Findings Of Fact Petitioner, Diane Aquino, is a 33 year old female who currently resides at 1271 North West 23rd Avenue, Pompano Beach, Florida. By application filed on February 10, 1981, Petitioner sought licensure as a real estate salesman by Respondent, Department of Professional Regulation, Board of Real Estate. (Respondent's Exhibit l) Question 7(a) on the application asked whether any judgment or decree of a court has been entered against the applicant in which the applicant was charged with any fraudulent or dishonest dealing. Question 15(a) asked whether the applicant has ever had any registration to practice a profession revoked, annulled or suspended upon grounds of fraudulent or dishonest dealing or violations of law. Question 15(b) asked whether applicant has ever surrendered her registration to practice any regulated profession or occupation. Aquino answered each of those questions affirmatively and included a written statement describing actions taken against her by the Securities and Exchange Commission (SFC) based upon fraudulent activities which occurred in 1976. The application was denied by Respondent by letter dated April 28, 1981, on the ground she had failed to demonstrate that she was "honest, truthful, trustworthy, and of good character, and ... (has) a good reputation for fair dealing." The denial precipitated the instant hearing. Between September, 1975, and April, 1976, Petitioner was employed by Colonial Securities, Inc. located in Jersey City, New Jersey, in the capacity of a registered sales assistant. Colonial was a broker-dealer registered with the SEC pursuant to Section 15A of the Securities Exchange Act of 1934. In 1977 Colonial, Petitioner and two other Colonial employees were the subject of an administrative proceeding instituted by the SEC charging that they had "willfully violated and willfully aided and abetted violations of Sections 5(a) and 5(c) of the Securities Act in that they, directly and indirectly, made use of the means and instruments of transportation and communication in interstate commerce and of the mails to offer, sell and deliver after sale shares of the common stock of Tucker (Drilling Company, Inc.) when no registration statement was filed or in effect as to such securities pursuant to the Securities Act." (Respondent's Exhibit l). Because of the time and expense involved in contesting these charges, and upon advice of her counsel, Aquino consented to the entry of an order by the SEC that made findings that she had willfully violated and willfully aided and abetted violations of Sections 5(a) and 5(c) of the Securities Act of 1933. The consent order also imposed the following sanctions: that Aquino be barred from association with any broker, dealer or investment company, except in a secretarial capacity; and that, after a period of two years she be permitted to apply to become reassociated in non-supervisory and non-proprietary capacity. Aquino is now reapplying for registration with the SEC. In addition to the sanctions imposed by the SEC, Petitioner has been enjoined by a federal court in New York from violating Sections 5(a) and 5(c) of the Securities Act of 1933. Since the entry of the consent order, Petitioner has owned and operated a laundry and dry cleaner business in Pompano Beach, Florida, and been employed as a sales assistant at a stock brokerage firm in Fort Lauderdale, Florida. Since 1980 she has been the president and 50 percent stockholder of Financial Communications, Inc., a small private investment company located in Pompano Beach, Florida. In her present business, Petitioner deals with private investors who entrust her with sums of money for different securities and stock investments. One such investor described her as being honest and trustworthy, and stated he is completely satisfied with the business relationship that they enjoy. Another investor attested to Aquino's excellent reputation for honesty and truthfulness. A former employer indicated he is willing to sponsor her reapplication for licensing with the SEC as a registered securities representative. He is also willing to hire her if that application is approved. Other than the difficulties incurred in 1977, Petitioner has had no other problems that would reflect adversely upon her reputation and integrity.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of Petitioner, Diane Aquino, for licensure as a real estate salesman be GRANTED. DONE and ENTERED this 29th day of September, 1981, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 1981. COPIES FURNISHED: Steven L. Rishken, Esquire Suite 203, Dadeland Towers North 9700 South Dadeland Boulevard Miami, Florida 33156 Linda A. Lawson, Esquire Assistant Attorney General The Capitol LL04 Tallahassee, Florida 32301 Diane Aquino 1271 NorthEast 23rd Avenue Pompano Beach, Florida 33062
Findings Of Fact Petitioner is a state licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular, Section 20.30, Florida Statutes, Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent, Lawrence R. Dennis is now and was at all times pertinent hereto a licensed real estate broker in the State of Florida having been issued license number 0148366 in accordance with Chapter 475, Florida Statutes. The last license issued was a broker, c/o Dennis & Associates, Inc., 4141 North Miami Avenue, #300, Miami, Florida 33127-2847. Respondent, Dennis & Associates, Inc., is now and was at all times pertinent hereto a corporation registered as a real estate broker in the State of Florida having been issued license number 0236428 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 4141 North Miami Avenue, #300, Miami, Florida 33127-2847. Sometime in September or October 1990 Janet Carter saw an advertisement in the Miami Times newspaper for a home for sale by Dennis and Associates, Inc. Mrs. Carter called the telephone number listed in the ad and talked with Mr. Dennis. After speaking with Mr. Dennis about the advertised property Mrs. Carter and her husband viewed the property and ultimately executed a contract to purchase the property which was owned by Dennis and Associates, Inc. Mrs. Carter knew that Mr. Dennis was a licensed real estate broker and felt that she was dealing with him in his capacity as a broker. Mrs. Carter understood that Mr. Dennis's corporation (Dennis & Associates, Inc.) was the owner and seller of the property. Mr. Dennis did not live in the home that the Carters were interested in buying and at all times the Carters were under the assumption that they were negotiating the purchase of a home through a licensed broker. There was, however, insufficient evidence to establish that Mr. Dennis misled the Carters into believing that he was acting in any capacity other than as the president of the corporation that owned the subject property. On or about October 22, 1990, Ms. Carter and her husband, Ruben, executed a Purchase and Sale Contract and Receipt for Deposit for property located at 2001 Northwest 53rd Street, Miami, Florida (Carter contract). The seller of the property was Dennis and Associates, Inc. In the first paragraph of the Carter contract, the receipt of the sum of $500.00 from the buyers as a deposit on account of the purchase price is acknowledged by the seller. The form language in that paragraph referring to the deposit being held in escrow is crossed out. The crossed out language is not signed or initialed by any of the parties to the transaction. 2/ On the second page of the Carter contract, the following provision was not altered by the parties: "Deposit check will be deposited, and the funds held in an escrow account until the sale has been closed." The $500.00 deposit was not paid by the Carters until November 19, 1990. Mrs. Carter believed the earnest money deposit was to be held in an escrow account. After signing the Purchase and Sale Contract and Receipt for Deposit the Carters took the contract to attorney Keith Levarity who prepared a two page Modification of Contract and attached it to the original contract. The Modification of Contract allowed the Carters, at their expense, to obtain a roof and termite inspection. The parties to the transaction agreed to that modification of the contract. Another provision in the Modification of Contract agreement provided that the earnest money deposit in the amount of $500.00 would be held in Mr. Levarity's trust account. Respondents did not agree to that modification and that provision was deleted from the Modification of Contract agreement. The Carters agreed to allow Mr. Dennis to hold the earnest money deposit in his escrow account and that portion of the Modification of Contract that referred to Mr. Levarity holding the earnest money deposit was crossed out, initialed by the Carters and by Mr. Dennis, and dated November 19, 1990. The Modification of Contract also provided that if defects were noted by the inspections, repairs to the house would be made by the sellers prior to the closing of the transaction. On November 19, 1990, Janet Carter gave Respondent Lawrence Dennis check number 541 in the amount of $500.00 as an earnest money deposit for the purchase of the property located at 2001 Northwest 53rd Street, Miami, Florida. The transaction never closed because certain repairs to the property were never made by the Respondents as agreed. On January 14, 1991, Mr. and Mrs. Carter advised Mr. Dennis by letter that they wished to cancel their contract and wanted a full refund of the $500.00 