was computer error. Remainder rejected as not findings of fact. COPIES FURNISHED: James R. Mitchell, Esquire Harold Huff, Executive DPR - Division of Real Estate Director 400 West Robinson Street DPR - Division of Real Estate Orlando, Florida 32802 400 West Robinson Street Orlando, Florida 32802 Reynold Diaz 7908 N. Florida Avenue Tampa, Florida 33604
The Issue This is a license discipline proceeding in which the Petitioner seeks to take disciplinary action against the two Respondents, one individual and one corporation, on the basis of alleged violations set forth in an eight-count1 Administrative Complaint. The Respondents are charged with violation of Section 475.25(1)(b), Florida Statutes, and with multiple violations of Section 475.25(1)(e), Florida Statutes.
Findings Of Fact The Petitioner is a state government licensing and regulatory agency charged with responsibilities and duties which include the prosecution of Administrative Complaints against licensees under Chapter 475, Florida Statutes. Respondent Hilda H. Bell is now, and was at all times material hereto, a licensed Florida real estate broker, having been issued license number 0349586 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker at Sharmic Realty, Inc., at the following address: 8701 Willes Road, Unit 16-308, Coral Springs, Florida 33067. Respondent Sharmic Realty, Inc., is now, and was at all times material hereto, a corporation registered as a Florida real estate broker, having been issued license number 0243150 in accordance with Chapter 475, Florida Statutes. The last license issued was at the following address: 8701 Willes Road, Unit 16- 308, Coral Springs, Florida 33067. At all times material hereto, Respondent Hilda H. Bell was licensed and operating as the qualifying broker of, and an officer of Respondent Sharmic Realty, Inc. On September 27, 1994, Petitioner's Investigator Margaret R. Hoskins audited Respondents' escrow accounts. The audit revealed that the Respondents maintained Property Management Escrow Account Number 00300066617 at Glendale Federal Bank, Fort Lauderdale, Florida. A total trust liability for the Respondents' Property Management Escrow Account could not be determined because the Respondents did not have complete and accurate records. On August 11, 1992, the Respondents deposited $20,000.00 into their Property Management Escrow Account for a person who did not have a checking account. On August 11, 1992, the Respondents issued escrow check number 0972 in the amount of $20,000.00. On August 18, 1992, the Respondents loaned Cecil Sailsman $500.00 from the Property Management Escrow Account. On January 12, 1993, the Respondents deposited $22,496.91 in personal funds into the Property Management Escrow Account. The Respondents subsequently disbursed $15,045.00 of the personal funds from the Property Management Escrow Account.
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that the Florida Real Estate Commission issue a final order in this case to the following effect: Dismissing Counts III and IV of the Administrative Complaint; Concluding that the Respondents are guilty of the violations charged in Counts I, II, V, VI, VII, and VIII of the Administrative Complaint; and Imposing administrative penalties consisting of the following: An administrative fine against Respondent Hilda H. Bell in the amount of three thousand dollars ($3,000.00); A six month suspension of the real estate brokerage license of Respondent Hilda H. Bell; A one year period of probation for the Respondent Hilda H. Bell, to begin immediately following the period of suspension; A requirement that the Respondent Hilda H. Bell complete additional education in the form of a seven hour course in real estate brokerage escrow management during her period of probation; and A reprimand of Respondent Sharmic Realty, Inc. DONE AND ENTERED this 2nd day of April 1996 in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH, 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 2nd day of April 1996.
