The Issue Whether Petitioner, Bans N. Persaud, should be awarded a passing grade on the "Financial Accounting" part of the Certified Public Accounting examination given on May 7-8, 1997.
Findings Of Fact Petitioner, Bans N. Persaud, took the Certified Public Accountant Exam in May of 1997. The Department of Business and Professional Regulation's Bureau of Testing notified Petitioner by Examination Grade Report dated August 4, 1997, that he had earned a score of 75.00 which was a passing grade on three parts of the exam: Audit, Accounting & Reporting, and Law Exam. The report informed him that, "CREDIT ON PASSED PARTS HAS BEEN GRANTED." The report also informed Mr. Persaud that he had failed the Financial Accounting Part of the exam. On that part, he received a score of 62.00 when a minimum passing score was 75. Petitioner, "very certain that [he] passed this examination," filed a letter of appeal with the Department, treated by the Department as request for a formal administrative hearing. During the course of pre-hearing procedures, Mr. Persaud requested that he be allowed to audit the grading of the examination. The Department responded by pointing to Section 455.217(2), Florida Statutes, which states in pertinent part, The board . . . shall make available an examination review procedure for applicants . . . . Unless prohibited or limited by rules implementing security or access guidelines of national examinations, the applicant is entitled to review his examination questions, answers, papers, grades, and grading key . . . and the following language of Rule 61-11.012(6), Florida Administrative Code: In order to preserve the security and integrity of the examination, such candidate shall be permitted to review only the questions and answers missed on the examination. Furthermore, the Department pointed to the following excerpt of Section 119.07(3)(a), a provision of the public records law, Examination questions and answer sheets of examinations administered by a governmental agency for the purpose of licensure, certification, or employment are exempt from the provisions of subsection (1) and s.24(a), Art. I of the State Constitution [provisions which require disclosure of public record]. In light of the response, the ruling was made at hearing that the Department was not required to allow Petitioner to conduct the requested audit. In fact, it was determined that the requested audit was a prohibited act under the force of law through the operation of Rule 61-11.012(6), Florida Administrative Code. Mr. Persaud claimed that without an audit, he would not be able to prove that he had, in fact, passed the examination. The examination was developed by the American Institute of Certified Public Accountants, a national organization of certified public accountants whose function it is to develop, prepare and grade the "in-force CPA exam." (Tr. 74). As such, the exam is considered a "national examination," id., developed by a national organization. About such exams, the following is stated in the rules of the Department of Business and Professional Regulation, Bureau of Testing: If the examination being challenged is an examination developed by or for a national board, council, association or society, (hereinafter referred to as national organization) the Department shall accept the development and grading of such examination without modification. Rule 61-11.012(1), Florida Administrative Code. The examination consisted of six questions, two of which (Questions five and six) were essays. Mr. Persaud received 36 points out of the 60 points available for question one, 2.15 out of five points available for question two, 4.38 out of five available for question three, 3.68 out of five for question four, 8.5 out of ten for question five, and 5.5 out of ten for question six, for a total of 62 points. Mr. Persaud pointed to his background as a person of Indian descent (that is, from the subcontinent of India) who immigrated from Georgetown, Guyana, to the United States where, in 1984, he received U.S. citizenship. Mr. Persaud felt that lack of points on the essay for English composition, grammar and expression were due to prejudice and incorrect because of the excellent state of his English. During the hearing, it was obvious that Mr. Persaud's spoken English, although at times difficult to understand because of pronunciation, is otherwise of high quality. Whatever the state of his written English, however, had he received all points available for the essay questions he still would have failed the Finance and Accounting part of the exam with a score of 68 when a passing score of 75 was necessary. It was therefore incumbent on Mr. Persaud to show more than just that improper grading of English (which he did not show) in the essay portion of the exam led to the failing grade. Mr. Persaud made no attempt to do so. To the contrary, Mr. Persaud did not show that the examination was faulty, or that it was arbitrarily worded, or that the answers to challenged questions were capriciously graded or that he was arbitrarily denied credit through a grading process of the challenged questions devoid of logic or reason. In fact, Mr. Persaud does not appear to have ever identified the questions among those that he missed that were under challenge. He simply insisted that he had passed the exam. Rather than challenge specific questions for which he was not given credit or the grading of the answers to those questions, Mr. Persaud took a different tack. He testified that immediately after passing parts 3 and 4 of the CMA in 1996, he was suddenly bombarded on a daily basis by the noise of planes from the international Airport who were assisted in some way by a Village Inn not far from his house. When he complained to the authorities, they stated that they did not fly anywhere near his house. He complained of other noises and pressures to which he was subject while trying to study and identified them as "[p]lanes at four o'clock," (Tr. 48) and a "12 part air conditioner." Id. He also complained that his computer had been sabotaged and produced documents he had composed where the word "and" appeared in a sentence when his choice, and the more appropriate word, would have been "but." (Tr. 55). After this line of the challenge to the exam had been exhausted at hearing, Mr. Persaud was asked to identify the questions among those he missed that he now challenges as well as any of their answers. Aside from testimony about written English on the Essay questions, Mr. Persaud made no reference to individual questions. He chose to maintain his position that he had passed the test.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that a final order be entered denying Petitioner's challenge to the grade he received on the Financial Accounting part of the CPA Exam administered in May of 1997. DONE AND ORDERED this 16th day of September, 1998, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 16th day of September, 1998. COPIES FURNISHED: R. Beth Atchison, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-1007 Bans N. Persaud 310 Ninety-Second Avenue North St. Petersburg, Florida 33702 Lynda L. Goodgame, General Counsel Office of the General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Martha Willis, Executive Director Division of Certified Public Accounting Department of Business and Professional Regulation 4001 Northwest 43rd Street, Suite 16 Gainesville, Florida 32606
The Issue The issue for consideration is whether the Respondent has violated the sections cited in the Administrative Complaint as alleged. Both parties submitted posthearing findings of fact, which were read and considered. Those findings not incorporated herein are found to be subordinate, cumulative, immaterial, unnecessary, or not supported by the evidence.