deposit. In addition to the letter of January 14, 1991, Mrs. Carter verbally told Mr. Dennis that the contract was cancelled and that she wanted her $500.00 earnest money deposit refunded. In December 1990, Respondents ordered a roof inspection to determine the extent of the repairs that would be needed. This inspection cost Respondents the sum of $50.00. Under the terms of the Carter contract as modified, the Respondents were to bear the cost of paying for that roof inspection. The Carters never ordered a roof inspection and were not, under the terms of their written contract, obligated to pay for the roof inspection ordered by Mr. Dennis. On or about February 25, 1991, Janet and Ruben Carter signed a release on deposit receipt provided by Mr. Dennis. The release on deposit provided that Mr. Dennis would return $450.00 of the $500.00 earnest money deposit made by the Carters. Mr. Dennis insisted on retaining the sum of $50.00 to pay for the roof inspection that he had ordered. Although the Carters believed they were entitled to the return of all of their earnest money deposit, they agreed to accept the sum of $450.00 on the advice of their attorney. On or about March 8, 1991, Janet Carter filed a complaint against Respondents with the Department of Professional Regulation. As of the time of the formal hearing, the Respondents had not repaid the Carters any portion of the $500.00 earnest money deposit they had made. Kenneth George Rehm is an experienced real estate investigator who had been employed by the Department of Professional Regulation for the ten years preceding the formal hearing. In March or April of 1991 Mr. Rehm went to the registered location of the office of Respondents to talk with Mr. Dennis about the complaint filed with the Department of Professional Regulation by Mrs. Carter. There was no sign indicating that the premises was a real estate office or that Lawrence Dennis was the broker of a real estate office either on the primary entry to the office or on the lobby directory. When Mr. Rehm brought the lack of a proper sign to Mr. Dennis's attention he put up a piece of paper with his name and the name of the company. Respondents established that at one time they had signs on the outside of Mr. Dennis's office suite and on the lobby directory, but that both signs had been stolen. It was not established when the thefts occurred or whether these thefts were the reason there were no signs in March or April 1991. Respondents had replaced their signs by the time of the formal hearing. Mr. Rehm interviewed Mr. Dennis about the Carter transaction on April 8, 1991. When Mr. Rehm asked to review the escrow account, Mr. Dennis told him that the Respondents did not have an escrow account and that, consequently, the Carter deposit was not being held in escrow. When informed by Respondent that there was no escrow account Mr. Rehm asked to review the operating account. Mr. Dennis refused to permit Mr. Rehm review of the operating account. Mr. Dennis telephoned Frederick H. Wilsen, Petitioner's Chief Staff Attorney, and inquired as to whether he had to give the operating account records to Mr. Rehm. After talking with Mr. Wilsen, Mr. Dennis agreed to allow Mr. Rehm review of the records for the operating account. On April 9, 1991, Mr. Rehm prepared a subpoena duces tecum directing Mr. Dennis as broker for Dennis and Associates, Inc., to produce at Petitioner's offices in Miami on April 15, 1991, all monthly bank statements, bank deposit slips, and cancelled checks for operating accounts and/or escrow accounts for the period of April 1, 1990, to the time of service of the subpoena on April 9, 1991. During Mr. Rehm's initial interview of Mr. Dennis he was told by Mr. Dennis that he could bring the subpoena to Respondents's office the following day at approximately 10:00. Mr. Rehm attempted to serve the subpoena at that time but Mr. Dennis was not at the office. Mr. Rehm contacted Mr. Dennis who indicated he would be at his office at approximately noon. Mr. Rehm was at Respondents's office at noon and Mr. Dennis was not there. Mr. Rehm returned to Respondents's office a third time in the afternoon and successfully served the subpoena duces tecum on Mr. Dennis. Mr. Dennis came to Mr. Rehm's office on April 15, 1991, but did not produce all the documents outlined in the subpoena duces tecum. On April 15, 1991, Mr. Rehm asked Mr. Dennis to produce cancelled checks and a bank statement for March of 1991. Mr. Dennis never complied with that request. The request for these records was within the scope of the subpoena. In response to the subpoena, Mr. Dennis gave Mr. Rehm a copy of two of the monthly bank statements for an escrow account (account number 20300562106) in the name of Dennis and Associates, Inc., at Eagle National Bank. The monthly statement for the period ending November 30, 1989, reflected that an overdraft in the amount of $8.91 existed in the account resulting from a bank service charge. The monthly statement for the period ending January 10, 1990, reflected a zero balance. There was no evidence of any activity in the escrow account subsequent to January 10, 1990. Mr. Dennis asserted the position that he did not have to provide records for an escrow account because Respondents did not have an active escrow account. That position is rejected. The evidence establishes that Respondents had, as of January 10, 1990, an escrow account at Eagle National Bank, and there was no persuasive evidence that this account had ever been closed. The documentary evidence introduced in this proceeding establishes that, as of January 10, 1990, the escrow account had a zero balance, but it does not establish that the account was closed. Mr. Dennis's testimony that he had asked that the account be closed is insufficient to establish that the account was closed, nor did it establish that Respondents were relieved of their duty to provide documentation in response to the subpoena that would enable Mr. Rehm to either audit the escrow account or verify that the account had been closed. When Mr. Rehm discussed the Carter contract with Mr. Dennis in late March 1991, Mr. Dennis stated he would return $450.00 of the $500.00 earnest money deposit to the Carters in the first week of April 1991. As of the date of the formal hearing Respondents had not refunded any of the earnest money deposit to the Carters. On or about November 30, 1990, a Final Judgment in case #90-2559-SP020 in the County Court in and for Dade County, Florida, was entered against Respondent Lawrence R. Dennis d/b/a Dennis & Associates, Inc., in favor of Nathaniel A. Greenidge and Joycelyn B. Greenidge. The award of the Final Judgment was for the principal sum of $3,200.00, prejudgment interest of $44.80, costs of $70.50 and attorneys' fees of $200.00 for a total of $3,515.30. The Final Judgment obtained by the Greenidges was a result of Respondents's refusal to refund an earnest money deposit taken by Respondents in conjunction with a real estate transaction involving Respondents as the seller of the property. Respondents refused to honor said Final Judgment, so the Greenidges had to levy on the subject real property and set it for Sheriff's sale on April 3, 1991. In an effort to obtain the debt owed by Respondents, the Greenidges entered into an agreement to cancel the Sheriff's sale in exchange for receipt of $3,500.00 from a third party purchasing the property. The agreement set a closing on or before 30 days from the date of the agreement. Respondents did not timely pay the Greenidges. On or about March 27, 1992, Respondents paid the Greenidges approximately $3,000.00, which they accepted in satisfaction of the final judgment. On or about October 16, 1990, the Respondents were issued a letter of guidance from the Florida Real Estate Commission for a violation of Section 475.25(1)(d), Florida Statutes, and Rule 21V-10.032, Florida Administrative Code. On or about February 19, 1991, a Final Order was issued by the Florida Real Estate Commission in DOAH Case No. 90-5124 (DPR Case Nos. 0148366 and 0236428) incorporating a stipulation disciplining Respondent for breach of trust in a business transaction, failure to account and deliver a deposit and failure to notify the Florida Real Estate Commission of a deposit dispute. That proceeding pertained to dealings between Respondents and Gwendolyn King and Roxie Ann King. On or about August 26, 1991, Mr. Wilsen, sent a letter to Respondents in reply to a letter sent to Mr. Wilsen by Respondents on or about July 31, 1991. Mr. Wilsen's letter stated, in pertinent part: It is a matter of private agreement as to who will hold the deposit and where the account will be maintained. As the property owner, you may hold the funds so long as you have the mutual prior knowledge and consent of the parties you are dealing with in the transaction." The King, Greenidge, and Carter transactions all occurred prior to Respondents's July 31, 1991, letter to Mr. Wilsen. Mr. Dennis did not rely on Mr. Wilsen's reply in his dealings with the Kings, the Carters, or the Greenidges.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered which adopts the findings of fact contained herein and which suspends the licensure of both Respondents for a period of one year and which assesses an administrative fine in the total amount of $500.00. DONE AND ORDERED this 9th day of July, 1992, 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 9th day of July, 1992.
