The Issue The issue to be resolved in this proceeding concerns whether the Respondent's Florida Real Estate Broker's License should be the subject of sanctions, based upon the charges alleged in the Administrative Complaint, wherein it is contended that the Respondent has violated Section 475.25(1)(k), Florida Statutes, and Rules 61J2-14.012(2) and (3), Florida Administrative Code, and derivatively, Section 475.25(1)(e), Florida Statutes (1998 and 1999).
Findings Of Fact The Petitioner is an agency of the State of Florida charged with regulating and enforcing the statutory provisions pertaining to real estate licensure and practice in the State of Florida. It is charged with the duty to prosecute Administrative Complaints against perceived violations and violators of the Florida Real Estate Practice Act, Chapter 475, Florida Statutes, and the rules promulgated pursuant thereto, as well as in the manner envisioned in Chapter 455, Florida Statutes, and Chapter 120, Florida Statutes. The Respondent, at all times pertinent hereto, has been a licensed Florida real estate broker, holding License 0596898. The Respondent was last licensed as an inactive broker due to non-renewal. He has not been charged or found guilty of any violations of the statutes and rules pertaining to real estate licensure and practice in the past. His last known address is 212-B Sudduth Place, Parker, Florida 32404. The Petitioner's investigator John Hentz conducted an office inspection and an audit of the Respondent's escrow accounts and broker's trust accounts on April 2, 1999. The audit was conducted at the office of the Respondent, trading as George H. Smith Real Estate. The Respondent maintained an account with Bay Bank of Panama City entitled "Rental escrow account." This was actually the "owners' distribution escrow account." The account number is 2603100501. An audit of that escrow account revealed a total trust account liability of $16,861.51, meaning the total amounts of escrows the Respondent and his firm were liable to pay out if the account was entirely paid-out to those for whom it was held in trust. The reconciled bank balance, however, was for $4,001.82. This resulted in an apparent shortage of $12,858.69. The Respondent and his company also maintained an account entitled "escrow rental deposit account." This account was maintained at Regions Bank of Panama City. The account will be described as the "security deposit escrow account." The security deposit escrow account bears account number 55-022- 9270. An audit of that account revealed that the total trust liability for that account was $22,525.00. The reconciled bank balance for that account was $21,277.50. This resulted in an apparent shortage in the amount of $1,247.50. Mr. Hentz established that the audit disclosed that the Respondent failed to prepare written monthly reconciliation statements for both of the accounts from at least May of 1998 forward. The Respondent, however, asserted that he had prepared a written reconciliation for the February 1999 time period, but admitted that he had not provided the required explanation on the reconciliation form. The evidence also shows that the Respondent began operating as the managing or operating broker of George H. Smith Real Estate sometime in the period March through May of 1999. The records maintained by the Petitioner show that the qualifying broker was George H. Smith, the Respondent's father. George H. Smith and the Respondent provided the Petitioner with the corrective documentation registering the Respondent as the operating broker, however. Mr. Hentz obtained the broker's records from the Respondent during the course of his audit, including, but not limited to, bank statements, lists of balances for the owners' accounts, and the security deposit accounts, as well as a list of clients and a record of outstanding checks. Mr. Hentz reviewed the Respondent's "owner balance" list and the "checks pending" list for the owner's distribution account for the period up to February 28, 1999. Through this procedure he was able to determine the broker's trust liability for the account. Mr. Hentz calculated the broker's trust liability of $16,861.51, by adding the positive balance as identified on the Respondent's owner balance sheet as the amount of money that should be held on behalf of the property owners for the properties the Respondent managed. He then added the list of any outstanding checks or deposits. Mr. Hentz then compared the broker trust liability to the actual bank balance of $4,001.82 for the owners distribution account in order to determine whether the account was in balance and concluded that it was not. The difference between the broker liability and the bank balance reflected a shortage of at least $12,858.69. this indicated the amount of funds the Respondent did not properly maintain in the owners' distribution escrow account. Mr. Hentz also admitted that he should not have subtracted one particular negative balance and that the shortage should have actually been $532.00 greater than what was stated on the audit form. Mr. Hentz stated that the properties listed on the owners' sheet for John Green and Avalon Real Estate should only have been added in the calculations as a positive balance, and not any negative balance, since the same client owned the properties for both accounts with George H. Smith Real Estate. Mr. Hentz was not of the opinion, and found no evidence, that the Respondent had taken and used any of the funds for his personal use. Rather, the shortage reflected, in essence, a situation where the brokerage had used certain owners' funds to cover other owners' expenses, when the owners with the expenses had accounts which did not contain sufficient funds to cover their own rental property management expenses. Typically these situations occurred where the owners who had