Findings Of Fact The Department is the state agency charged with the licensing and regulation of real estate brokers. Respondent's real estate broker license number 0325307 was active in Florida between October 1985 and November 1987. During this period, the business address registered at the Department for AmBest Realty was: 333-31st Street North #24, St. Petersburg, Florida 33713. Respondent was the qualifying broker for this real estate firm. The real estate office at the above-mentioned address was officially closed by Respondent in November 1987. At this particular time, there had been a decrease in real estate sales throughout the state. Respondent changed careers and became a long haul trucker in order to provide for his family under the then prevailing real estate market conditions. Post Office Box 12811, St. Petersburg, Florida 33733, was acquired by Respondent in November 1987 so that he could continue to receive communications regarding his former real estate practice, if necessary. His current profession as a long haul trucker frequently required his absence from the state for days at a time. The use of the post office box allowed him to review all correspondence regarding AmBest Realty whenever he returned to St. Petersburg, Florida from his trucking route. Respondent did not surrender or account for his license to the Real Estate Commission when he closed or moved his real estate business to his home in November 1987. By statute, Respondent was required to do so within 10 days of the address change or office closure. Notification to the Board should have been done by Respondent on a form provided by the Real Estate Commission for that purpose. Respondent's license ceased to be in force when he closed the real estate office at 333-31st Street North #24, St. Petersburg, Florida. In March 1988, Respondent attempted to allow his broker license to automatically revert to inactive status, pursuant to Section 475.182(3), Florida Statutes [1987]. Although this decision ignored the previous deactivation of the license, it corroborates Respondent's testimony that the office closed in November 1987. When Respondent attempted to place the license in an inactive status in March 1988, it was his intention to reactivate his license within a four-year period if the real estate market recovered from its slump. Respondent notified the Department of his new mailing address at the post office box prior to his attempted placement of the license in an inactive status. Respondent's failure to notify the Board of the change in his business address caused the Board to improperly rely on that business address as the proper location for office inspections and the Department's review of escrow/trust accounts. In August of 1990, an investigator with the Department unsuccessfully attempted to contact the Respondent at the registered business address at 333- 31st Street North #24, St. Petersburg, Florida. The real estate office and a real estate sign were no longer at the location. Respondent was later contacted by the investigator through the home address previously listed on his license that had been replaced in March 1988 by the post office box number. The investigator requested Respondent make his escrow trust account records and supporting documentation available for inspection. Respondent advised that he was unable to comply with the request as his original escrow trust account records had been stolen in a garage burglary in late November 1987. No effort was made by Respondent to reconstruct or to aid in the reconstruction of the missing records. No additional mitigating factors were presented at hearing other than the break-in to the location where Respondent stored his original escrow trust account records.
Recommendation Based upon the foregoing, it is RECOMMENDED: That Respondent, James E. Willis t/a AmBest Realty be found not guilty of Count I of the Administrative Complaint. That Respondent be found guilty of violation of Section 475.25(1)(e), Florida Statutes, as set forth in Count II, based upon his failure to preserve and make available to the Department all escrow trust account records with supporting documentation, as required by Rule 21V-14.012(1), Florida Administrative Code. That the privilege of Respondent Willis to reinstate his real estate broker's license be suspended for three years, subject to a reduction in the suspension term if the escrow trust account records are reconstructed and presented to the Board. DONE and ENTERED this 14th day of January, 1992, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY 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 14th day of January, 1992. COPIES FURNISHED: JAMES H GILLIS ESQUIRE DPR - DIVISION OF REAL ESTATE 400 W ROBINSON ST ORLANDO FL 32801 1772 JAMES E WILLIS, AMBEST REALTY PO BOX 12811 ST PETERSBURG FL 33733 2811 DARLENE F KELLER/EXECUTIVE DIRECTOR DPR - DIVISION OF REAL ESTATE 400 W ROBINSON ST ORLANDO FL 32801 1772 JACK McRAY ESQ/GENERAL COUNSEL DEPT OF PROFESSIONAL REGULATION 1940 N MONROE ST TALLAHASSEE FL 32399 0792
The Issue The issue presented is whether Respondents are guilty of the allegations contained in the Administrative Complaint filed against them, and, if so, what disciplinary action should be taken against them, if any.