Findings Of Fact Petitioner filed application for registration with respondent a a securities agent with First Florida Securities Inc., Pompano Beach, Florida, on March, 1977. Although he met the various statutory and regulatory procedural requirements for registration, on or about May 19, 1977, he was advised by the Director, Division of Securities, of intended denial of his application and advised of his right to petition for an administrative hearing. Petitioner did so request a hearing on June 2, 1977. The stated ground for the proposed denial of the application in accompanying "Administrative Charges and Complaint" was as follows: "The license application of respondent was refused or denied by the Division of Securities, Department of Banking and Finance, State of Florida, by stipulation and consent on February 18, 1976. Said denial constitutes prima facie of unworthiness to transact the business of a securities salesman In the State of Florida." The above-mentioned "Stipulation and Consent" resulted from a prior application denial by respondent of an application by MFP Petroleum Exploration and Investment, Inc., its officers and salesman, including petitioner. The grounds for denial of petitioner's application in that instance were that he had sold unregistered securities in the form of shares in oil drilling ventures in violation of Section 517.07, F.S., while not registered as a securities salesman in further violation of Section 517.12(1), F.S. The various parties in that administrative proceeding consented to the denial of their applications by stipulation without admitting the allegations of respondent. (Exhibits 1, 2, 4, 5) Petitioner has never been registered with respondent as a securities dealer, agent or salesman. He testified that when he joined MFP sometime in 1974, its president, Mark F. Preddy, led him to believe that one selling interests in oil drilling ventures need not register as a salesman in Florida. Consequently, he sold such interests to clients for several months before he learned that it was necessary for him to be so registered. Some nine months after commencing employment with MFP, he went to Shreveport, Louisiana, to take securities examinations for Florida and the NASD. After waiting approximately three months more to obtain the results of the MFP application for registration, he resigned from the firm. He admitted selling during the entire nine-month period in which he had been associated with MFP, even though he knew during a substantial portion of that period that registration was required. After his resignation, he authorized an attorney to execute the "Stipulation and Consent" which authorized respondent to deny his application for registration. (Testimony of Weber, Exhibits 2, 3, 5) A client of petitioner testified as to the latter's honesty and conscientiousness. (Testimony of Hansis) Respondent's Assistant Director, Division of Securities, stated the Division's position that although it felt justified in denying petitioner's current application, it would be amenable to reevaluate any application submitted one year from the final order in this proceeding and, if petitioner's record was clear and he otherwise met requirements for registration, it would issue the same on a supervised basis for a period of one year. (Testimony of Brandi)
Recommendation That petitioner Paul Anthony Weber be issued a certificate of registration as a securities salesman pursuant to Chapter 517, Florida Statutes. DONE and ENTERED this day of August, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Ryland Terry Rigsby, Esquire Assistant General Counsel Office of the Comptroller Legal Annex Tallahassee, Florida 32304 Paul Anthony Weber 1745 Northeast Fifty-Second Street Ft. Lauderdale, Florida 33308
The Issue The issue presented is whether Respondents are guilty of the allegations contained in the Amended Administrative Complaint, and, if so, what action should be taken against them, if any.
Findings Of Fact At all times material hereto, Respondent Boca Insurance Lenders, Inc. (hereinafter "Boca"), has been a Florida corporation involved in the business of purchasing life insurance assignments. Some beneficiaries of insurance policies are unable to pay for the funeral of the friend or relative insured by that policy, and most funeral homes require payment in full for the funeral expenses at the time the funeral is scheduled. Under the arrangement that Boca has with certain funeral homes, the beneficiary of the life insurance policy of a decedent can assign the policy to the selected funeral home. The funeral home then assigns the policy to Respondent Boca, and Boca pays the funeral home the cost of the funeral. Respondent Boca's profit results from a 6 percent discount on the monies paid. Shares of preferred stock of Respondent Boca were sold for $1,000 a share. Respondent Boca ceased selling its preferred stock in March 1994, converted and/or re-acquired the outstanding shares, and began selling bonds issued by the company instead. Purchasers of preferred shares of the stock of Respondent Boca earned a return of 12 percent, 14 percent if their investment was held longer than one year. Purchasers of the bonds issued instead of the preferred shares of stock received the same return on their investment as was paid on the preferred shares. At all times material hereto, Respondent Equity Investment Club, Inc. (hereinafter "Equity"), has been a Florida corporation. The business purpose of Respondent Equity is to allow persons to deposit small amounts of money in a personal account akin to a Christmas Club, except that such persons can withdraw their money on 24-hours notice. Account owners earn a return of 6 percent on their deposits. The monies deposited in such accounts were "pooled" by Respondent Equity and used by Respondent Equity to purchase Respondent Boca's shares of preferred stock. At all times material hereto, Respondent Alec Shatz was the president and the director of both Respondent Boca and Respondent Equity. He was also the sole stockholder of Respondent Equity. Respondents admit that Respondent Shatz directed, controlled, supervised, managed, and participated in the acts, practices, and policies of Respondents Boca and Equity. In conjunction with commencing sales of its preferred shares, Respondent Boca filed with the United States Securities and Exchange Commission a Form D which is a Notice of Sale of Securities pursuant to Regulation D, Section 4(6), a Uniform Limited Offering Exemption. When Respondent Equity was formed, it also filed a Form D with the Securities and Exchange Commission under Rule 504. Filing a Form D notice that stock will be sold pursuant to an exemption from registration is not the same as registering a stock with the Securites and Exchange Commission. Respondents Boca and Shatz did not register the preferred shares of stock with the Department, and neither Respondent Boca nor Shatz is or has been registered with the Department to sell or offer for sale securities as a dealer, as an associated person, or as an issuer. One of the ways in which Respondent Boca marketed its preferred shares of stock was by advertising seminars which could be attended by members of the public. Advertisements appeared in newspapers and were aired on the radio. It was not necessary that a potential investor attend one of Respondent Boca's seminars in order to purchase Boca's preferred shares. Employees of Respondent Boca attended the seminars and gave presentations. They also answered questions from members of the public attending the seminars. Information about Respondent Boca, Respondent Equity, and Respondent Shatz' other companies was given out at the seminars. A prospectus for Respondent Boca was also given out. The seminar advertisement which appeared in The Palm Beach Post on February 22, 1993, on behalf of Respondent Boca represented that one could earn 12 percent interest on a "No Risk Return", that there was no penalty for withdrawal, that the investment was "liquid," and that interest was paid every 60 days. The advertisement also read: "Registered with S.E.C". (Part of the advertisement, which was admitted as Joint Exhibit numbered l, is illegible.) By September 27, 1993, the advertisement which appeared in The Palm Beach Post remained substantially the same except that the interest rate was 14 percent, the phrase "Your Money Guaranteed through Insurance Payments" had been added, and the ad read "Register [sic] under S.E.C. exemptions". An October 25, 1993, advertisement was the same except that the word "interest" now read "dividend". However, a