expenses, such as repair work for their properties, were slow in issuing checks to the Respondent's brokerage to cover such repairs or other expenses or, in infrequent instances, where the checks issued by the owners to the Respondent's brokerage did not clear because of insufficient funds. This situation occasioned more delay in rectifying shortages caused in the brokerage-maintained account because of the necessity of obtaining reimbursement from the owners issuing insufficient checks for their expense assessments. There was no intentional conversion of funds in the owners' distribution escrow account or in the security deposit escrow account for the Respondent's own use or for any improper use or use detrimental to any client's interest. Mr. Hentz followed the same steps in auditing the security deposit escrow account. The audit revealed that the Respondent's tenant list balanced and therefore, the broker trust liability for the account as of February 28, 1999, to be $22,525.00. There were no outstanding checks or deposits. The bank statement indicated that the security deposit escrow account balance as of that date was actually $21,277.50, resulting in a shortage of $1,247.50. Mr. Hentz was unable to recall if the Respondent provided an explanation for that shortage in the security deposit account, however, he testified that the former broker and owner, George H. Smith, immediately took corrective action the same day by depositing funds in the escrow account to cover the shortage. Mr. Hentz also established that during the audit the Respondent told him that the shortage in the owners distribution account resulted from owners' failure to reimburse George H. Smith Real Estate for expense payments made on behalf of the properties owned by those property owners, or for payments an owner or tenant may have made to George H. Smith Real Estate that were returned for insufficient funds. George H. Smith admitted in his testimony that a broker should not use funds from an escrow account to "loan money" to another owner but rather should use the a brokerage's own funds and that a monthly reconciliation statement review should identify any shortages for correction. The Respondent admitted in his testimony that the audit revealed that the escrow accounts were not in accordance with properly maintaining trust and liability. The Respondent also asserted that the information provided to Mr. Hentz at the time of the audit may not have accurately provided the status of each account, as to the owner balance sheet, but he did not provide any documentation to dispute the allegations. The Respondent admitted that he was unable to provide an explanation on the reconciliation statements when the trust liability did not actually match the balance on the bank statement.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, it is, therefore, RECOMMENDED that a final order be entered by the Florida Real Estate Commission finding the Respondent guilty of violating Section 475.25(1)(k), Florida Statutes; Rules 61J2-14.012(2) and (3), Florida Administrative Code; and, derivatively, Section 475.25(1)(e), Florida Statutes. In light of the facts found and conclusions reached hereinabove concerning the Respondent's candor in admitting responsibility for the shortages, that the brokerage took immediate corrective action, that no client was harmed and that the Respondent did not use any funds involved in the shortages for personal use or fraudulent purposes, it is recommended that a one-year suspension, with a co-extensive year of probation, be imposed, together with a $1,000.00 fine. It is further recommended that the suspension be abated and, if during the one-year of probation the Respondent successfully completes a 30-hour broker management course, that the suspension be cancelled. DONE AND ENTERED this 6th day of November, 2001, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF 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 Clerk of the Division of Administrative Hearings this 6th day of November, 2001. COPIES FURNISHED: Sunia Y. Marsh, Esquire Department of Business and Professional Regulation 400 West Robinson Street Suite N-308A Orlando, Florida 32801-1772 Andre Carlos Smith 212-B Sudduth Place Parker, Florida 32404 Buddy Johnson, Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe street Tallahassee, Florida 32399-2202
The Issue Whether the real estate license of Respondent, Larry L. Morris, should be disciplined for: Advertising property or services in a manner which is fraudulent, false, deceptive, or misleading in form or content in violation of Subsection 475.25(1)(c), Florida Statutes (1998); Failure to prepare required written monthly escrow statement-reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and, therefore, in violation of Subsection 475.25(1)(e), Florida Statutes (1998); Using a trade name without proper registration in violation of Rule 61J2-10.034, Florida Administrative Code, and, therefore, in violation of Subsection 475.25(1)(e), Florida Statutes (1998); and Depositing or intermingling personal funds with funds being held in escrow or trust or on condition in violation of Rule 61J2-14.008(1)(c), Florida Administrative Code, and, therefore, in violation of Subsection 475.25(1)(e), Florida Statutes (1998); Whether the real estate license of Respondent, Investment Marketing, Inc., a Florida Corporation, should be disciplined for: Failure to prepare required written monthly escrow statement-reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and, therefore, in violation of Subsection 475.25(1)(e), Florida Statutes (1998); and Depositing or intermingling personal funds with funds being held in escrow or trust or on condition in violation of Rule 61J2-14.008(1)(c), Florida Administrative Code, and, therefore, in violation of Subsection 475.25(1)(e), Florida Statutes (1998).