Findings Of Fact The Respondent, Paul R. Ashe, is a certified public accountant who was issued a license number 1968 by the Board of Accountants. (See Respondent's admissions.) The Respondent was found guilty in the United States District Court, Las Vegas, Nevada, of fraud by wire and of the interstate transportation of false and forged securities. The Respondent is currently under a pending sentence of three years in prison on each count, to run concurrently, and a fine of $10,000. (See Respondent's admissions). The licensure file of the Respondent maintained by the Board of Accountants (Petitioner's Exhibit 2) reveals that the Respondent was licensed as a certified public accountant in the State of Florida on December 3, 1965. The file further reveals that the Respondent's licensure to practice public accounting was placed in an inoperative (inactive) status at the request of the Respondent on or about February 28, 1977. While in an inoperative status, a certified public accountant may not practice and is not issued a license. However, the accountant is not required to keep up his continuing professional education credits or to pay annual license fees. An accountant in an inoperative status may reactive his license upon paying all back annual licensure fees and demonstrating that he has completed all required continuing professional education course hours. On September 26, 1982, the Respondent requested and received conditional reactivation of his license to practice public accounting in the State of Florida, which was made permanent on February 8, 1983. In this proceeding, the Respondent testified in his own behalf. His testimony was credible and uncontroverted. The Respondent received his certified public accountant certificate on December 3, 1965. He worked for the Internal Revenue Service for three years and subsequently practiced public accounting while working with a life insurance company and attending law school. After obtaining a law degree and admission to the Bar, Respondent practiced tax law and maintained his active license as a certified public accountant. In 1977, because the continuing professional education requirements for both professions were becoming burdensome, the Respondent placed his certified public accountant license in an inoperative status. Since he was a child, the Respondent has suffered from pathologic compulsive gambling. It was this compulsion which gave rise to his conviction on the federal charges referenced above. The Respondent now has this disorder under control after receiving professional counseling and is a member of Gamblers' Anonymous. As an attorney practicing tax law and providing investment counseling services, the Respondent maintained large trust accounts during the entire period he was actively gambling. Audits of his personal trust accounts reveal no shortage of any client's account. The Respondent stated, and his testimony was uncontroverted, that he had never violated any client's trust account or any trust relationship. The charges on which the Respondent was convicted arose out of a series of events which began in 1974 on a gambling trip to Las Vegas, Nevada. At that time, the Respondent became deeply indebted to various casinos in Las Vegas. Some of those casinos relieved the Respondent of his indebtedness upon his promise not to gamble further in their casinos. (Tr. 136, 173.) The Respondent paid his gambling debts at other casinos to maintain his right to continue to gamble there. In 1975, the Respondent returned to Las Vegas with his step-father. At that time, a line of credit was established in the step-father's name, and the Respondent and his step-father gambled on the step-father's line of credit. Respondent's step-father was worried about the Respondent's gambling problems and, at the conclusion of this gambling junket, took several checks from his checkbook, signed them in blank, and gave them to the Respondent with instructions that should the Respondent get into trouble the Respondent should use them. Upon returning home from this gambling junket, the Respondent's step- father died. On the weekend of July 4, 1976, the Respondent went to Las Vegas on a gambling junket. Prior to arriving there, he had established a line of credit of $54,000. Near the conclusion of his junket, he had lost the $54,000 and, in seeking to win back his losses, used the checks given to him by his step-father. The Respondent issued three checks totaling $55,000 to three different casinos to pay off the gambling debts he had incurred and to reestablish his line of credit. It was the uttering of these checks on his deceased step-father's checking account which gave rise to the federal charges of interstate transport of a forged or false security, and the casinos' subsequent use of the telephone to check the Respondent's credit which gave rise to the federal charges of fraud by wire. The Respondent believed that the account upon which the checks were drawn contained sufficient funds to cover the checks and that the account was active. However, several weeks or months before, the Respondent's mother had closed the account without his knowledge. In 1977, the Suma Corporation (Hughes' hotels) initiated charges through the U.S. Attorney on one of the checks in the amount of $11,250. When the Respondent made this check good, Suma Corporation withdrew its complaint against him and made him persona non grata at the Hughes' hotels. By this time, the Respondent's family had become quite concerned about his gambling, and he had been divorced from his wife and lost custody of his children. The Respondent sought to conceal his further gambling from his family. In November 1977, the Respondent was overcome by the urge to gamble. Having settled a substantial case, he opened a bank account under the assumed name of Paul Allen and went to Las Vegas. The Respondent used this assumed name because he did not want his family to find out he was gambling in Las Vegas. While at the MGM Hotel, his real identify was discovered, and he was compelled to pay the MGM Hotel all the monies which he owed it. This event initiated a reinvestigation of the previous 1976 check-passing incident, which resulted in his indictment in 1979-1980 and his subsequent conviction. Lawrence Dale Scheaffer was a client of Respondent from 1976 until the present. The Respondent provided Scheaffer with information and professional advice concerning Scheaffer's retirement plan, both as an attorney and later as a certified public accountant. Scheaffer and others testified concerning the Respondent's reputation in the community, where the Respondent is reputed to be honest and of good character.
Recommendation Having found that the Respondent did not violate the statutes as alleged in Counts I, II or III of the Administrative Complaint, the Hearing Officer recommends that the charges against the Respondent be dismissed. DONE AND RECOMMENDED this 22nd day of February 1984 in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of February 1984. COPIES FURNISHED: Charles F. Tunnicliff, Esquire Joseph W. Lawrence, II, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Jeffrey J. Fitos, Esquire One East Silver Springs Boulevard Ocala, Florida 32670 Frederick Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Martha Willis, Executive Director Board of Accountancy 4001 NW 43rd Street, Suite 16 Gainesville, Florida 32306 =================================================================
The Issue The issues are whether the Florida Commission on Ethics (Ethics Commission) has jurisdiction over Counts I and IV of the Advocate's Amended Recommendation, pursuant to section 122.322(1), Florida Statutes; if jurisdiction exists over Count IV, whether Respondent, while a commissioner and vice mayor of the City of Margate (City), violated section 112.313(7), Florida Statutes, by appearing before the City commission on behalf of his employer, which was seeking a beer and wine license for consumption on the premises (2COP); and whether Respondent is entitled to an award of attorneys' fees and costs, pursuant to section 57.105(5), Florida Statutes.
Findings Of Fact The Complaint is on a Ethics Commission form (Form 50) that asks the complainant for a full explanation of the complaint. The complaint form refers twice to documents. The complaint form asks the complainant not to attach copies of lengthy documents; the form assures that, "if they are relevant, your description of them will suffice." The oath printed on the complaint form states: "I . . . do depose on oath or affirmation . . . that the facts set forth in the foregoing complaint and attachments thereto are true and correct to the best of my knowledge and belief." The Complaint, which is signed and notarized, contains no explanation or narrative, but Complainant attached 11 pages of copies of documents, which are marked as pages 3 through 13. Page three of the Complaint is an article dated March 8, 2012, and posted on MargateNews.net.5/ This article reports that, by a 3-2 vote, the City commission reprimanded Respondent for abusing City credit card privileges, even though Respondent claimed to have repaid any unauthorized charges. The article reports that one commissioner expressed a belief that Respondent misused a City credit card and committed a "few other abuses." At page four of the Complaint is a copy of the City credit card agreement signed by Respondent. Handwritten notations add: "This (i.e., the credit card agreement) states that he (Respondent) cannot use card for personal use in which he did[.] [H]e bought beer and wine for his bar with cash advance. Says he paid it back in cash be has no repcit (sic) for it." All handwritten notes on documents attached to the Complaint and Amended Complaint were made by Complainant.6/ At page five, a MargateNews.net article dated August 16, 2010, reports alleged tax and purchasing violations by McLean's Bar & Grill, which was located at 2160 Mears Parkway. This article mentions other matters, including Respondent's voting a pay raise for City commissioners and a property-tax hike, Respondent's "history of financial instability . . . and fiduciary irresponsibility," and Respondent's two residential evictions from 1996-2006 for lease defaults. At page six is an unsigned, typewritten letter about Respondent. This letter twice charges that Respondent misused a City credit card and also alleges that he failed to repay $15,000 from "a Margate taxpayer"--Complainant--and violated unspecified tax and purchasing laws as to alcoholic beverages. A handwritten note adds: "I read this at the commissioner meeting." Below this note is printed Complainant's name. At pages seven and eight, a MargateNews.net article dated October 30, 2011, states that Complainant had lent Respondent $15,000 for a kitchen addition at