Findings Of Fact At all times material hereto, Respondent Richard Shindler has been a licensed real estate salesman in the State of Florida, having been issued License No. 0395044. The last license issued was as a salesman with Global Real Estate & Management, Inc. At all times material hereto, Respondent Global Real Estate & Management, Inc., has been a corporation registered as a real estate broker in the State of Florida, having been issued License No. 0223589. At all times material hereto, Mark H. Adler was licensed and operated as the qualifying broker and officer of Global Real Estate & Management, Inc. Adler's license is currently under suspension by agreement with Petitioner as a result of the activities complained of in the Administrative Complaint filed in this cause. At no time has Respondent Shindler been a director or officer of Respondent Global Real Estate & Management, Inc. At all times material hereto, Respondent Shindler has been the sales manager for Respondent Global Real Estate & Management, Inc. As the sales manager, Respondent Shindler sometimes helped other salesmen structure financing and helped them with other problems. Respondent Shindler was not responsible for the collection of funds from individual salesmen. Each individual salesman was responsible for collecting funds from any real estate transaction and giving those funds to Respondent Global's bookkeeper for deposit. As sales manager, Shindler was a signatory on the escrow account in order to make disbursements for small transactions mainly involving rental properties. In addition, Respondent Shindler was responsible for the hiring and firing of office personnel. However, he had no control over the contracts of other salesmen. On March 13, 1989, Respondent Shindler, as a private purchaser, made two purchase offers for two pieces of property owned by the same sellers. The purchase offers were for $115,000 and $80,000, respectively, and required that Respondent Shindler place $6,000 and $5,000, respectively, into Respondent Global's escrow account as a deposit on the purchase of the properties. Respondent Global and real estate broker Jay Hirsch were to receive commissions on the sale of the properties. Those offers to purchase disclosed in writing that Respondent Shindler was also a licensed real estate salesman. Although both offers to purchase were accepted by the sellers, the transactions involving the purchase of these properties did not close due to Respondent Shindler's inability to obtain financing, which was a contingency of the contracts. In October, 1989, demands for the release of the escrowed monies were made by the sellers and by the sellers' broker Jay Hirsch. They made demand upon Respondent Global's attorney. Additionally, Jay Hirsch made demand on Mark Adler by telephone and then by demand letter to Adler, who, as the qualifying broker for Respondent Global, was responsible for the release of the escrowed funds. Subsequent to the demands made by the sellers and their broker, Respondent Global filed a complaint for interpleader. The escrowed deposits were eventually disbursed pursuant to a settlement among the parties claiming an interest in the escrowed deposits. In March, 1990, Petitioner began an investigation of the Respondents and Adler. Investigators Castro and Rehm both participated in the investigation. Investigator Castro believed Respondent Shindler to be the office manager of Respondent Global. During the initial interview with Respondent Shindler, he produced records which indicated that a deposit of $14,265.69 had been made on January 13, 1989, into Respondent Global's escrow account. This check had been given by Respondent Shindler to Global's bookkeeper for deposit. This deposit represented proceeds from the sale of property owned by Respondent Shindler's brother Paul, and was placed in escrow in anticipation of the offers to purchase made by Respondent Shindler on the two properties involved in this cause. Investigator Rehm examined the escrow account bank records and determined that for a two-month period the escrow account balance had dropped below the minimum $11,000 balance required by the two contracts in question herein alone. Initially, Respondent Shindler advised the investigators that the bank where the escrow account was maintained had represented that it had debited the escrow account as a result of a lien placed on that account by the Internal Revenue Service. Upon further investigation, Respondent Shindler advised the investigators that the bank itself had withdrawn $3,200 from Global's escrow account to cover a shortage in Respondent Global's operating account. At all times material hereto, both Adler and Respondent Shindler were signatories