Findings Of Fact Upon consideration of oral and documentary evidence received at the hearing, the following relevant findings of fact are made: Petitioner, Department of Business and Professional Regulation, Division of Real Estate, is the State of Florida agency which licenses and regulates real estate professionals pursuant to Section 20.165, Florida Statutes (1998), and Chapters 120, 455, and 475, Florida Statutes (1998), and the rules in the Florida Administrative Code promulgated pursuant thereto. Respondent, Larry L. Morris (hereinafter "Morris"), is now, and was at all times material hereto, a licensed real estate broker in the State of Florida holding License No. 0061891. Respondent, Investment Marketing, Inc., a Florida Corporation (hereinafter "Investment Marketing"), is now, and was at all times material hereto, a licensed real estate broker holding License No. 0233721. At all times material hereto, Morris was an officer of Investment Marketing and its qualifying broker. Morris has agreed by stipulation that he is a real estate broker and subject to the jurisdiction of Petitioner during the period of the acts alleged in the Administrative Complaint filed in this case. In 1989, a company that Morris had an interest in, Sunset Harbour Condominium Development Company, purchased 57 condominium units in the 72-unit Sunset Harbour Condominium (hereinafter "Condos"). Subsequent to the initial purchase of 57 units, Sunset Harbour Condominium Development Company acquired 10 additional units which were in foreclosure. Sunset Harbor Condominium Development Company subsequently sold all units it owned in Condos. Morris continues to own one unit in Condos. Respondents managed Condos and were sales and rental agents for Condos pursuant to a verbal agreement with the Sunset Harbour Condominium Association. When Condos was acquired, Morris either personally or through an entity in which he had ownership, acquired a tract of land contiguous to Condos on which Sunset Harbour Villas (hereinafter "Villas") was developed by Morris in 1987-1989. Respondents were rental and sales agents for Villas. Condos had the following amenities which are relevant to this case: a swimming pool, a gazebo, and a 200-foot fishing pier. Villas has the following amenities which are relevant to this case: a swimming pool and a clubhouse. Morris testified that he hoped to "integrate the amenities between the two condominium properties." According to Morris, "the Board of Directors has the right to do that [a cross-use of amenities] on a year-to-year basis." Morris had brochures printed in 1997 for Villas which advertised the following amenities: Two swimming pools; Clubhouse; Gazebo; and, a 200-foot pier. Morris testified that when he realized that there would be no integration or cross-use of the amenities of Condos and Villas which made the brochure inaccurate, he redacted, using a "magic marker," the inappropriate amenities from the brochure. In 1997 or 1998, during the construction start-up of Villas, David Woodard obtained an unredacted copy of the brochure at Morris' office. Woodard did not see any redacted brochures. In January 1999, Benjamin Clanton, a Division of Real Estate Investigator, obtained an unredacted copy of the brochure from Morris' office. He also saw redacted brochures in the office. Gene Daughtry, an employee of Investment Marketing, testified that [at some non-specified date] he redacted about 2500 out of 3000 - 4000 brochures and that he never gave a prospective buyer a brochure which had not been redacted. On January 27, 1999, Mr. Clanton performed an audit on Respondents' security account (escrow/trust account). Morris made the requisite information available to him although the escrow liability lists had to be reconstructed. Mr. Clanton discovered that the monthly reconciliations had been done improperly. The trust liability account balance was $3,400.31; the reconciled bank balance was $4,320.31. There was $920.50 in excess funds in the escrow account. On February 10, 1999, Morris wrote Mr. Clanton a letter in which he stated that the excess funds "came from monies that were paid to Investment Marketing for utility bills, etc., that were paid for owners to keep their utilities from being disrupted, and Investment Marketing was never reimbursed. The other overage amounts came from unpaid rental commissions." Morris acknowledged that the monthly escrow reconciliations were not done exactly right and testified that, "I'm guilty." On April 26, 1994, Florida Department of Business and Professional Regulation, Division of Real Estate, filed an Administrative Complaint against Larry L. Morris and Investment Marketing, Inc., which alleged that escrow