February 14, 1994, advertisement used the word "interest" rather than "dividend". Respondent Boca's September 18, 1995, advertisement also used the word "interest", represented that "This is a Minimum Risk Return!", and stated that "Our Investment Involve [sic] Insurance Company". The advertisement contained no language as to any registration with either the S.E.C. or the Department. Although some persons purchasing Respondent Boca's preferred shares were "accredited investors", no purchasers were questioned by Respondents Boca or Shatz as to their financial ability or experience to determine if they were accredited investors prior to their purchase of Boca's preferred shares. At some of the seminars conducted by Respondents Boca and Shatz, attendees were also given information regarding the membership accounts offered by Respondent Equity. Between May 7, 1992, and March 14, 1994, Respondent Boca made 137 sales of its preferred shares of stock. In April 1993 Respondent Shatz announced the establishment of Respondent Equity as an investment club for the purpose of raising money for Respondent Boca by having the investment club purchase Respondent Boca's stock. In May 1993 five membership accounts in Respondent Equity were opened, and those members subsequently made additional deposits in their accounts. Once the accounts were opened, Respondent Equity became the sole manager of those funds. On July 2, 1993, Respondent Equity purchased five shares of Respondent Boca's stock with the combined monies from the membership accounts. Respondent Equity has not registered its securities with the Department, and neither Respondent Equity nor Respondent Shatz is registered with the Department to sell or offer to sell its membership accounts as an issuer, as a broker/dealer, or as an associated person. A pamphlet regarding Respondent Boca's offering, labeled "prospectus" but generally known as a private placement memorandum, was given to attendees who wanted one at each seminar. No prospectus was available regarding Respondent Equity's offering. As the advertisements placed by Respondents Boca and Shatz changed, so did the prospectus for Respondent Boca. Boca's February 1, 1993, prospectus carried a caveat on the cover page that the securities of Boca and its prospectus were neither approved or disapproved by the Securities and Exchange Commission. The September 1, 1993, prospectus carried the same caveat. However, the November 1, 1993, and the April l, 1994, prospectuses added to that caveat an additional statement that the securities of Respondent Boca were not registered with the Department but the firm was registered as an issuer/dealer to sell its own securities. Between June 15, 1993, and January 14, 1994, neither Respondent Boca nor Respondent Shatz had access to all of the corporate books and records for the time period prior to June 15, 1993, since those records were in the possession of Respondent Boca's accountant/escrow agent. Respondent Boca's September 1, 1993, prospectus, its September 1, 1993, revised prospectus, and its November 1, 1993, prospectus represented that any purchaser of Boca's preferred shares had the right of access upon reasonable notice to Boca's books and records. Further, the November 1, 1993, prospectus offered that right of access to potential purchasers. Respondent Boca's September 1, 1993, prospectus represents that Larry Rosenman was Boca's escrow agent possessing copies of all assignments of insurance policies. That information was also provided orally to those attending Respondent Boca's September 30, 1993, seminar. On October 7, 1993, Rosenman wrote a letter to Respondents Boca and Shatz denying that he had agreed to be Boca's escrow agent, demanding that Boca and Shatz cease any representations to the contrary, and demanding that Boca and Shatz notify anyone who had received the September 1, 1993, prospectus that the representation in the prospectus that Rosenman was the escrow agent was not accurate. By letter dated October 8, Respondent Shatz wrote Rosenman apologizing for the error, agreeing to remove Rosenman's name from Boca's prospectus, and agreeing to notify all persons who had received the prospectus that Rosenman's name should not have been listed. Respondents Shatz and Boca issued a revised September 1, 1993, prospectus deleting any reference to an escrow agent and, specifically, deleting Rosenman's name. They did not notify all persons who may have received the original September 1 prospectus. Thereafter, none of Respondent Boca's prospectuses represented that Boca had an escrow agent. Attorney Tina Talarchyk was Respondent Boca's "in-house counsel" from October 1, 1993, through December 1993. She denied at hearing that she was also Boca's escrow agent during that time period and that she had ever executed the temporary escrow agent agreement written on her letterhead and admitted in evidence in this cause. She offered no explanation for the other items of correspondence admitted in evidence which reflect she was the person handling the redemption of stock certificates when investors wished to withdraw their monies invested in Respondent Boca. As she appeared to be carrying out the duties of an escrow agent on her professional letterhead and as she represented herself to an investor to be Boca's escrow agent, she acted as an escrow agent on behalf of Respondent Boca during that time period. On October 7, 1994, Respondents Boca and Shatz directed a letter to all investors that incorrect statements had been made in the past. The letter specifically advised that Respondent Boca did not have an escrow agent at that time, that Respondent Boca had never been registered as an issuer/dealer to sell its own securities, and that, although any investor could examine the company's books and records, no audit had been performed at that time. The letter also offered to return any investor's money. No investor requested the return of any monies based upon the contents of that letter. No investor relied upon any misrepresentation or "incorrect statement" in investing in Respondent Boca. The investors who testified at the final hearing conducted their own "due diligence" inquiry before investing in Respondent Boca and discovered, as the Department's own investigators discovered, that there were no complaints regarding Respondents made to any local or state agency. On occasion, a former employee of Respondent Boca found that an entry in Boca's accounts receivable journal had not yet been deleted when he thought it should have been. From August 18 to August 25, 1993, one of Respondent Boca's bookkeepers gave Respondent Shatz a report that she prepared indicating that Respondent Boca had a negative bank balance. Respondent Boca never missed making timely any interest or dividend payment to any investor who purchased Boca's preferred shares and, later, Boca's bonds. Similarly, Respondent Equity never missed making timely any interest payment to any investor having a membership account. Every person who purchased preferred shares in Respondent Boca was able to redeem those certificates and receive back the money invested in Boca upon electing to do so. Similarly, every member of Respondent Equity was able to withdraw their monies upon electing to do so. The Department has never received a complaint from any investor in Respondent Boca regarding Boca's or Respondent Shatz' business practices. Similarly, the Department has never received a complaint from any member of Respondent Equity regarding Equity's or Respondent Shatz' business practices. Although the Department has examined and copied Respondents' business records at the corporate office on several occasions, and although the Department has interrogated investors in Respondent Boca and members of Respondent Equity, some of them on repeated occasions, the Department has not discovered any investor or member who has been injured by Respondents' business practices, by Respondents' failure to register with the Securities and Exchange Commission and the Department, or by any representations made by Respondent Shatz at Boca's seminars or by Respondents Shatz or Boca in any of Boca's prospectuses. Further, the Department has not discovered any investor or member who relied on any erroneous or inaccurate statement made by any Respondent in deciding to invest in Respondent Boca or open a membership account in Respondent Equity. A Department investigator attended the September 30, 1993, seminar after seeing the newspaper advertisement and ascertaining that Respondents Boca and Shatz and Boca's securities were not registered with the Department. He also attended the February 17, 1994, seminar. Fifty-five of the 137 sales made by Respondents Boca and Shatz occurred after the first seminar which he attended.