on the escrow account. As part of its investigation, Petitioner served a subpoena on Maria Aguerra, Respondent Global's bookkeeper, requesting from Adler, or Respondent Shindler, or the custodian of records for Respondent Global Real Estate, all contracts, leases, agreements, monthly bank statements, deposit slips, and cancelled checks for all accounts for the period of January 1, 1989, through March 22, 1990. Some of the requested documents were initially unavailable because they had previously been sent to the Florida Real Estate Commission. Although Adler testified that he was initially unaware that a subpoena had been served, he was given a 30-day extension to produce the records when he met with investigators Castro and Rehm on May 1, 1990. Although Adler had both the responsibility for and control over the records of Respondent Global, he was not fully familiar with the records, and the bookkeeping was in disarray. At all times material hereto, Adler, as the broker for Respondent Global, was responsible for operating the Global office, for overseeing Global's escrow account, for reviewing contracts, and for being aware of the day-to-day events in the Global office. In addition, as the broker, Adler was required to be an officer of the corporation, to be a signatory on the escrow account, to have prepared and to sign the monthly escrow account reconciliations, and to respond to Petitioner if there were complaints or requests for production of documents. Adler, as the broker for Respondent Global, did not reconcile and sign escrow account statements on a monthly basis since he was not aware of the requirement that he do so. However, Adler did testify that he was aware of his responsibility for escrowed funds. At no time did Respondent Shindler have the responsibility to maintain Global's escrow account or to reconcile the escrow account on a monthly basis. At no time did Respondent Shindler represent that he was the broker for Respondent Global or that he was a broker. Respondent Shindler did not state to investigator Rehm that he was acting as the broker for Global or that Adler had simply lent Adler's license to Shindler to use. At no time did Adler and Respondent Shindler enter into an agreement whereby Shindler would act as the broker for Global using Adler's broker's license, and Adler was never paid any monies for any use of his broker's license. Adler testified that his involvement with Global's business had declined as he had pursued his growing interest in performing appraisals.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered: Dismissing Counts II, III, VII, VIII, and IX of the Administrative Complaint filed herein; Finding Respondent Global Real Estate & Management, Inc., guilty of the allegations contained in Count V of the Administrative Complaint; and Ordering Respondent Global Real Estate & Management, Inc., to pay a fine in the amount of $500 by a date certain. RECOMMENDED in Tallahassee, Leon County, Florida, this 20th day of March, 1991. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of March, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-4522 Petitioner's proposed findings of fact numbered 2-5, 7-9, 11-12c, 13, 14, and 16 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 1 has been rejected as not constituting a finding of fact but rather as constituting a conclusion of law. Petitioner's proposed finding of fact numbered 6 has been rejected as being unnecessary for determination of the issues herein. Petitioner's proposed findings of fact numbered 10, 15, and 17 have been rejected as not being supported by the weight of the credible evidence in this cause. Petitioner's proposed finding of fact numbered 12d has been rejected as being irrelevant to the issues under consideration herein. Respondents' proposed findings of fact numbered 1-22 have been adopted either verbatim or in substance in this Recommended Order. The transcript of proceedings, together with Petitioner's Exhibits numbered 3, 5, and 8-14 and Respondents' Exhibit numbered 1 which were admitted in evidence. COPIES FURNISHED: James H. Gillis, Esquire Department of Professional Regulation Division of Real Estate - Legal Section 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Harold M. Braxton, Esquire 9100 South Dadeland Boulevard Suite 400 - One Datran Center Miami, Florida 33156 Jack McRay General Counsel Department of Professional Regulation Northwood Centre, Suite 60 1940 North Monroe Street Tallahassee, Florida 32399-0792 Darlene F. Keller Division Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801
The Issue The issue in this proceeding is whether the Respondents' real estate brokers licenses should be suspended, revoked or otherwise disciplined.