account irregularities had been discovered during a February 4, 1994, audit (Case Nos. 94-80988, 94-81264). On July 14, 1994, Florida Department of Business and Professional Regulation, Division of Real Estate, and Larry L. Morris and Investment Marketing, Inc., entered into a stipulation which stated inter alia: Respondents neither admit nor deny the allegations contained in the Administrative Complaint, nor that if true, they support a finding of a violation of the Real Estate License Law. Respondents shall not in the future violate Chapters [sic] 455, Florida Statutes, or the Real Estate License Law, or Rules promulgated pursuant thereto. Respondent Larry L. Morris shall be fined $3,000. The fine shall be made payable to the Department of Business and Professional Regulation, Division of Real Estate, within thirty (30) days from the date of filing of the Final Order, or the Respondent's licenses, registrations, certificates, and permits shall be suspended until such fine is paid. This suspension period shall not exceed ten years. Respondent Larry L. Morris shall provide original evidence of having satisfactorily completed a 30- hour broker management post-licensure education course within one year. These education hours are in addition to the hours required to maintain your real estate license. Should these education hours not be completed within the required one-year period all Respondent's licenses, registrations, certificates, and permits shall be suspended until satisfactory evidence that such education hours are successfully completed and that the original grade report from the real estate school has been received by the Florida Division of Real Estate. Respondents Larry L. Morris and Investment Marketing, Inc., shall be reprimanded. * * * The action reflected in the Final Order shall be published in the FREC News and Report as follows: Destin: Larry L. Morris; broker: Reprimanded; fined $3,000; 30 hr. bk. mgmt. course within 1 yr.: Investment Marketing, Inc.: Reprimanded: failed to maintain sufficient funds in escrow account; failed to properly prepare the required written monthly escrow statement-reconciliations. On December 3, 1998, the following advertisement appeared in the Pensacola News-Journal classified advertising section: NAVARRE BEACH Waterfront and Waterview Condos for Sale and Lease. Sale prices starting at $68,900. Long and short term rentals also available. Pool, fishing pier, gazebo, and clubhouse Sunset Villas Development Co. 800-939-1887 Morris testified that he believed the name Sunset Villas Development Company was registered with the Florida Real Estate Commission. Morris testified that the errors made in the December 3, 1998, ad were made by the Pensacola News-Journal. The newspaper failed to include "Investment Marketing, Inc.", but included Investment Marketing's broker's phone number. Morris maintains that this ad is for both Villas and Condos. Subsequent to the January 27, 1999, audit, Morris made changes in his bookkeeping procedures. Mr. Clanton conducted a later audit which revealed appropriate escrow account management.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Petitioner enter a final order finding Morris guilty of violating Subsection 475.25(1)(c), Florida Statutes (1998); Rule 61J2-14.012(2) and (3), Florida Administrative Code, and, therefore, Subsection 475.25(1)(e), Florida Statutes (1998); Rule 61J2-14.008(1)(c), Florida Administrative Code (1998); and, therefore, Subsection 475.25(1)(e), Florida Statutes (1998); finding that Morris did not violate Rule 61J2-10.034, Florida Administrative Code, and, therefore, Subsection 475.25(1)(e), Florida Statutes (1998); dismissing Count IV of the Administrative Complaint; finding Investment Marketing guilty of violating Rule 61J2-14.012(2) and (3), Florida Administrative Code, and, therefore, Subsection 475.25(1)(e), Florida Statutes (1998), and Rule 61J2-14.008(1)(c), Florida Administrative Code, and, therefore, Subsection 475.25(1)(e), Florida Statutes (1998); imposing a penalty of $1,000 per count, resulting in $3000.00 for Morris and $2,000.00 for Investment Marketing; suspending Morris' license for one year; and reprimanding Investment Marketing. DONE AND ENTERED this 21st day of February, 2001, in Tallahassee, Leon County, Florida. JEFF B. CLARK 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 21st day of February, 2001. COPIES FURNISHED: Nancy P. Campiglia, Esquire Department of Business and Professional Regulation 400 West Robinson Street Hurston Tower, Suite N308 Orlando, Florida 32801-1772 Steven W. Johnson, Esquire 1801 East Colonial Drive, Suite 101 Orlando, Florida 32803-4820 Herbert S. Fecker, Division Director Division of Real Estate Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Hardy L. Roberts, III, General Counsel Department of business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Whether Respondents violated Subsections 475.25(1)(b),(e), and (q), Florida Statutes, and Rules 21V-10.033, 21V-14.012(2) and (3) and 21V-14.014, Florida Administrative Code.