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered: Finding Respondents Boca and Shatz not guilty of the allegations contained in counts 1-4 of the Amended Administrative Complaint filed against them; Finding Respondents Equity and Shatz guilty of the allegations against them contained in counts 5-19; Finding Respondents Boca and Shatz guilty of the allegations against them contained in counts 20-430; Ordering Respondents to cease and desist from the sale of unregistered securities by unregistered persons and entities; Imposing an administrative fine in the amount of $100 for each of the 137 transactions against Respondents Boca and Shatz, jointly and severally, for a total of $13,700; Imposing an administrative fine in the amount of $100 for each of the 5 membership accounts against Respondents Equity and Shatz, jointly and severally, for a total of $500. DONE and ENTERED this 30th day of July, 1996, at Tallahassee, Leon County, Florida. 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 30th day of July, 1996. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 94-6671 Petitioner's proposed findings of fact numbered 2-6, 8, 11, 13, 14, 16- 18, 22, 24, 25, 28, 29, and 33 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 1, 7, 9, 15, 19, and 20 have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel, or recitation of the testimony. Petitioner's proposed findings of fact numbered 10, 21, 23, 27, and 31 have been rejected as not being supported by the weight of the evidence. Petitioner's proposed findings of fact numbered 12, 26, 30, 32, and 37- 40 have been rejected as being subordinate to the issues involved herein. Petitioner's proposed findings of fact numbered 34 and 36 have been rejected since they are illegible. Petitioner's proposed finding of fact numbered 35 has been rejected as being irrelevant. Respondents' proposed findings of fact numbered 1-3, 11, 13, 18, 23, 40, and 41 have been adopted either verbatim or in substance in this Recommended Order. Respondents' proposed findings of fact numbered 4, 6-10, 12, 19-21, 24, 29, 30, 32-34, 36-39, 42, and 43 have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel, or recitation of the testimony. Respondents' proposed findings of fact numbered 5, 14-17, and 35 have been rejected as being irrelevant to the issues herein. Respondents' proposed findings of fact numbered 22, 25, 28, and 31 have been rejected as being subordinate to the issues involved herein. Respondents' proposed findings of fact numbered 26 and 27 have been rejected as not being supported by the weight of the evidence. COPIES FURNISHED: John D. O'Neill, Esquire Department of Banking and Finance Division of Securities and Investor Protection The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Alec Shatz 5850 West Atlantic Avenue Suite 103 Delray Beach, Florida 33484 Hon. Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350
The Issue The central issue in this case is whether Respondent's yacht and ship salesman's license should be disciplined for the reasons set forth in the notice of intent to revoke license dated June 14, 1994.
Findings Of Fact The Department is the state agency charged with the responsibility to regulate persons pursuant to Chapter 326, Florida Statutes. On April 30, 1993, the Department received an application for a yacht and ship broker or salesman license (the application) submitted by Respondent, Thomas I. Davis, Jr. The application provided, in pertinent part: LICENSES AND CERTIFICATES: Have you now or have you ever been licensed or certified in any other profession such as real estate, insurance, or securities in Florida or any other state? Yes No If you answered yes, please describe: Profession License # First Obtained Status of License (a)Has any license, certification, registration or permit to practice any regulated profession or occupation been revoked, annulled or suspended in this or any other state, or is any proceeding now pending? Yes No (b) Have you ever resigned or withdrawn from, or surrendered any license, registration or permit to practice any regulated profession, occupation or vocation which such charges were pending? Yes No If your answer to questions (a) or (b) is Yes, attach a complete, signed statement giving the name and address of the officer, board, commission, court or governmental agency or department before whom the matter was, or is now, pending and give the nature of the charges and relate the facts. In response to the application questions identified above, Respondent entered the following answers: "No" as to questions 11, 12(a), and 12(b). As a result of the foregoing, Respondent was issued a yacht and ship salesman's license on May 10, 1993. Thereafter, the Department learned that Respondent had been censured by the NASD. In a decision entered by that body accepting Respondent's offer of settlement, Respondent was given a censure, a fine of $20,000.00, and a suspension in all capacities from association with any member for a period of two (2) years with the requirement that at the conclusion of such suspension that he requalify by examination for any and all licenses with the Association. The censure also provided a specific payment plan for the $20,000 fine which was assessed. To date, Respondent has not complied with that provision of the settlement. From 1973 through 1991, Respondent was registered with several different firms pursuant to Chapter 517, Florida Statutes. Additionally, Respondent has been licensed to sell securities in the following states: California, Colorado, Connecticut, Delaware, Idaho, Illinois, Louisiana, Maine, Maryland, Nevada, and New York. Respondent has also been licensed in Washington, D.C. and Puerto Rico. Respondent has been a licensed stock broker with the Securities and Exchange Commission since 1971. Respondent answered questions 11 and 12 (a) and (b) falsely. Respondent knew he was licensed to sell securities and knew of the sanction from the NASD at all times material to the entry of the answers. Pursuant to Rule 61B-60.003, when the Department receives an application for licensure which is in the acceptable form, it is required to issue a temporary license. Had the Respondent correctly answered questions 11 and 12 on the application, the Department would not have issued Respondent's license.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Department of Business and Professional Regulation, Division of Florida Land Sales, Condominiums, and Mobile Homes, enter a final order dismissing Respondent's challenge to the notice of intent and revoking his license. DONE AND RECOMMENDED this 13th day of March, 1995, in Tallahassee, Leon County, Florida. JOYOUS D. 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 13th day of March, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-4258 Rulings on the proposed findings of fact submitted by the Petitioner: Paragraphs 1 through 9, 11, 13, and 15 through 17 are accepted. Paragraph 10 is rejected as repetitive. Except as to findings reached above, paragraphs 12 and 14 are rejected as irrelevant. It is found that Respondent falsely answered question 11. Rulings on the proposed findings of fact submitted by the Respondent: Respondent's proposed findings of fact are rejected as they do not comply with Rule 60Q-2.031(3), Florida Administrative Code. However, to the extent findings do not conflict with the findings of fact above, they have been accepted. Such proposed findings of fact are paragraphs: 1, 7 and 8. The remaining paragraphs are rejected as they are not supported by the record cited (none), irrelevant, argument, or contrary to the weight of the credible evidence. COPIES FURNISHED: Lynda L. Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 E. Harper Field Senior Attorney Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-1007 David M. Goldstein LAW OFFICE OF DAVID M. GOLDSTEIN 100 S.E. 2nd Street Suite 2750 International Place Miami, Florida 33131
The Issue The issue proposed in the Department's "Recommended Order" is: Whether the Department was substantially justified in bringing this action, or that special circumstances exist which would make an award of attorney's fees unjust, pursuant to Section 57.111, Florida Statutes (1983). As Respondent, the Department has not contested Ms. Fieber's allegations of standing as a "prevailing small business party" nor the reasonableness of the fees and costs claimed by Ms. Fieber.