McLean's Bar & Grill, but Respondent had failed to repay the loan after the business closed. This article alludes to some bad debts and judgments against Respondent or his businesses, but portions of the article are illegible, and the meaning of these portions of the article is unclear. The same article reports that Respondent was now operating Dave's Tiki Bar, which was located at 238 North State Road 7. Part of this portion of the article is also illegible, but seems to report that Jean LeBlanc, a co-owner with Respondent of a "former Tiki Bar," cancelled the bar's 2COP beer and wine license, effectively closing the bar. To reopen the Tiki Bar, according to the article, Respondent convinced his fellow City commissioners to hold a special meeting of the City commission in August 2011 to grant a 2COP license to "Tiki bar petitioner, Kenneth Suhandron," whom the article describes as Respondent's "partner." The article notes that Respondent abstained from voting due to a conflict of interest. The article states that Respondent acquired the corporate owner of the bar days after the special meeting, so Respondent now holds the temporary 2COP license, even though he had not paid for it. An online update indicates that Respondent paid for the 2COP license on November 1, 2011. At page nine, a MargateNews.net article dated August 20, 2011, describes a special meeting of the City commission on August 15. This article states that Respondent had been managing the Tiki Bar when a disagreement between him and his partner, Mr. LeBlanc, resulted in the cancellation of the bar's 2COP beer and wine license. According to the article, Respondent found a new investor, Mr. Suhandron, to apply for a new 2COP license and called for a special meeting of the City commission to provide the necessary City approval for the applicant to obtain a 2COP license. The article notes that Respondent appeared at the meeting to represent the listed applicant, Mr. Suhandron, but abstained from voting due to a conflict of interest. At pages 10 through 12 are a final summary judgment against Respondent and McLean's Bar & Grill, Inc., for $29,638.60 and a final judgment against Respondent for $20,073.63. At page 13 is an email from Complainant that pertains to the charge of Respondent's misuse of a City credit card. Redacted from the email is reportedly an email that another City commissioner had sent to Complainant, who added a handwritten note to this effect. The Amended Complaint is on the same form as the Complaint and is also notarized.7/ Like the Complaint, the Amended Complaint contains no explanation or narration of the charges, but it contains 41 pages of copies of documents, which are attached as pages A-3 through A-43. At pages A-3 through A-4, a letter dated May 16, 2012, from the Ethics Commission to Complainant focuses on Respondent's alleged failure to repay the $15,000 loan from Complainant and Respondent's misuse of a City credit card. To this letter, Complainant added a handwritten note stating: I cannot prove he use[d] [a City credit card for cash advances] for alcohol. . . for bar but just the cash advance alone is breaking the law over [sentence abruptly ends]. Just last week he got fined again for selling illigiel [sic] beer that he bought from a gas station in his bar[.] It will be in margate news.net next week[. I]f you want I can email you a copy. This man is a con artist. Pages A-5 through A-8 comprise a promissory note evidencing the $15,000 loan from Complainant. Complainant handwrote on the note: "He never gave me 1 payment or any interest payments." Pages A-9 through A-14 are the minutes of a meeting of the City commission on March 7, 2012. The sole handwritten addition to these minutes is at the top of the first page: "Each one of the following [commissioners?] has info on it[. A]ll are highlighted or outlined for your use." According to the minutes, one commissioner stated that she believed that Respondent had misused a City credit card and wanted him to resign, but he refused to respond to her statement or, clearly, to resign. This commissioner asked the City attorney to identify the options available to the City commission. The City attorney informed the commission that there had not been a determination that Respondent had violated the standards of conduct or code of ethics in his use of a City credit card and advised that the City commission could order an investigation, prospectively clarify the restrictions on the use of City credit cards and provide for forfeiture of office for a violation of these restrictions, publicly censure or reprimand a City commissioner, or prohibit a City commissioner from using a City credit card. According to the minutes, another commissioner--the mayor--then stated that what Respondent had done was wrong. The commissioner who had called for Respondent's resignation then asked for an investigation to be conducted by the county Board of Ethics or the Ethics Commission. The mayor responded that either this commissioner or a resident would need to file such a request because the City commission was not in a position to do so itself. A motion to censure Respondent, revoke his City credit card, and order an investigation then failed for the lack of a second. A motion followed to censure Respondent and revoke his City credit card. This motion was amended to add a directive to the City attorney to add restrictions to the use of City credit cards and provide for forfeiture of office for their violation. Prior to a vote on this amended motion, someone made a motion to table the amended motion, but the motion to table failed by a 2-3 vote. The commission then considered the amended motion, which passed 3-2. Respondent voted to table the amended motion and against the amended motion. At pages A-15 through A-21, the minutes of a meeting of the City commission on March 21, 2012, state that Respondent asked the City manager to cancel his City credit card "in light of the recent inquiries on his use of the card." (It appears, though, that the adoption of the March 7 amended motion should already have resulted in the cancellation of Respondent's City credit card.) According to the minutes, Respondent then "apologized for the mistrust the matter had caused" and added that "he did not intentionally misuse his position to mistrust anyone." Reverting to more conventional syntax, Respondent concluded: "He could not change what happened, but he had made it right and said it would not happen again." Complainant drew a box around this paragraph of the minutes, and he drew an arrow pointing to a corner of the box. Later in the meeting, the City commission unanimously agreed to advertise an ordinance restricting the use of City credit cards and providing for the dismissal of any employee violating these restrictions. A handwritten note states that Respondent should nonetheless be removed from office for his misuse of a City credit card because "[h]e used card for cash advances and said he paid city back in cash, but no one has a record of him doing that." Pages A-22 through A-37 are the minutes of a meeting of the City commission on April 18, 2012, and four executed memoranda of voting conflict that appear to have been attached to the minutes. These minutes describe City commission votes on alcoholic beverage licenses as to which Respondent abstained from voting due to his employment, but the establishments seeking City commission approvals appear to have been unrelated to Respondent. As indicated in the joint factual stipulation, at all material times, Respondent served as a commissioner and vice mayor of the City commission, and, as such, Respondent was subject to part III, chapter 112, Florida Statutes. As indicated in the joint factual stipulation, Respondent misused a City credit card. As indicated in the joint factual stipulation, while serving as a commissioner and vice mayor of the City, Respondent represented his employer before the City commission in the employer's application for a license from the City commission. Respondent timely disclosed his employment relationship to the City commission, abstained from voting on the issue, and timely filed a Memorandum of Voting Conflict. Under the circumstances, the appearance of Respondent, as an employee of the Tiki Bar, at the August 15, 2011, special meeting of the City commission did not constitute, or serve as a precursor to, a continuing or frequently recurring conflict between Respondent's private interests and public duties, nor did this appearance impede the full and faithful discharge of Respondent's public duties. The key facts are the lack of significant regulatory jurisdiction of the City commission over the issuance and use of 2COP licenses, the one-time nature of the Tiki Bar's need for City commission approval for its request for a 2COP license, the employment relationship that existed between Respondent and the Tiki Bar, and the absence of any responsibilities imposed on Respondent due to his employment with the Tiki Bar to represent other parties in requests before the City commission.
Recommendation It is RECOMMENDED that the Ethics Commission enter a final order dismissing Counts II and IV, determining that Respondent violated section 112.313(6) as alleged in Count I, and imposing an administrative fine of $3000, censure, and a reprimand against Respondent. DONE AND ENTERED this 28th day of August, 2014, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of August, 2014. 1/ Available at
The Issue Count I of the Amended Administrative Complaint as modified by the August 22, 1991 Order on Reconsideration alleges Respondent Certified Public Accountant (CPA) practiced public accounting in an unlicensed firm by appending the CPA designation after her name in the telephone book and on business cards in violation of Sections 473.323(1)(a), (g), and (h) F.S. and Rule 21A-20.012 F.A.C. Count II of the Amended Administrative Complaint as modified by the August 22, 1991 Order on Reconsideration alleges that Respondent CPA violated Sections 473.323(1), (g), and (h) and Rule 21A-24.001(1)(g) F.A.C. by appending the certified financial planner (CFP) designation along with the CPA designation after her name in the telephone book and on business cards, in that the CFP designation allegedly is an unapproved specialty of accountancy. Count III of the Amended Administrative Complaint as modified by the August 22, 1991 Order on Reconsideration alleges that Respondent CPA practiced public accounting by holding herself out as a CPA by appending the CPA designation after her name in the telephone book and on her business cards, implying that she abides by the provisions of Chapter 473 F.S., and is thereby in violation of Sections 473.323(1)(f), (g), and (h) F.S. and Rule 21A-24.001 F.A.C. [no specific subsections cited].