Findings Of Fact Respondent, Rhoda Kurzman (Kurzman), is currently and was at all times relevant to this proceeding a licensed real estate broker in this state. Respondent, Security Realty Investments, Inc. (Security), is currently and was at all times relevant to this proceeding a licensed real estate broker corporation in this state. Security is a small company which deals primarily with the property management of its own properties. Ms. Kurzman is the president of and broker for Security. In April, 1992, Respondents came up for a routine audit. Joseph L. Wilson, then an investigative auditor for Petitioner, Department of Professional Regulation (DPR), conducted an office inspection and escrow/trust account audit on April 14, 1992. The inspection and the audit were in four areas: 1) office 2) required office sign 3) agency disclosure and 4) broker's records, including reconciliation statements and escrow/trust accounts. Respondents maintained a trust account in an interest bearing savings account with County National Bank of South Florida. Respondents received quarterly statements from the bank. As part of the audit, Mr. Wilson asked Ms. Kurzman to produce the reconciliation statements for Security's escrow/trust account. She gave him a running journal (Pet. Exhibit 2) which she had prepared in her own handwriting. The journal was entitled " Escrow Account # 0120056458-20, County Bank, Miami, Florida 33164." There were entries beginning June 29, 1988 through December 31, 1991. The dates listed on the left side of the journal represented the dates for either deposits or withdrawals. The last deposit in the account other than interest was on March 20, 1991. There were double check marks on the right side which represented the amounts reconciled with the bank statements. The entire document contained five double check marks. Petitioner's Exhibit 2 does not reflect the dates the reconciliations took place. Petitioner's Exhibit 2 was not signed and dated by Ms. Kurzman each time the account was reconciled. Petitioner did not reconcile the account on a monthly basis. The bank statement for the period ending December 31, 1991 showed a balance of $375.54, as did the balance in the December 31, 1991 entry of the journal. The bank statement for the period ending March 31, 1992 showed a balance of $379.83. Respondents did not have any escrow security liability on these dates; thus these balances represented overages in the escrow account. Petitioner's Exhibit 2 did not contain a description or explanation for the overages. Mr. Wilson discussed the overages with Ms. Kurzman, and she indicated that the balance in the bank account resulted from accumulated interest from 1988. Mr. Wilson advised her that prior to March, 1992, an escrow account could carry an overage of only $100, but that after March 1992, overages of up to $200 could be carried in escrow accounts. Ms. Kurzman agreed to withdraw sufficient funds from the account to bring it in compliance with the allowed overage. By letter dated April 14, 1992, Ms. Kurzman advised Mr. Wilson that she had withdrawn $300 from the escrow account, bringing the balance to $79.83, and included a copy of the withdrawal slip with the letter. All the sales made by the Respondents are listed in the journal maintained by the Respondents. There have been eight sales since 1988. Some of the transactions did not result in a contract. From September 1, 1991 through October 1, 1992, Mr. Wilson conducted approximately 300 audits, 40 of which were done during the month of April, 1992. The audit of Respondents was approximately two to four hours long. Ms. Kurzman produced one sales contract during the audit, the other contracts were stored in a different location. During the audit, Mr. Wilson prepared an Office Inspection and Escrow/Trust Account Audit Form, which he and Ms. Kurzman signed. After the audit he prepared an investigative report. No specific transactions were mentioned in either document. Mr. Wilson destroyed the specific notes or tic sheets that he made during the audit. At hearing he admitted that if someone showed him one of the contracts for the transactions appearing in the journal, he would not be able to recall if he had looked at the contract during the audit. Ms. Kurzman specifically recalls the audit and her recollection of the audit is much clearer than