Findings Of Fact Kimberlee M. Fieber is a licensed mortgage solicitor, having been issued license number HK 0008319 by the Department of Banking and Finance ("Department"). Ms. Fieber was employed by State Capital Corporation in the capacity of a mortgage solicitor commencing in 1983 and ending in August 1984. (Stipulation Agreement filed February 17, 1987; R 53, 132.) The Department began investigating State Capital Corporation in 1982, and in July of that year filed suit against the corporation, its directors, officers and certain named employees (not Kimberlee Fieber), charging eleven counts of securities and mortgage brokerage act offenses. (R 1-24, 160-161) The parties executed stipulations for final judgment, and judgment was entered on April 11, 1983, restraining the defendants from making certain representations to investors and from other specific violations of Chapters 494 and 517 F.S.. 25-28) Anthony Bernardo lives in Ft. Myers, Florida. Sometime in early 1983 he saw a State Capital Corporation advertisement regarding investment opportunities. He contacted the company and on June 27, 1983, Kimberlee Fieber came to his house to answer his questions. After about one hour Mr. Bernardo gave Ms. Fieber a check for $5,000.00 to invest as a loan yielding 18 percent interest, secured by a mortgage on commercial property. (R 30-32, 68-80) This was the first and only contact he had with Ms. Fieber. (R 74) Approximately two weeks later, the Bernardos received the papers related to their investment, including a Mortgage Deed, described in boldfaced print on the first page as a first mortgage of equal dignity with other first mortgages to be given in the total amount of $260,000.00, on a motel in Ft. Lauderdale. (R 32, 73) The Bernardos began receiving their $75.00 per month interest payments; in November 1983, they exercised an option to continue the investment for an additional twelve months at the same interest rate. (R 38) After reading some adverse articles about State Capital Corporation in the newspaper, Anthony Bernardo decided not to continue his loan beyond the term ending December 31, 1984. He informed the company in writing. (R 50, 83-85) When he did not receive his $5,000.00, he began calling the company on January 7, 1985. (R 84) He sent a letter dated January 16, 1985, to Gary Allen at State Capital Corporation demanding the return of his $5,000.00 with interest from January 1, 1985. He sent a copy of that letter to Gerald Lewis, State Comptroller. (R 50) On January 31, 1985, John Willard, an investigator for the Office of the Comptroller, interviewed Anthony Bernardo by telephone. The investigator's notes of that interview reflect the facts described in paragraphs 3 and 4, above, but also note that during Ms. Fieber's explanation of the investment, she did not explain to the Bernardos what equal dignity mortgages were, nor did she disclose that the Comptroller's Office had taken action against State Capital Corporation. The investigator noted that Bernardo told him that Ms. Fieber suggested he call the Comptroller's Office as a reference. (R 51-52) On February 14, 1985, Anthony Bernardo received his $5,000.00 from State Capital Corporation along with full interest. (R 85-86) John Willard never interviewed nor contacted Anthony Bernardo again, nor did he ever interview Ms. Fieber or anyone else regarding the Fieber case. He conducted interviews with other investors. He had some general discussion with an attorney in the Comptroller's Office about solicitors who had been employed by State Capital Corporation who may have committed misrepresentations regarding the sale of equal dignity mortgages. (R 170-173) He told the attorney, John Root, that the only thing they had in the file on Ms. Fieber was the memorandum of his interview with Anthony Bernardo. (R 174) Nothing in the record suggests that any other investigation of Ms. Fieber was done. On April 2, 1986, the Department served Kimberlee M. Fieber, as individual Respondent, a Notice of Intention to Suspend and Administrative Charges and Complaint which provided, in pertinent part: * * * STATEMENT OF FACTS Under the Provisions of Chapter 494, Florida Statutes (1983), the Department is charged with the responsibility and duty of administering and enforcing the provisions of the ACT, which includes the duty to suspend the licenses of those persons registered under the ACT for violations of the terms therein, as set forth in Section 494.05, Florida Statutes (1983). Kimberlee M. Fieber is a mortgage solicitor, who has been issued license number HK 0008319 by the DEPARTMENT. Formerly, Respondent was a mortgage solicitor for State Capital Corporation. As authorized by Section 494.071(1), Florida Statutes (1983), the DEPARTMENT conducted an investigation of the affairs of State Capital Corporation under the ACT. During that investigation, the DEPARTMENT took a statement from A. G. Bernardo. Mr. Bernardo stated that he had first heard of State Capital Corporation through its advertisements in the newspaper, to which he responded. After Mr. Bernardo contacted State Capital in answer to the advertisements, Respondent went to his home to attempt to persuade him to invest. During her sales talk, Respondent failed and neglected to explain the concept of equal dignity mortgages to Mr. Bernardo. Respondent also failed and neglected to disclose to Mr. Bernardo that the DEPARTMENT had taken legal action against State Capital and, in fact, suggested that Mr. Bernardo call the Department as a reference. Based on Respondent's representations, Mr. Bernardo invested $5,000.00 with State Capital Corporation. In return for his investment, Mr. Bernardo received an equal dignity first mortgage on a small motel. Mr. Bernardo's note became due after six months, and he renewed his investment for another period, this time of a year. When the one year renewal period had expired, Mr. Bernardo had decided not to renew his investment because of newspaper articles telling of State Capital's financial difficulties, and he notified State Capital of his decision and made demand on it for the return of his investment. Said mortgage note was due to be paid in December, 1984. However, payment was not made to Mr. Bernardo at that time, nor within a reasonable time thereafter.