Findings Of Fact Respondent, Barbara Odom, is a licensed real estate broker in the State of Florida, holding license number 0189819. Ms. Odom is the owner of and the qualifying broker for Respondent, Odom Realty, Inc., located in Pensacola, Florida. Respondent, Odom Realty, Inc. is a corporation registered as a real estate brokerage company in the State of Florida, holding license number 0226080. Ms. Odom has been licensed since 1982 and has been the owner of Odom Realty, Inc., since 1983. Rita Leonard has been the corporation's bookkeeper since Ms. Odom's acquisition of the company. Previous to her employment with Odom Realty, Ms. Leonard was the financial manager in charge of a large bank's accounting and bookkeeping department. Ms. Leonard was and is highly qualified as an accountant/bookkeeper. In addition to Ms. Leonard's bookkeeping services, Ms. Odom also has Odom Realty's books and records, including the various escrow account books and records, annually audited and reviewed by her CPA. Early in the company's history Ms. Odom entered into the rental property management business. Initially, Ms. Leonard was paying clients' repair bills on that client's rental property out of the corporation's operating account. The CPA questioned whether it was appropriate to pay those bills out of the corporation's operating account and indicated that the bills should be paid out of the corporation's rental property management escrow account, #11823890431. The CPA was not sure what the appropriate bookkeeping practice should be and indicated that Ms. Leonard should check with the Florida Real Estate Commission to discover what the appropriate procedure was. Ms. Leonard called the Florida Real Estate Commission to inquire about the proper method of paying clients' repair bills. Her impression of that conversation was that client repair bills should be paid out of the escrow account regardless of whether the individual had the money in the account. After this conversation with the Florida Real Estate Commission, Ms. Leonard began paying all the clients' repair bills out of the rental property management escrow account. All such client bills were paid promptly upon the repair bill's presentation, whether or not the individual client had the money available in the escrow account. Each client was later billed for the amount not covered by the balance in that individuals' escrow account. The client billings occurred on at least a monthly basis and the majority of the rental clients remitted their payments on a monthly basis. Occasionally, one of Respondent's clients was permitted to carry a negative balance for more than a month. These carry- overs occurred in the off-season and were paid when rentals picked back up during the areas main tourist season. As a consequence of this practice, some of Respondents' clients would have negative escrow balances on their individual escrow ledger account. Respondents were under the impression that such a practice was all right as long as the corporation had money available to cover those negative balances. In fact, the corporation always had such money available, although the actual transfers of funds were never made from the corporation's operating account to the rental property management escrow account. Respondents believed this practice was tantamount to loaning the respective clients money to cover the client's negative balance until that client corrected the deficit. No client ever complained about this practice. In fact, most of Respondents' clients wanted the repair bills paid promptly so that good repair service could be maintained on that client's property. On March 15, 1990, Elaine Brantley, Petitioner's investigator, conducted an audit of all of Respondents' escrow accounts. The only account she found a problem with was the rental property management account. During that investigation, Ms. Brantley found that Respondents had a trust liability of $10,081.71 and a bank balance of $9,480.97, leaving a shortage of $600.74. Respondents, the same day and prior to Ms. Brantley leaving, transferred the amount of the shortage from the corporation's operating account to the escrow account. Ms. Brantley then explained to Ms. Odom and her bookkeeper her opinion of how the Commission wanted escrow accounts maintained. Since that time, Respondents have maintained the escrow accounts in the manner prescribed by Ms. Brantley and no longer follow their policy of maintaining negative balances on the individual ledger sheets of their clients. They now make the actual transfer of funds from the operating account to the escrow account prior to paying any bill which would take an individual client over the amount of money that client has in the escrow account. The Respondents' books and records for the rental property management account were meticulously kept and both total and individual reconciliations were completed on a monthly basis by Respondents. All the records, including the monthly reconciliations reflected the appropriate negative balances if a particular client should have such a balance. As a consequence of this method of bookkeeping, there were no discrepancies, as opposed to a total shortage, between the total reconciliations and the escrow account's bank statement. Likewise, there were no discrepancies on the individual ledger accounts. There were no discrepancies because everything was added and subtracted out according to the records being kept and the bookkeeping method used in maintaining those records. Importantly, Respondents' CPA never criticized or commented on Respondents' method of accounting and maintenance of negative balances in Respondents' escrow account. As indicated earlier, the temporary negative balances were maintained for the convenience of the customer in order to obtain better service from repairmen. In reality, Respondents' clients probably never thought about the intricacies and inner workings of the trust account in which that client's money was maintained. Given the desires of Respondents' customers, such payments and the maintenance of a negative balance on behalf of that individual client were impliedly authorized by those respective customers. However none of the clients expressly authorized Respondents to use that client's money to pay another client's repair bills. The clients' general desires on getting prompt payment of repair bills is, by itself, insufficient to establish express authorization for one client to use another client's escrow money. Without such express authority Respondents made improper disbursements from the property management escrow account in violation of Section 475.25 (1)(k), Florida Statutes. However, because of the client's general desires regarding their repair bills, the record keeping utilized by Respondents, the manner of billing and the obvious lack of any intent to defraud on the part of Respondents, there was no evidence of any fraud, misrepresentation, trick, scheme or device, or breach of trust or culpable negligence on the part of Respondents in the maintenance of their property management escrow account.