Mr. Wilson's. At hearing Mr. Wilson was unable to recall specific transactions dealing with the alleged failure to disclose that escrow funds were being placed in an interest bearing account. He believes that they discussed names of contracts or types of situations, but can't recall because of the length of time that had passed since he performed the audit. Ms. Kurzman specifically recalls that other than the transaction in which she was the seller they only discussed one sales contract. He believes that Ms. Kurzman said that she had made oral disclosure in some but not all transactions in which there were principals other than the broker, and that there were no written disclosures. In one of the sales listed in the escrow account journal, Ms. Kurzman was the seller and had divested herself as broker during that transaction. In the Baldoria transaction, the contract required that Ms. Baldoria receive interest and the interest was paid to her. Obviously there was disclosure to Ms. Baldoria, and it appears that the disclosure was in writing. Ms. Kurzman and Mr. Wilson discussed the issue of the disclosure of interest bearing accounts during the audit. There was a disagreement between them as to when such disclosure had to be made. Having judged the credibility of the witnesses and in particular having considered Mr. Wilson's difficulty in recalling specifics of the audit, I find that the evidence is insufficient to conclude that the Respondents failed to disclose that escrow/trust funds were being placed in an interest-bearing account. Mr. Wilson was unable to recall any contracts in which Respondents were alleged to have failed to make agency disclosure. There have been no prior audits of Respondents. No prior disciplinary actions have been taken by Petitioner against Respondents.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered dismissing Counts I, II, V, VI, VII, and VIII of the Administrative Complaint, finding Respondents guilty of violating Rule 21V-14.012, Florida Administrative Code and Section 475.25(1)(e), Florida Statutes, reprimanding each Respondent, imposing against Rhoda Kurzman an administrative fine of $100, and requiring Rhoda Kurzman to provide within six months after the date of the Final Order satisfactory evidence to the Florida Department of Business and Professional Regulation, Division of Real Estate, Legal Section, Hurston Building, North Tower, Suite N-308, 400 West Robinson Street, Orlando, Florida 32801-1772, of having completed a 30-hour postlicensure broker management course. DONE AND ENTERED this 20th day of January, 1994, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of January, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-5542 To comply with the requirements of Section 120.59(2), Fla. Stat. (1993), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact Paragraphs 1-6: Accepted in substance. Paragraph 7: Rejected as not demonstrated by clear and convincing evidence. Paragraph 8: Accepted. Respondent's Proposed Findings of Fact Paragraph 1: Accepted. Paragraphs 2-3: Rejected as subordinate to the facts actually found. Paragraph 4: Accepted in substance. Paragraph 5: Rejected as subordinate to the facts actually found. Paragraphs 6-7: Accepted in substance. Paragraph 8: Accepted in substance. Paragraph 9: Accepted. Paragraph 10: Accepted in substance. Paragraphs 11-13: Accepted. Paragraphs 14-19: Rejected as subordinate to the facts actually found. Paragraphs 20-26: Accepted in substance. Paragraph 27: Rejected as not supported by the evidence. Paragraph 28: Accepted in substance. Paragraph 29: Rejected as subordinate to the facts actually found. Paragraph 30: Accepted. Paragraph 31: Rejected as subordinate to the facts actually found. Paragraph 32: Accepted. Paragraphs 33-34: Rejected as subordinate to the facts actually found. Paragraphs 35-37: Accepted in substance. 20 Paragraphs 38-40: Rejected as subordinate to the facts actually found. COPIES FURNISHED: Michael J. Kurzman, Esquire Grand Bay Plaza, Suite 702 2665 South Bayshore Drive Coconut Grove, Florida 33133 Theodore Gay, Senior Attorney Department of Business and Professional Regulation Division of Real Estate 401 Northwest 2nd Avenue, Suite N-607 Miami, Florida 33128 Darlene F. Keller Divison Director 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Jack McRay Acting General Counsel Department of Business Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399
The Issue The issues for determination in this proceeding are whether Respondent violated Sections 475.25(1)(b), (d), (e), and (k), Florida Statutes, 1/ by committing the acts alleged in two administrative complaints; and, if so, what, if any, penalty should be imposed.