Findings Of Fact Respondent, George G. Walsh, is a licensed real estate broker in the State of Florida, holding license number 0117943. Mr. Walsh is the owner of and the qualifying broker for G. G. Jerry Walsh Real Estate, located in Panama city, Florida. In May 1989, Respondent was the acting broker for Howard Bilford of Miami, Florida. Mr. Bilford owned a five acre parcel of property located in Bay County, Florida. Around May 15, 1989, Tama and Paul Russ, through Mr. Walsh's office, entered into a contract for the purchase of Mr. Bilford's property. The purchase price of the property was $15,000. The Russ' gave Mr. Walsh a $500 binder for deposit in his escrow account. The $500 was placed in Respondent's escrow account. Simultaneous with the signing of the sales contract and deposit receipt agreement, Mr. Walsh also prepared an estimated closing cost statement. On that closing cost statement, Mr. Walsh estimated that a survey of the property would cost the Russ' $450. During this meeting, Mr. Walsh explained to the Russ' that, especially if a financial institution was involved in the financing of the property, there would be certain costs which they would probably have to pay up front. Part of those costs included a survey of the property. At about the same time, the Russ' made application for a loan to a credit union located in Panama City, Florida. At the time of the loan application, the loan officers Mrs. Stokes, prepared a closing cost statement estimating the loan closing costs which the Russ' would encounter. On the credit union's closing cost statement, the cost of a survey was estimated to be $150 to $200. Since it was the credit union that required the survey, the Russ' believed that that estimate was the more accurate. The Russ' simply could not afford a $500 survey. As part of the loan application, an appraisal of the property was required. The appraisal was ordered by the credit union on May 16, 1989, and was completed on May 31, 1989. Unfortunately, the property had been vandalized by unknown persons, and the mobile home which was on the property had suffered severe and substantial damage. The appraisal indicated that the real estate was worth $10,500. With such a low appraisal, the credit union would not lend the amount necessary to purchase the property at the negotiated price. In an effort to renegotiate the property's price, Tama Russ inspected the property and prepared a list of the items which would have to be repaired to make the mobile home liveable. At the same time, the Russ' placed no trespassing signs and pulled logs across the entry to the property. The Russ' also placed padlocks on the doors to the mobile home and removed the accumulated garbage inside the mobile home in an effort to secure the property. They made no other repairs to the property. On June 1, 1990, the Russ' told the loan officer to hold the loan application. At some point during this process, both Mr. Walsh and the Russ' became aware that the survey would cost a considerable amount more than had been expected. By using a favor with Mr. Walsingham of County Wide Surveying, Mr. Walsh obtained a survey price of $500 for the Russ'. In an effort to help the Russ' close on the property, Mr. Walsh contacted Mr. Bilford to see if he would agree to pay the $500 survey cost. Mr. Bilford so agreed, contingent on the closure of the transaction, and sent Mr. Walsh a check made out to County Wide Surveying in the amount of $500. At that point, the Russ' believed that they were no longer obligated to pay for the survey since Mr. Walsh told them that Mr. Bilford was to pay for the survey. On June 3, 1989, Mr. Bilford agreed to a renegotiated price of $10,500.00 on the property. Additionally the Russ' agreed to sign a ten year promissory note for $2,000 bearing 11% interest per annum. Since there were changes in the terms of the contract, the Russ' entered into a net contract with Mr. Bilford on June 3, 1989. The new contract expired on June 30, 1989. Around June 5, 1989, the Russ' learned that their credit had been preliminarily approved. However, such preliminary approval only indicated that the Russ' had sufficient income to proceed with the more costly loan underwriting requirements of the credit union. Such preliminary approval did not indicate that the loan would be finally approved by the financial institution. The preliminary approval was communicated to Mr. Walsh by Tama Russ. Ms. Russ intended the communication to mean that they had been preliminarily approved by the financial institution. Mr. Walsh in an abundance caution contacted Mrs. Stokes, the loan officer. Mrs. Stokes advised him that the Russ' credit had been preliminarily approved. She did not tell him that the loan had been finally approved. Through a misunderstanding of what Mrs. Stokes communicated to him, Mr. Walsh ordered the survey from County Wide Realty on June 7, 1989. There was no reliable evidence presented that the credit union had authorized him to order the survey. The credit union at no time during this process ordered the survey. Mr. Walsh testified that Ms. Russ told him to order the survey. Ms. Russ denies that she gave Mr. Walsh permission to order the survey. At best this evidence goes only to demonstrate Respondent's intent with regards to the actions he undertook in this case and removes this case from a Section 475.25(1)(b), Florida Statutes, violation. At some point Ms. Stokes left the employ of the credit union. On June 16, 1989, as part of her leaving, she unilaterally closed the Russ' loan application file and cancelled the loan application. Neither the Russ' nor Mr. Walsh were notified of the closure or the cancellation. The credit union's file fell into the void created between a change of employees. Because Mr. Walsh was unaware of Ms. Stokes' actions, Mr. Walsh, on July 13, 1989, after the expiration of the Russ' sales contract, contacted the credit union in order to obtain the loan closing package from the institution. The credit union had to hunt for the Russ' file. The credit union president called the Russ' about the loan and he was advised that they did not want the loan. The credit union's president then reviewed the loan file and noted that the Russ' had insufficient income to come up with the amount of the promissory note. He also thought the real estate constituted insufficient collateral for the loan. The loan application was officially denied on July 15, 1989. The Russ' were notified of the credit union's denial credit. The real estate transaction never closed. However, sometime after July 15, 1989, Mr. Walsh received the survey from County Wide. The survey indicates that the field work for the survey was completed on July 17, 1989, and that it was drawn on July 18, 1989. 1/ There was no reliable evidence which indicated any attempt had been made to cancel the survey. Sometime, after July 15, 1989, Tama Russ contacted Mr. Walsh in order to obtain the return of their $500 deposit. After many failed attempts to get the Russ' to voluntarily agree to pay for the cost of the survey, Mr. Walsh, around October, 1989, unilaterally paid the Russ' deposit to County Wide Realty. Mr. Walsh followed this course of action after speaking with some local FREC members who advised him that since FREC was swamped with deposit disputes that nothing would happen as long as he used his best judgment. The payment of the deposit to the surveyor, without prior authorization from the Ruse' violates Section 475.25(1)(d) and (k) Florida Statutes.
Recommendation Based on the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, the pleadings and argument of the parties, it is therefore, RECOMMENDED that the Florida Real Estate Commission enter a Final Order finding Respondent guilty of violating Sections 475.25(1)(d) and 475.25(1)(k), Florida Statutes, issuing a letter of reprimand to Respondent with instructions to immediately replace the Russ' trust deposit and forthwith submit the matter to the commission for an escrow disbursement order and levying a $250 fine. IT IS FURTHER RECOMMENDED that the portions of the Administrative Complaint alleging violation of Section 475.25(1)(b) be dismissed. DONE and ENTERED this 29th day of January, 1991, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of January, 1991.
Findings Of Fact Respondent has been employed in the securities industry since approximately 1957. He has worked for a number of broker/dealers over the years and is familiar with the procedures involved in transferring employment from one broker to another. It is the custom in the securities industry that when a securities salesperson changes employment, forms U-4 and U-5 are filed with the National Association of Securities Dealers. As registration is approved by that organization and by the various states involved, the states give that information to the National Association of Securities Dealers, which in turn gives that information to the securities firm which employs the associated person seeking registration, and that brokerage firm in turn notifies the applicant. Respondent began to work at Alison Baer Securities, Inc., in September, 1988, and remained employed there until February, 1989. When he associated himself with Alison Baer, Respondent applied for registration as an associated person with that company. As is the proper procedure, he submitted a U to the National Association of Securities Dealers. While waiting for his registration to be approved, Respondent maintained telephone and personal contact with his own clients. He did not, however, sell or offer to sell securities until after he was sure his registration was approved. Respondent's application for registration as an associated person with Alison Baer Securities, Inc., was approved by the National Association of Securities Dealers and was also approved by the states of New York, Texas, Georgia, Florida, and Oklahoma. In late October of 1988, Jeffrey Britz, the President and Chief Executive Officer of Alison Baer Securities, told Respondent that his registration as an associated person with Alison Baer Securities had been approved by the state of Florida. In fact, Respondent was not registered as an associated person by the state of Florida until December 7, 1988. Respondent did not attempt to directly confirm with the Department of Banking and Finance his registration as an associated person with Alison Baer Securities. Respondent has applied for registration with the Department as an associated person with Shamrock Partners, Ltd. The Department denied that application based solely on the allegations which are the subject matter of this proceeding.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent not guilty of the allegations contained in the Administrative Complaint, dismissing the Administrative Complaint filed against him in this cause, and granting his application for registration with the Department as an associated person with Shamrock Partners, Ltd. DONE and ENTERED this 14th day of February, 1992, at Tallahassee, Florida. 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 14th day of February, 1992. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed finding of fact numbered 27 has been adopted in this Recommended Order. Petitioner's proposed findings of fact numbered 1-5, 11-14, 16-18, 23- 26, 28, 29, and 31-34 have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel, or recitation of the testimony. Petitioner's proposed findings of fact numbered 6-10, 15, 19, and 30 have been rejected as being subordinate to the issues involved in this proceeding. Petitioner's proposed findings of fact numbered 20-22 have been rejected as not being supported by any competent evidence. COPIES FURNISHED: Deborah Guller, Esquire Assistant General Counsel Office of the Comptroller Suite 211 111 Georgia Avenue West Palm Beach, Florida 33401 Richard Doggett, Esquire 808 Northeast 3rd Avenue Fort Lauderdale, Florida 33304 Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 William G. Reeves, General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0350
The Issue The issue for consideration in this matter is whether Petitioner should be granted registration as an associated person of FISCL Securities in Florida.