Findings Of Fact Respondent Silvia S. Ibanez is a practicing attorney, a member of the Florida Bar, and holds active Florida CPA License No. 10842, currently in good standing. She is also a Registered Investment Advisor with the Florida Division of Securities and a certified financial planner (CFP). At all times material, she has been actively certified as a CFP in good standing with the International Board of Standards and Practice for Certified Financial Planners (IBCFP). The IBCFP is a corporation. "CFP" and "certified financial planner" are registered trademarks. The IBCFP has no governmental affiliations within the state of Florida. The Florida Board of Accountancy has no involvement in the CFP accrediting process and no proprietary interest over the CFP mark. As a licensee with the federal Securities and Exchange Commission, Ibanez is required to, and does, disclose the fact that she is a CPA. Ibanez' CPA certificate (like all Florida CPA certificates) authorizes her to display her CPA credentials. The CPA certificate represents that the recipient, . . . has passed all examinations and has met all other requirements prescribed by law and by rule of this board for certification as an expert public accountant, and *is therefore entitled to append the letters CPA after this registrant's name to evidence registration by this board as a Certified Public Accountant.* [Emphasis supplied between *] The Board of Accountancy's only classifications of CPA licenses/licensees are "active" or "inactive." "Active" and "inactive" refer to the status of the CPA license and do not refer to or imply that the licensee is actively practicing public accounting. One can be an actively licensed CPA and not be practicing public accounting. The Board of Accountancy issued a letter opinion to Ibanez that a CPA who offers financial planning services for a fee but who does not hold out as a CPA or become associated with financial statements would not be practicing public accounting. Ibanez is listed in the yellow pages under the heading, "Attorneys," as, "Ibanez, Silvia, S., CPA, CFP." Respondent also is listed in the white pages as "Ibanez, Silvia S., CPA CFP atty." On their face, there is nothing false or fraudulent about these listings. As an attorney, Petitioner also places "CPA" after her name on her business cards and on her letterhead. The Respondent's business card states "Silvia Safille Ibanez, JD, CPA, CFP." DPR contends that because Petitioner "holds out" to the public as a CPA, uses accounting skills, and provides one or more types of management, advisory or consulting services, she is currently "practicing public accounting." Ibanez is not listed in the yellow pages under "accountants," "accountants, certified," or "CPAs." Neither the CFP nor CPA credential is part of the firm name, "Silvia S. Ibanez, P.A. - Law Offices," which also appears on Ibanez' business card. Ibanez' telephone directory listings and card at issue show the CPA and CFP credentials strictly appended to Respondent's individual name. Louis Dooner, accepted as an expert certified public accountant, testified that the Respondent is involved in the practice of public accounting because by merely appending the CPA designation after her name on her business cards, she is telling the public that she is offering to perform services that CPAs perform. Respondent Ibanez currently operates as a sole practitioner of law employed by the law firm of "Silvia S. Ibanez, P.A." As such, she provides specialized legal services for her clients not provided by CPAs. As part of her current, normal professional activities as an attorney, she provides all types of tax services to her clients, including tax opinion work, representation before the Internal Revenue Service, and evaluation of the tax consequences of certain transactions. She also performs financial counselling and planning for her clients. In doing so, she utilizes both her legal education, training, and experience and her education, training, and experience as a CPA. Prior to admission to the Florida Bar, Ibanez was employed by two CPA firms where she did substantially similar work, plus audits. It is conceded by the parties that it is possible to practice law and public accounting in the same business activity and that many activities conducted by professionals and nonprofessionals other than by CPAs and other than by attorneys are identical to activities performed by CPAs engaged in public accounting. For instance, anyone can legally prepare a tax return. Bookkeepers and free-lance tax assistors of all sorts are unregulated in any way. Truthful use, communication, or disclosure of the CPA credential by an actively licensed CPA does not per se constitute false, misleading, or deceptive advertising. The evidence does not support a finding that withholding truthful disclosure that one has earned the CPA credential benefits the public welfare or effects the purposes of the enabling legislation, or indeed, how such nondisclosure could promote them, particularly since it has been shown that persons of considerably lesser competency and achievement levels in the discipline of accounting may legally offer to the public almost all the services provided by CPAs. The use of the term "CPA" implies a specific competency to the public. The fact that Ibanez is a CPA is valuable to her legal clients. CPA status is a valuable property right to each CPA, and the ability of a practicing attorney to publicize the fact that s/he holds an active CPA license is a valuable asset to that individual. The only activity among public accounting activities that is a unique activity of CPAs is the "attest" function. See, Section 473.322(1)(c) F.S. There is no evidence that Respondent Ibanez attests as a CPA in the course of her law practice or that she personally performs audits. Ibanez testified credibly that her intent in appending the CPA and CFP credentials solely to her own name is to indicate that she is, in her own right, individually licensed as a CPA and CFP. Respondent Ibanez has clearly marked her office premises with all the indicia of a law office, including two signs posted outside the building itself. One sign specifies that the building constitutes "law offices," that "Silvia S. Ibanez, P.A." is located there, and that Ibanez is an "attorney at law," with no reference to her CPA or CFP credentials. Another sign specifies, "law offices," without any reference to her CPA or CFP credentials. A potential client must pass these two signs just to enter the building that houses Ibanez' law office. Once in the building, a potential client also must be admitted by a secretary to Ibanez' inner office. Ibanez has consistently required her secretary to screen all telephone calls and potential clients who enter the office to be certain that persons seeking out Ibanez will be fully informed that Ibanez is not offering strictly accounting services and that she is practicing law. Ibanez also personally makes that information clear to individuals at each initial office consultation and consistently follows up office consultations at which her legal employment has been negotiated with letters and/or employment contracts which set forth the parameters of the legal services she has agreed to perform for clients. Elise Rice is an employee of Petitioner Department of Professional Regulation who has earned a vocational school accounting diploma. She is not a CPA, nor is she an attorney. Ms. Rice testified that she, personally, drew the conclusion from looking at Respondent's business card that the Respondent was a CPA, but that she did not know what CFP or JD signified and therefore she would not assume from the card that Ibanez was a lawyer or a certified financial planner. Clearly, the designation "CFP" did not suggest to Ms. Rice that Ibanez was advertising either a specialty or particular competence in public accounting. Ms. Rice further stated that, despite Ibanez' business card's clear use of the term "law offices," she would continue to believe that Ibanez was doing both CPA work and legal work out of "law offices." Ms. Rice further stated that even if she telephoned ahead and spoke to a secretary who clearly indicated that Ibanez was a CPA but was working as a lawyer, she would persist in believing that Ibanez was doing both CPA work and legal work out of "law offices." Ms. Rice also testified that if she arrived at Ibanez' office building and was confronted by the sign posted there which clearly indicates Ibanez is an attorney at law and the two signs that clearly state that the building houses only "law offices," she would then believe that she had come to the wrong place to find Ibanez the CPA. However, Ms. Rice conceded that, under the latter circumstances, the premises were, indeed, law offices. Ms. Rice's personal view that Ibanez must be acting as a CPA in the face of significant information to the contrary is not persuasive that the average layman would be misled by Ibanez' business card and telephone listings in the face of all her other disclosures. One who has initially consulted the yellow pages of the telephone directory under the heading "attorneys" would most logically infer from Ibanez' yellow pages listing that Ibanez is a practicing attorney who is dually licensed as a CPA and who possesses a CPA's education, training, experience, and skills and that Ibanez is offering to act as a lawyer capable of applying her additional education, training, experience, and skills as a CPA and CFP. The inferences that the average viewer might draw from Ibanez' white pages telephone listing and her business card are more blurred, but Ibanez demonstrated, and it is conceded by both parties, that an individual may have the opportunity to disabuse members of the public that s/he is engaged in the activity of the practice of public accounting or that s/he is offering all the services normally associated with a CPA, as opposed to law or some other profession, at least where there is direct contact by letter or telephone. It may be reasonable that at least until making direct contact with Ibanez or her office staff, the average viewer of either the telephone listings or the card would assume that, as a CPA, Ibanez is subject to disciplinary oversight by the licensing authority for accounting functions only and that she abides by all Board of Accountancy regulations while doing accounting. However, prior to any meaningful employment, Ibanez exercises reasonable care to disabuse the average viewer of that belief. Since 1982, the Board has consistently issued letter opinions on an individual basis to the effect that the designation "certified financial planner" is an accountancy specialization which has not been approved by the Board and further holding that "CFP" could not be displayed by CPA licensees on stationery or in yellow pages listings in conjunction with the CPA designation. The Executive Director of the Florida Board of Accountancy did not know how "certified financial planner" came to be viewed as a specialty designation of certified public accounting, and the letter opinions do not set forth the Board's rationale for considering it as a specialty. The Board has adopted no rule to that effect. Further, in this proceeding, the agency has not proven any rationale for the policy set forth in the Board opinions. The agency presented no evidence by way of anecdotal experience, professional studies, or accumulated data to show that licensed CPAs or certified CFPs have ever mislead members of the public purely by displaying their credentials in the manner Ibanez has done here. DPR knows of no complaint and has never received any complaint from a member of the public regarding Ibanez' professional activities or advertising. Nor is there any evidence that any member of the public has ever been confused about whether or not Ibanez was practicing accounting or law or financial planning or that any member of the public was mislead into hiring Ibanez under the impression that she would be acting as a CPA solely and not as an attorney, or that she would be performing audits or performing the attesting function of a CPA. Upon the scenario established in the case sub judice, Ibanez is not guilty of any fraudulent advertising so as to mislead the public to the effect that she abides by all regulations of the Board of Accountancy.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board of Accountancy enter a Final Order that: Finds Respondent Ibanez is not "holding herself out as a certified public accountant" and Finds her not guilty of all charges alleged under Counts I through III and dismisses them. DONE and ENTERED this 15th day of January, 1992, at Tallahassee, Florida. ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of January, 1992.