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 that Respondents are guilty of one violation of Section 475.25(1)(k), Florida Statutes, and issuing a letter of guidance to Respondents for the violation. It is further recommended that the Florida Real Estate Commission enter a final Order dismissing the Counts of the Administrative Complaint charging Respondents with violations of Section 475.25(1)(b), Florida Statutes. RECOMMENDED this 28th day of December, 1990, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER 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 28th day of December, 1990.
The Issue The issue in this case is whether the allegations of the Administrative Complaints are correct and, if so, what penalties should be imposed.
Findings Of Fact At all times material to this case, Respondent Tailormade Management, Inc. ("Tailormade"), was a corporation registered as a licensed real estate broker in the State of Florida, license #0259180, located at 12811 Kenwood Lane, #218, Fort Myers, FL 33907. The president of Tailormade was R. C. Hendrickson ("Hendrickson"), an unlicensed person. At all times material to this case, Respondent Comprehensive Management, Inc. ("Comprehensive"), was a corporation registered as a licensed real estate broker in the State of Florida, license #0268646, located at 12811 Kenwood Lane, #218, Fort Myers, FL 33907. Until approximately January 30, 1991, the president of Comprehensive was Hendrickson. On or about January 30, 1991, Hendrickson resigned and relinquished her ownership and control to her son, Jay Coffing, an unlicensed person. The rental escrow account for each company was maintained by Hendrickson and the company bookkeeper. On direction of Hendrickson, the bookkeeper did not disclose information regarding rental escrow accounts to the licensed broker-salespersons. All accounts were reconciled by the bookkeeper who would provide the reconciliation data to the broker. The licensed broker- salespersons did not actually reconcile any accounts, but relied on the bookkeeper's data. At all times material to this case, Linda Futch ("Futch") was a licensed real estate broker in the State of Florida, license #0334770. The most recent license issued to Futch was as a broker-salesperson for Rawlings Realty, Inc., 1642 Colonial Boulevard, Fort Myers, FL 33907-1150. From approximately February 20, 1989 through approximately November 16, 1989, Futch was licensed and operating as qualifying broker and officer for Tailormade. On October 10, 1989, Hendrickson issued check #RE-1895 in the amount of $10,000 from the Tailormade rental escrow account to the Tailormade operating account. A check notation indicated that the funds were "advance management fees". Hendrickson admitted to the company bookkeeper that the funds were to be used to pay the outstanding balance owed to the previous co-owner of Tailormade, from whom Hendrickson had purchased the business. At no time during the period Futch acted as qualifying broker and officer for Tailormade did Futch prepare or sign written monthly escrow account statement reconciliations. Futch did not balance escrow liabilities with the escrow assets. Futch failed to make appropriate entries in monthly reconciliation statements which would note whether a shortage existed and whether corrective action had been taken. Futch maintained no records and was unable to provide any account documentation to the Petitioner's investigator. Futch resigned as Tailormade broker-salesperson effective November 16, 1989. Futch was apparently succeeded by Bette K. Potts. In November of 1990, Jeffrey C. Cooner met with a representative of Tailormade and leased a condominium unit, providing a deposit totaling $1,125 of which $350 was a pet and security deposit. Cooner eventually vacated the unit, 2/ and attempted to obtain a refund of the security deposit. By such time, the Tailormade office was vacant and closed. Cooner has received neither an accounting nor a refund of all or part of the security deposit paid to Tailormade. According to the bookkeeper, as of December, 1990, approximately $35,000 of rental escrow funds had been removed from the Tailormade rental escrow account by Hendrickson and had not been replaced. At all times material to this case, Janet Lynn Coffing ("Coffing"), Jay Coffing's wife, was a licensed real estate broker in the State of Florida, license #0268647. Coffing's most recent license was as a broker in limbo, listing her home address as 5410 Ashton Circle, Fort Myers, Florida, 33907-7828. From approximately February 21, 1991 through approximately May 28, 1991, Coffing was licensed and operating as qualifying broker and officer for Tailormade. From approximately February 14, 1991 through approximately June 14, 1991, Coffing was licensed and operating as qualifying broker and officer for Comprehensive. Coffing was aware, almost immediately after taking over as qualifying broker and officer for the companies that the escrow funds were short. She spoke to Hendrickson (her mother-in-law) and Jay Coffing about the situation, but apparently received no assistance from them. Coffing utilized operating funds to cover escrow shortages when escrow refunds were necessary, and continued to do so until all funds were depleted. On March 18, 1991, Charles W. Pease met with a representative of Comprehensive and leased a condominium unit at 13040 Tall Pine Circle in Fort Myers, Florida, providing two checks totaling $1,650 of which $500 was a security deposit. Upon vacating the unit, 3/ Pease attempted to obtain a refund of the security deposit but the Comprehensive office was vacant and closed. Pease has received neither an accounting nor a refund of all or part of the security deposit paid to Comprehensive. At some time in 1991, 4/ Debra and Kevin Campbell met with Coffing and leased a condominium unit located at 5418 Harbor Castle Drive. At the time the lease agreement was signed, the Campbells paid a $500 security deposit to Tailormade through Coffing. Upon vacating the unit, the Campbells attempted to obtain a refund of the security deposit but were unable to locate Coffing, and the Tailormade office was vacant and closed. The Campbells have received neither an accounting nor a refund of all or part of the security deposit paid to Tailormade. At no time during the period Coffing acted as qualifying broker and officer for either Tailormade or Comprehensive, did Coffing prepare or sign written monthly escrow account statement reconciliations. Coffing did not balance escrow liabilities with the escrow assets. Coffing failed to make appropriate entries in monthly reconciliation statements which would note whether a shortage existed and whether corrective action had been taken. Coffing maintained no records and was unable to provide account documentation to the Petitioner's investigator. On several occasions beginning on July 2, 1991, an investigator from the Department of Professional Regulation visited office location identified as the registered offices of the Respondent Tailormade and Comprehensive companies. The offices were vacant and closed. The investigator contacted Hendrickson and Jay Coffing, and attempted to obtain information from them, but was unable to maintain contact with them. The companies are apparently not operational.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Professional Regulation, Division of Real Estate, enter a Final Order determining Linda Futch guilty of the violations set forth herein and providing for a fine of $1,000, and a suspension of 90 days, to be followed by a probationary period of two years. During the probationary period, Futch shall complete 60 hours of continuing education, including a 30 hour management course for real estate brokers, and shall provide to the Florida Division of Real Estate all written monthly escrow account reconciliation statements for which she is responsible. That the Department of Professional Regulation, Division of Real Estate, enter a Final Order determining Janet Lynn Coffing guilty of the violations set forth herein and providing for a fine of $1,000, and a suspension of 180 days to be followed by a probationary period of three years. During the probationary period Coffing shall complete 60 hours of continuing education, including a 30 hour management course for real estate brokers, and shall provide to the Florida Division of Real Estate all written monthly escrow account reconciliation statements for which she is responsible. That the Department of Professional Regulation, Division of Real Estate enter a Final Order revoking the licensure of Respondents Tailormade Management, Inc., and Comprehensive Management, Inc. DONE and ENTERED this 15th day of July, 1992, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1992.