Findings Of Fact At all times pertinent to the allegations herein, the Petitioner was an applicant for registration as an associated person of FISCL Securities. The Respondent, Department, was the state agency charged with the administration and enforcement of Chapter 517, FLORIDA STATUTES, the Florida Securities and Investor Protection Act, and the rules promulgated thereunder which include the registration of associated persons as securities dealers inthis state. Under the rules of the Department, anyone who seeks to represent a securities dealer in Florida is required to file an application form, (Form U- 4), with the National Association of Securities Dealers, (NASD), which, upon review, is forwarded to the state in which the applicant resides and seeks registration. If the records of the NASD disclose any disciplinary action having been taken against the applicant, it is identified to the state in which registration is sought. In Florida the Department is the appropriate agency and Department officials review the application to see if it should be approved. In this regard, all disciplinary information, the records of the NASD, is forwarded to the pertinent state for review in accordance with the rules and statutes of that state and, based on the information provided, a decision is made as to whether the application should be approved fully, approved with conditions, or denied. In Florida, all documents relating to the applicant's disciplinary history are secured and reviewed by the Department's Division of Securities prior to a recommendation being made as to approval or denial of the application for registration. In the instant case, the information submitted by NASD, pertaining to the Petitioner herein, included evidence of a prior disciplinary record. Upon receipt of the notice, Ms. Cain, the Division's Assistant Director, sent out a discrepancy letter to the Petitioner and requested copies of the disciplinary record and his form U-4 from NASD. The information submitted to the Department by Ellen J. Badler, Assistant Director, Special Registration, with NASD, dated July 18, 1990, reflected three letters of admission, waiver and consent from First Heritage Corporation, a securities dealer in Southfield Michigan, and Louis Feldman, Petitioner, a registered options principal with and president of the firm. The documents show that on the basis of periodic review of the company records in October and November, 1981, the corporation failed to obtain or maintain option account agreements for 7 of its option customers; that in 5 cases it failed to obtain or maintain sufficient background and financial information on customers approved for trading; and that it failed to show the date prospectuses were furnished to options customers. All of the above were cited as violations of Article III, Section 33, Appendix E, NASD's Rules of Fair Practice. This inquiry also indicated that the corporation and Petitioner failed to inform its customers, in writing, of the method it used to allocate exercise notices to its customers' accounts, and failed to explain the way the system operated and its consequences, in violation of Section 63, of NASD's Uniform Practice Code. Mr. Feldman, along with the company, admitted those violations in a Letter of Admission, Waiver and Consent he executed in response to NASD's District 8 Business Conduct Committee, (Committee), and they were punished with a censure to the company and a joint fine of up to $500.00 for Mr. Feldman andthe company. No further disciplinary action was taken against the Petitioner or his company by NASD, the SEC, or the state of Michigan until, in 1989, NASD entered its Decision and Order of Acceptance of Respondents' Offer of Settlement regarding three Complaints filed by the Committee in 1988 for alleged violations of rules of the Municipal Securities Rulemaking Board, (MSRB), and the Rules of Fair Practice. These complaints, filed against Petitioner, First Heritage, and as to one of the three, to a third party as well, related to: effecting the purchase and sale of municipal securities at prices in which the aggregate price at which the securities were purchased or sold were not reasonable and fair under the circumstances; placing several different advertisements which omitted material facts and were mis- leading; again, purchasing and selling municipal securities at prices which were not fair and reasonable. The Committee found that the Petitioner and the other parties involved were in violation of the rules as alleged, and fined Petitioner and First Heritage $10,000.00 jointly as to the two price allegations, and $5,000.00 as to the advertising allegation. Petitioner claims the violations were more ministerial and technical than substantive and that no customer ever complained about or was in any way injured by those actions. As to the advertisements, he claims they were not misleading. Examination of the advertisements does not necessarily support that claim, however, He also claims that the policies complained of were the same as those followed for the 13 years the company was in business and prior audits by NASD had never resulted in any noted discrepancies. The Department does not consider as pertinent the fact that injury to a consumer was not involved. By the same token, given, as here, the completed disciplinary action which has become final, it will not look behind that action and re-litigate, at a hearing such as this, the truth of the allegations. Petitioner also claims that in each case he was advised by counsel that it would be useless to fight the allegations of misconduct since it appeared the collective mind of the agency was made up to take action. Further, weighing the minimal fines sought against the extensive cost to Petitioner in attorney fees and lost commissions while litigating the allegations, he elected to take that route less expensive to him in the short run and accept punishment. This decision did not, it would appear, redound to his benefit. Petitioner also claims, and it is so found, that at no time has any disciplinary action ever been taken against him for actions in the securities business by the states of Michigan or Florida. On the basis of those actions, by letter of October 11, 1990, the Department notified the Petitioner that his application for registration was denied. The two page letterclearly indicated the Petitioner's professional history and the fact that he was the subject of "at least two regulatory actions filed by the NASD." The letter then listed the specific allegations of misconduct charged against the Petitioner in each of the two actions and noted the agency action taken in each case. The Department's letter also cited the pertinent statute which authorizes it to deny an application for registration and the bases therefor, and noted the reasons for its action. Petitioner was also notified of his right to and the procedure for contesting the Department's action.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is therefore recommended that a Final Order be entered denyingPetitioner, Louis Feldman's application for registration as an associated person of FISCL Securities in Florida. RECOMMENDED in Tallahassee, Florida this 17th day of September, 1991. 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 17th day of September, 1991. COPIES FURNISHED: Gregory G. Schultz, Esquire Schultz & Associates, P.A. 26750 U.S. Highway 19 N. Suite 310-A Clearwater, Florida 34621 Margaret S. Karniewicz, Esquire Department of Banking and Finance Suite 1302, The Capitol Tallahassee, Florida 32399-0350 Gerald Lewis Comptroller The Capitol, Plaza Level Tallahassee, Florida 32399-0350 William G. Reeves General Counsel Department of Banking and Finance The Capitol, Plaza Level, Room 1302 Tallahassee, Florida 32399-0350