The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint dated February 5, 1999, and, if so, what penalty should be imposed. The Respondent maintains that the instant action is barred by laches and violates Section 455.225, Florida Statutes.
Findings Of Fact Petitioner is the state agency charged with the responsibility of regulating the practice of certified public accountants licensed within the state. At all times material to the allegations of this case, the Respondent, Robert Jarkow, has been licensed in Florida as a certified public accountant, license number AC0010963. On or about December 1996, the Respondent orally agreed to provide accounting services for an individual named Kasman who was doing business as Traditions Workshop, Inc. (Traditions). Traditions manufactured uniforms and listed the federal government among its clients. Revenues to the company from the sale of uniforms were presumably posted in accordance with written contracts. Although the Respondent participated in the monthly completion of financial records for the company, the exact description of his responsibilities for the company and the individual are not known. It is undisputed that Ms. Kasman asked the Respondent to provide a financial statement for the company as part of an effort to secure a line of credit from a bank in New York. It is also undisputed that Ms. Kasman refused to pay for the statement. According to the Respondent, based upon that refusal, he declined to prepare the instrument. Nevertheless, a document entitled "Financial Statements" was generated with a notation "MANAGEMENT USE ONLY-NOT FOR DISTRIBUTION." The Respondent maintains that the document was not prepared as a financial report and that if generated using his data disk it was done without any intention on his part for the product being used to secure a line of credit. The document did not comply with provisions of accounting practice. The Respondent admitted that when his relationship with the party deteriorated, and payment for services was not rendered, he did not release information to a succeeding accountant. Ms. Kasman needed the information, depreciation schedules, in order to accurately complete tax records for Traditions. The Respondent attempted to locate Ms. Kasman and her bookkeeper for hearing but was unable to do so. Ms. Kasman filed a complaint with the Petitioner against the Respondent that was not investigated until several months after it was filed. The Respondent obtained a civil judgment against Traditions for unpaid accounting fees. The Administrative Complaint filed in this case was submitted over a year after the consumer complaint. Neither party presented testimony from the complainant, her bookkeeper, or her succeeding accountant.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation enter a final order finding the Respondent violated Rule 61H1-23.002, Florida Administrative Code, as set forth in Count II of the Administrative Code; imposing an administrative fine in the amount of $1000; and placing the Respondent on probation for one year subject to terms as may be specified by the Board of Accountancy. DONE AND ENTERED this 4th day of December, 2001, in Tallahassee, Leon County, Florida. ___________________________________ J. D. PARRISH Administrative Law Judge Division of Administrative Hearings Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative this 4th day of December, 2001. COPIES FURNISHED: Charles F. Tunnicliff, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-2202 Victor K. Rones, Esquire Law Offices of Rones & Navarro 16105 Northeast 18th Avenue North Miami Beach, Florida 33162 Martha Willis, Division Director Division of Certified Public Accounting Department of Business and Professional Regulation 240 Northwest 76 Drive, Suite A Gainesville, Florida 32607 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202
The Issue The issue is whether Respondent is guilty of various violations of the Insurance Code and, if so, what penalty should be imposed.
Findings Of Fact Respondent has been licensed since 1978 as an insurance agent. For several years, he has served as an instructor, approved by Petitioner, for continuing education courses in insurance. At the time in question, Respondent was not registered with the Department of Banking and Finance to sell securities, although he had been so licensed five to ten years earlier. In the mid-1980s, Respondent became an agent for Independent Financial Associates (IFA). He decided to join IFA based on his knowledge of the honesty and competence of its principals, even though their training, background, and experience were similar to those of Respondent. The IFA principals lived and worked in Tampa and Orlando. At some point, the IFA principals presented to Respondent a proposal to market Private Placement Agreements and Private Trust Agreements (Contracts) issued by International Capital Corporation (ICC). The principals informed Respondent that ICC would use the money invested to purchase guaranteed investment contracts (GICs). Respondent was unfamiliar with GICs. However, Respondent assembled a notebook that he used in presenting Contracts to his clients, and this notebook described GICs in the context of other investment vehicles. One of the materials contained in Respondent's notebook purports to be an excerpt from 1993 Money Guide by Marshall Loeb. This document states that only insurance companies issue GICs. The document states that GICs "resemble bank certificates of deposit, but . . . they return at least two-thirds of a percentage point more than Treasuries of comparable maturities." Other materials in Respondent's notebook stress the safety of an investment in GICs, asserting that they are as safe as (or, in the case of one material, safer than) Treasury Bills and Certificates of Deposit. One material depicts a pyramid, showing the safest, lowest-yielding investments at the base of the pyramid; this document suggests that GICs are safer than cash, as safe as checking accounts and savings accounts, and riskier only than money-market mutual funds. The Contract forms are crude. Two of the four samples produced in evidence confused the purchaser with ICC. Perhaps the most ominous provision in the forms warns the purchaser (and his or her bank) not to contact ICC's bank: Except as specifically provided herein or with the express written consent and preauthorized approval and acknowledgement of the participants hereto, their officers, representative agents or legal counsel; there shall be no telephone conversations, telexes, facsimile transmissions, or other communications between the participant's respective banks and banking officers. Any violation of this provision, by whatever cause, shall constitute an immediate default and forfeiture of this agreement, and the legal person at fault shall be subject to all and any remedy at law or in equity available to the injured participants. All banking coordinates are confidential. Respondent, who was born in 1934, has lived in Florida since 1976. He has lived in Port Charlotte since 1989. Respondent's experience in the insurance business has consisted of selling term life and health insurance, which he has sold since the late 1970s. Respondent has also sold annuities. Prior to entering the insurance profession, Respondent worked in publishing in the Midwest. Respondent has a bachelor of science degree in agriculture from Purdue University and has taken some graduate coursework at Washington University in Saint Louis. Respondent's wife passed away in October 1995 after a period of deteriorating health. Respondent was left with substantial medical expenses to pay. The ICC program promised Respondent commissions of about 4-5 percent, which was comparable to his earnings from the sale of term life insurance and annuities. However, the commissions were deferred to an unidentified point in the future. In total, Respondent sold $379,910.37 in Contracts from January 30, 1995, through January 14, 1997. Respondent received his full commission on the first six Contracts that he sold. The date of the last Contract is November 20, 1995. The value of these Contracts is $112,500, and the commissions total $4500, if the rate is only 4 percent. Respondent also received his full commission ($100) on the second smallest Contract that he sold ($2500). Respondent sold this Contract on May 20, 1996. Ignoring the May 20, 1996, Contract, Respondent received partial commissions on the 11 Contracts that he sold. These sales took place from January 20, 1996, through October 15, 1996. The value of these Contracts is $227,410.37, and the commissions would total $4548, if the rate were only 2 percent. (The record does not disclose how much of a commission he received on these sales.) Respondent received no commissions on the last two Contracts that he sold. These sales took place on November 13, 1996, and January 14, 1997. The value of these Contracts is $40,000. Petitioner did not produce as witnesses all of the purchasers of Contracts from Respondent. Petitioner produced six purchasers, although one of them (Una Douglas) was not mentioned in the Administrative Complaint. In the order of their initial purchases, the five purchasers are Phillip G. Bobb; Alton M. Bell, as trustee; Beth Hartt; Jenna M. Underwood, as trustee; and John S. Orcutt. Mr. Bobb spoke to Ms. Douglas about money he had in the bank and their relatively low annual rates of interest, such as 1.5 percent on checking accounts and 4.3 percent on savings accounts. Ms. Douglas told him that Respondent was selling investments that paid a higher rate of return. Mr. Bobb telephoned Respondent, and they set up an office appointment. At the appointment, Respondent explained that Mr. Bobb could earn 10 or 12 percent annually on the Contracts issued by ICC. Respondent assured Mr. Bobb that the Contracts were a sound investment. Mr. Bobb completed a Private Investment Suitability form that Respondent presented to him. The form reports that his year of birth is 1920, annual income is less than $25,000, net worth excluding residence is $50,000-$100,000, and retirement plan pays $143 monthly. The form states that the source of funds to purchase a Contract is an inheritance. On a scale of 1-5, with 5 being most important and 1 being least important, Mr. Bobb circled 5 for capital preservation, 2 for growth, and 4 for income. The form also presents a 1-10 scale of risk tolerance. Ten signifies high risk and aggressive growth, as reflected by the printed statement: "I want my money to grow as much as possible regardless of risk or fluctuation." One signifies low risk and money market, as reflected by the printed statement: "I want to minimize my losses and fluctuation as much as possible." Five signifies growth and income, as reflected by the printed statement: "I want to maintain a balanced savings mix with some fluctuation and growth." The word "income" appears above 3, and the word "growth" appears above a point midway between 7 and 8. Mr. Bobb circled 3. The form also provides years' investment experience in fixed annuities, variable annuities, mutual funds, stocks and bonds, and options and commodities. Mr. Bobb indicated that he had no experience in any of these investments, except for six years' experience in fixed annuities. Mr. Bobb signed and dated the Private Investment Suitability form on January 30, 1995. At this time, he invested $20,000 and received 12 monthly postdated checks, which represented the interest, and one postdated check, which represented the return of principal that he was due in one year. Mr. Bobb was able to cash his interest checks as they became payable. He purchased another Contract on November 29, 1995, for $10,000. ICC failed to pay the initial $20,000 postdated check when it became payable, and failed to pay the subsequent $10,000 postdated check. Mr. Bobb lost $30,000 plus some of the interest on the second Contract. Mr. Bell worked for 25 years as a law enforcement officer with the Metro Police Department in Washington, D.C. He has known Respondent for about eight years through church and mutual friends. Mr. Bell visited Respondent to discuss purchasing some life insurance and possibly changing a policy. In the course of this discussion, Respondent mentioned the ICC Contracts. Respondent later visited Mr. Bell at his home. The two men met two or three times to discuss Mr. Bell's insurance and investment needs. On Respondent's second visit to Mr. Bell's house, Mr. Bell decided to invest in the ICC Contracts. Respondent assured Mr. Bell that the ICC Contracts were a decent investment. He told Mr. Bell that he had his own money investment in ICC. In fact, Respondent never invested in ICC Contracts, except to the extent that he received some Contracts in payment of commissions that he was due. Mr. Bell, as trustee for the Bell Family Revocable Trust dated April 24, 1992, completed a Private Investment Suitability form that Respondent presented to him. The form reports that his year of birth is 1929, annual income is $25,000- $50,000, net worth excluding residence is over $100,000, and no information regarding a retirement plan. The form states that the source of funds to purchase a Contract is savings. Mr. Bell circled 3 for capital preservation, 3 for growth, and 2 for income. On the risk-tolerance scale, Mr. Bell circled 5. The form also reveals 10 years' experience in fixed annuities, 15 years' experience in mutual funds, and six years' experience in stocks and bonds. Mr. Bell, as trustee, signed and dated the form on June 7, 1995. At this time, he purchased a $10,000 Contract bearing 12 percent annual interest. He received 12 postdated interest checks and one postdated check representing the return of principal. ICC paid the interest checks as they became payable. As the time approached to present the $10,000 principal check, Respondent discussed with Mr. Bell the possibility of rolling it over and earning 14 percent interest on quarterly payments. Mr. Bell agreed to do this, and ICC delivered to him four postdated checks representing quarterly interest. The first two quarterly checks cleared, although ICC had to issue replacement checks. However, ICC and the issuing bank never honored the remaining two quarterly checks or the postdated principal check. Respondent kept Mr. Bell informed of the situation, but Mr. Bell lost his $10,000 investment plus two interest payments of $700. Ms. Hartt has known Respondent since 1994. He and his late wife had placed books for sale in her beauty salon in Englewood, Florida. Ms. Hartt originally visited Respondent's office to discuss hospital insurance for her husband, but they were unable to identify a suitable policy. Through Respondent and IFA in Tampa, Ms. Hartt had invested in two or more Allstate products. As the first one was to mature in early 1996, Ms. Hartt visited Respondent to discuss the options for reinvesting this money. Respondent mentioned the ICC Contracts to Ms. Hartt. He told her that he had read all of the materials and could not find anything wrong with the investment. He opined that it was no worse than the stock market, although you were not certain to get all of your money back. Ms. Hartt completed a Private Investment Suitability form that Respondent presented to her. The form reports that her year of birth is 1930, annual income is $25,000-$50,000, net worth excluding residence is over $100,000, and retirement plan is worth about $65,000. The form states that the source of funds to purchase a Contract is savings. Ms. Hartt circled 5 for capital preservation, 3 for growth, and 4 for income. On the risk-tolerance scale, Ms. Hartt circled 5. The form also reveals 12 years' experience in fixed annuities, 10 years' experience in mutual funds, and 10 years' experience in stocks and bonds. Ms. Hartt signed and dated the form on August 16, 1995. At this time, she made her initial investment of $25,000. She later invested another $25,000, and then another $50,000, for a total of $100,000. Ms. Hartt received monthly and quarterly postdated interest checks. After she received $12,000 in interest, ICC and its bank dishonored the remaining checks, including the principal checks totaling $100,000. Ms. Underwood has known Respondent for 10 years. She met him through his late wife and her mother. She purchased insurance and an annuity from Respondent. After her husband died, Ms. Underwood relied on Respondent to take care of all of her business. Ms. Underwood complained to Respondent of the low interest that she was earning at the bank. He suggested that she invest in ICC Contracts. Respondent assured her that he had thoroughly checked out the investment and it was satisfactory. Ms. Underwood, as trustee for The Jenna M. Underwood Revocable Trust dated July 1, 1992, completed a Private Investment Suitability form that Respondent presented to her. The form reports that her year of birth is 1913, annual income is less than $25,000, net worth excluding residence is $50,000- $100,000, and no information regarding a retirement plan except to show that it is a military plan. The form states that the source of funds to purchase a Contract is savings. Ms. Underwood circled 5 for capital preservation, 2 for growth, and 5 for income. On the risk-tolerance scale, Ms. Underwood circled 3. The form also reveals four years' experience in fixed annuities and 10 years' experience in mutual funds. Ms. Underwood, as trustee, signed and dated the form on February 26, 1996. At this time, Ms. Underwood made an initial investment of $10,200 and received 12 postdated checks, representing 12 percent annual interest, and a postdated principal check. ICC and its bank honored the 12 interest checks, and Ms. Underwood rolled over her investment in January 1997. ICC and its bank dishonored several of the remaining interest checks and the postdated principal check, so Ms. Underwood lost over $10,000. Mr. Orcutt worked for 35 years as a law enforcement officer with the Hangham Police Department in Massachusetts. Mr. Orcutt met Mr. Bell as a function sponsored by the Fraternal Order of Policy, and Mr. Bell gave Mr. Orcutt Respondent's telephone number. At their first meeting, Respondent gave Mr. Orcutt some materials to examine concerning the ICC Contracts. Respondent never mentioned any problems that he had had with ICC and its payment of its obligations. Mr. and Mrs. Orcutt completed a Private Investment Suitability form that Respondent presented to them. The form reports that their years of birth are 1935 and 1933, annual income is $25,000-$50,000, and net worth excluding residence is over $100,000. Respondent had revised the form so it no longer requested the value of any retirement plan or the source of funds for purchasing the Contract. Mr. and Mrs. Orcutt circled 5 for capital preservation, 3 for growth, and 4 for income. On the risk-tolerance scale, Mr. and Mrs. Orcutt circled 6. The form also reveals 10 years' experience in mutual funds. Mr. and Mrs. Orcutt signed and dated the form on January 14, 1997. At this time, they invested $25,000 in an ICC Contract that bore 16 percent annual interest. They received two postdated checks: one interest check payable in one year and one principal check payable in one year. By letter dated April 10, 1997, the main principal of ICC apologized to the purchasers of Contracts for the halting of the program, which he attributed to his absence due to "pressing matters Overseas and in New York." The letter explains that one bank account was closed merely due to inactivity and asks that purchasers exchange checks that they presently hold for new checks. The letter assures that purchasers who need to terminate their agreements prior to their stated maturity may have an opportunity to do so, based on their relative financial need, as disclosed on their Private Placement Suitability form, which the principal promises to review. The record does not reveal when ICC was to have paid Respondent's deferred commissions. The first commission to be partly unpaid pertained to a contract sold in January 1996. At minimum, it would seek likely that Respondent would have been aware of some problem with the payment of his commissions by January 1997. However, by January 1996, Respondent knew that ICC and its bank had not honored Mr. Bobb's $20,000 principal check, which he had held for one year since its purchase in January 1995. Despite this knowledge, Respondent advised Mr. Bell to rollover his $10,000 investment in July 1996. Mr. Bell then had problems with his first and second postdated interest checks, which were payable in October 1996 and January 1997. The evidence is not quite as clear as to the timing of the defaults concerning Ms. Hartt's checks. It appears that the first principal default was in January 1997. However, Respondent never advised her of the problems with ICC of which he was aware prior to her purchase of a $50,000 Contract in August 1996 and a $25,000 Contract in January 1997. Although Ms. Underwood received her interest payments on her January 1996 Contract, Respondent allowed her to rollover this investment in January 1997 without informing her of the problems with ICC. The situation is even worse concerning Mr. and Mrs. Orcutt because their investment, which was also in January 1997, was not a rollover, but an initial investment. While it may be doubtful that Ms. Underwood could have obtained her principal back as late as January 1997, Mr. and Mrs. Orcutt had not invested anything with ICC prior to January 1997, and the evidence is undisputed that Respondent was aware of serious problems with ICC by this late date. Another serious issue in this case is the unsuitability of this investment for at least some of Respondent's clients. Mr. Bobb and Ms. Underwood indicated on the risk-tolerance scale that they wanted income and capital preservation. Their annual incomes were less than $25,000; their net worths less than $100,000; and their investment experience was modest. Yet, Respondent took investments from Mr. Bobb of $30,000--which is more than his annual income--and $10,000 from Ms. Underwood. A true GIC is not an especially risky investment. However, the interest rates that the Contracts paid were extremely high--so high as to suggest the presence of an element of risk not ordinarily inherent in GICs. Respondent himself understood that the higher the rate of return, the higher the likely risk. Respondent was aware of significant problems with ICC in January 1996. Respondent knew that these problems were a material factor that he needed to disclose to persons purchasing (rather than merely rolling over) Contracts after January 1996: i.e., Ms. Hartt, Mr. Bell, Ms. Underwood, and Mr. Orcutt. However, Respondent never made these disclosures. Even absent knowledge of problems with ICC and its payment of its obligations, Respondent was, or reasonably should have been, aware that an investment in the Contracts was completely unsuitable for Mr. Bobb. The evidence is closer as to Ms. Underwood and does not rise to clear and convincing evidence of unsuitability. For these reasons, ignoring momentarily the connection to the business of insurance (discussed below), Petitioner has proved by clear and convincing evidence, for each of the five counts, that Respondent has demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license, or that he is a source of injury or loss to the public. The final factual issue is whether Petitioner has proved by clear and convincing evidence that the subject transactions involve insurance, so as to justify discipline of Respondent's insurance license. The sale of the Contracts did not require an insurance license, and the record does not support a finding of a close relationship between the sale of the Contracts and the sale of products requiring an insurance license, such as term life and annuity contracts. Petitioner has thus failed to prove that Respondent lacks sufficient knowledge and technical competence to engage in transactions authorized by the license. However, Petitioner has shown that Respondent is unfit to engage in the business of insurance in the sales to Mr. Bell, Ms. Hartt, and Ms. Underwood. Operating under his insurance license, Respondent had engaged in insurance business with each of these persons, or each of these persons originally visited Respondent for the purpose of discussing an insurance product, rather than a Contract. The cases are different as to whether the sales to Mr. Bobb and Mr. Orcutt involved the business of insurance. Neither of these individuals had a prior business relationship with Respondent involving the purchase of insurance products. Each of these individuals approached Respondent, on the advice of others, to purchase ICC Contracts. As to Mr. Orcutt, though, Petitioner has proved, by clear and convincing evidence, the necessary connection to the insurance business. An insurance client, Mr. Bell, referred Mr. Orcutt to Respondent for the purchase of ICC Contracts. The source of the referral of Mr. Bobb, though, was Ms. Douglas, who had never been insurance client of Respondent. She had been a life insurance agent herself, but her relationship with Respondent involved only the ICC Contracts. As to Mr. Bobb, then, Petitioner has failed to show the necessary connection to Respondent's insurance business.
Recommendation It is RECOMMENDED that the Department of Insurance enter a final order finding Respondent guilty of four violations of Section 626.611(7), Florida Statutes, suspending his insurance license for two years, and requiring, as a condition of relicensure, that Respondent complete additional education, beyond the amount normally required, with an emphasis on the riskier or less conventional products that a licensee is authorized to sell. DONE AND ENTERED this 19th day of July, 1999, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of July, 1999. COPIES FURNISHED: David J. Busch Office of the General Counsel Department of Insurance 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Gerald Lee Wilkins Post Office Box 2279 Port Charlotte, Florida 33949-2279 Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300 Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact Dwight S. Cenac, Respondent, holds certificate No. 3639 as a Certified Public Accountant in the State of Florida. On 2 September 1977 he requested an exemption from the continuing education program required of public accountants to retain their certificate (Exhibit 2). Therein he stated he was not practicing public accounting, the exemption was granted and Respondent's registration card has been endorsed with a statement that Respondent's certificate to practice public accounting in Florida is inoperative. Following his graduation from college in 1970 Respondent worked for the accounting firm of Ernst and Ernst for two years and attained his certificate in 1973. He was employed with Blue Cross of Florida from 1973 until 1977 when he was employed by a health care provider in Puerto Rico to help set up their procedures to improve Medicare and Medicaid payments for services they provided. His understanding of the Medicare regulations and procedures acquired while working at Blue Cross, coupled with the conditions he found in Puerto Rico, led Respondent to believe that many health care providers had need for special consulting in conjunction with their financial record keeping. Health Care Management Consulting, Inc. (HCMC) was formed in 1977 with Respondent as the sole shareholder. In order to acquaint providers with the services he proposed, Respondent prepared a proposal (Exhibit 1) which was sent to health care providers. As a certified public accountant he could not do this without violating the laws and regulations proscribing solicitation by Florida practitioners. In order to overcome this potential problem, Respondent, on 2 September 1977, (by Exhibit 2), notified Petitioner that he was no longer performing public accounting. As the owner and principal operator of HCMC, Respondent does not hold himself out as a CPA, such information is not included in his letterhead or business cards, office or telephone directory or in any public place. His certificates as a Certified Public Accountant are hanging on the wall of his office, but none of his clients ever visit his office. In addition to Respondent, HCMC employs two other consultants who previously worked for Blue Cross, as well as a secretary. Neither of the other two consultants is a certified public accountant, but both perform services for clients similar to those services performed by Respondent. They, as well as Respondent, obtained the special expertise they offer to health care providers while working in the intermediary field between the government and the provider. HCMC provides specialized services not provided by public accountants such as setting up books and records for health care providers, preparing cost reports, providing assistance in setting rates and general familiarity with Medicare rules and regulations. Many of the services provided by HCMC, inasmuch as they involve financial records, are the same type services provided by Florida practitioners. Respondent, by submitting the HCMC Proposal to hospitals, nursing homes and other health care providers is both advertising and soliciting business. HCMC has submitted copies of its Proposal (Exhibit 1) to over 300 hospitals in Florida, and has obtained business previously performed by Florida practitioners. In the Proposal (Exhibit 1) HCMC offers services on a contingent fee basis. These services offered include reimbursement and recoupment of Medicare funds, and the fee paid HCMC is a percentage of the additional funds obtained as a result of the services provided by HCMC. Many of HCMC's services involve increasing reimbursement to the health care provider from Medicare and Medicaid sources. No audits unrelated to Medicare or Medicaid are performed, and financial statements prepared by HCMC do not refer to generally accepted accounting principles and generally accepted auditing standards, nor do they purport to express or disclaim an opinion as to the fairness of the presentation. The work performed by Respondent as an employee of HCMC would not constitute the practice of public accounting if performed by a non-certified person. The other employees of HCMC providing consulting services to health care providers similar to that provided by Respondent, are not in violation of Chapter 473, Florida Statutes.
Findings Of Fact The Petitioner is a certified public accountant licensed in the State of Pennsylvania, having been licensed in 1961. The Petitioner is seeking licensure as a certified public accountant in Florida pursuant to the provisions of Chapter 43.308(3)(b), Florida Statutes, and Rule 21A-29.01(1)(b), Florida Administrative Code, that is, he seeks licensure in Florida by endorsement based upon his Pennsylvania licensure without the necessity for taking the Florida examination. At the time of the Petitioner's initial licensing in the State of Pennsylvania in 1961 he met Florida's requirements in the areas of education and experience. The Petitioner currently holds a valid license in Pennsylvania and is licensed in other states. The Board of Accountancy reviewed the Petitioner's application and determined that he met the Florida requirements for education and experience and that he was administered the same examination in Pennsylvania in 1961 that was administered in Florida in 1961, the uniform certified public accountancy examination administered by the American Institute of Certified Public Accountants (AICPA). The Board determined, however, in its non-final order, that the Petitioner did not receive grades on that examination administered in Pennsylvania that would have constituted passing grades in Florida and denied his application. The rules of the Board require that an applicant for licensure as a certified public accountant receive a grade of 75 or above on all parts of an examination administered by the American Institute of Certified Public Accountants. See Rule 2IA-28.05(2)(3), Florida Administrative Code. The rules in effect in 1961 also required that a grade of 75 or above be received on all four subjects of the examination in order to achieve licensure in Florida. See Rules of the State Board of Accountancy Relative to Examinations and the Issuance and Revocation of Certificates, Rule 1(f). See also Section 473.10, Florida Statutes (1961). The requirement that applicants for licensure by endorsement receive grades on all four areas of the AICPA Exam of 75 or better has been enforced in Florida since the 1930's and has been a requirement embodied in the rules of the Board since 1949. In February, 1961, the Pennsylvania Board of Accountancy, pursuant to a resolution enacted for insular reasons of its own, determined to accept as passing the Petitioner's and other candidates' scores in the Law and Practice portions of the AICPA licensure examination, even though those grades were below the score of 75. The Board thus deemed that the Petitioner passed the examination for purposes of licensure in Pennsylvania with a score of "75" by fiat, even though in fact the Petitioner did not receive an actual score of 75 in those two subject areas as determined by the AICPA which administered and graded the examination. The acceptance of the lower grade on the part of the Pennsylvania Board was not done pursuant to a regrading of the Petitioner's exam in an attempt to correct mistakes or errors in the AICPA's finding regarding his score, but was rather simply due to an arbitrary determination by the Pennsylvania Board that for the Petitioner and certain other Pennsylvania applicants the lower grade in that particular instance would be considered as passing. The Petitioner had no knowledge that the Pennsylvania Board had taken this action in arbitrarily upgrading his scores on two portions of the exam so that he passed the entire exam until he began his application process with the Florida State Board of Accountancy in September, 1980. During its investigation of the Petitioner's application for licensure by endorsement, the Florida Board of Accountancy ascertained that the Petitioner had in fact received grades of 65 in the Law and Practice pertions of the Uniform AICPA Examination which were then subsequently arbitrarily raised by resolution of the Pennsylvania Board. The Florida Beard has at no time accepted as passing grades for a licensure examination those grades by applicants of less than 75 on the AICPA examination. It is true that prior to the Florida Board's becoming aware, in 1973, of the fact that Pennsylvania had arbitrarily raised some grades of its applicants, it did in fact accept some similarly situated candidates for licensure by endorsement in Florida. After becoming aware at that time of this arbitrary grade-raising process, the Board has consistently refused licensure to applicants from other states who actually received less than 75 on the AICPA Examination as determined by the AICPA. For considerations of equity and fairness the Board did, however, allow candidates who had already been licensed in Florida by endorsement prior to the Board's becoming aware of this anomaly to retain their licenses. Since the Petitioner failed to meet the AICPA examination requirement of a grade of 75 or better on all portions of the examination which was set forth and adopted in the Florida rules and statutes in effect at the time of his licensure in Pennsylvania in 1961, his request for licensure by endorsement was denied by the Board's non-final order on December 8, 1980.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence in the record, the candor and demeanor of the witnesses and the pleadings and arguments of counsel, it is RECOMMENDED that the denial of the Petitioner's application for licensure by endorsement by the Board of Accountancy of the State of Florida be upheld and that the petition be denied. DONE AND ENTERED this 22nd day of June, 1981 in Tallahassee, Leon County, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of June, 1981. COPIES FURNISHED: George L. Waas, Esquire 1114 East Park Avenue Tallahassee, Florida 32301 John J. Rimes, III, Esquire Assistant Attorney General Suite 1601, The Capitol Tallahassee, Florida 32301
Findings Of Fact At all times material to this proceeding, Respondent Favret held public accounting license number 0001424 with the State of Florida. Respondent's license to practice public accounting reverted to inactive status by operation of law on January 1, 1980, due to his failure to demonstrate to the Department of Professional Regulation and the Board of Accountancy compliance with the continuing education requirements imposed on licensed public accountants pursuant to Section 473.312, Florida Statutes, and Chapter 21A-33, Florida Administrative Code. The Respondent was aware that his license reverted to inactive status on January 1, 1980, due to his failure to meet professional continuing education requirements. Respondent chose not to comply with the continuing education requirements because he did not wish to maintain an active license and did not feel that formal continuing education was of benefit to him. Between January 1, 1980, and August, 1981, Respondent continued to perform tax advisory services for approximately twenty-five (25 ) clients. His services included the preparation of personal federal income tax returns and all necessary supporting tax schedules. Respondent explained the tax services he provided as including the accumulation of raw data brought in by a client in categories, summarizing the information and then preparing the necessary tax forms. Although the Respondent signed all the tax forms as the preparer, he ceased using the professional designation, "C.P.A." when he received formal notice of the inactive status of his license. To prepare the income tax returns for his clients, knowledge of the present tax laws and regulations, tax accounting and arithmetic were utilized by the Respondent in the tax advisory and preparation services for which he received compensation. The preparation of personal income tax returns involves the use of accounting skills which includes the ability to make a determination of what items need to be recognized and included7 the reasonableness of the items, the proper categorization of the items and whether to apply certain accounting functions such as allocation to the items. 1/