Findings Of Fact 1. Petitioner is the governmental agency responsible for issuing licenses to practice real estate and for regulating licensees on behalf of the state. Respondent is a licensed real estate broker under license number 0377781. The last license issued to Respondent was issued as a broker at Wilson Realty International, 1059 Aurora Road, Melbourne, Florida 32935. The Myrie Transaction On July 22, 1993, Respondent negotiated a property management agreement with Harold E. and Bernia L. Myrie (the "Myries") who are residents of New York. Pursuant to the property management agreement, Respondent agreed to manage a rental house owned by the Myries and located in Florida (the "Myrie property"). On August 20, 1993, Respondent negotiated a lease agreement for the Myrie property with Mr. Eric A. Bogle and Ms. Jearlene Davis, as tenants. The tenants paid Respondent $2,590.60 in rental payments for the period August 20 through November 18, 1993. Respondent failed to deposit the rental payments into her escrow account. On November 19, 1993, Respondent issued check number 1501 to the Myries in the amount of $562.50. Respondent represented to the Myries that $562.50 was the net amount due them. The Myries deposited check number 1501. However, the check was returned for insufficient funds. Respondent replaced check number 1501 with another check for $562.50. There were sufficient funds to cover the second check. On December 29, 1993, the Myries cancelled their property management agreement with Respondent. They demanded the balance of $2,028.10. Respondent claimed that $562.50 was the total amount Respondent owed the Myries. Respondent represented that she had incurred expenses for repairs and maintenance to the Myrie property. Respondent never provided an accounting of either the rental proceeds received from the tenants or the alleged expenses for repairs and maintenance. 2/ Respondent failed to produce documents Petitioner needed to conduct an audit of her escrow account. Respondent failed to produce deposit receipts for rent and cancelled checks and written receipts for expenses incurred by Respondent. After Respondent failed to comply with two requests to produce the records Petitioner needed to conduct an audit, Petitioner subpoenaed Respondent's records on August 1, 1994. 3/ Respondent agreed to produce her records for review and audit on August 12, 1994. However, Respondent failed to keep her appointment and never produced the documents subpoenaed by Petitioner. 4/ Respondent misappropriated $2,028.10 paid to her by the tenants and converted those funds to Respondent's personal use. The tenants paid those funds to Respondent in trust for the Myries. The Myries authorized Respondent to collect those funds in trust and to remit the funds to them. Respondent breached the trust of both parties in a business transaction within the meaning of Section 475.25(1)(b). Respondent misrepresented and concealed her use of escrow funds for personal purposes. Respondent engaged in false pretenses to justify her misappropriation and conversion of the escrow funds. Respondent's failure to account for escrow funds paid to her in the Myrie transaction and her failure to produce records needed by Petitioner to audit Respondent's account is culpable negligence. When considered in their totality, the acts committed by Respondent in the Myrie transaction constitute fraud and dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Respondent failed to timely account or deliver rental trust funds within the meaning of Section 475.25(1)(d). Respondent failed to preserve and make available to Petitioner all books, records, and supporting documents and failed to keep an accurate account of all trust fund transactions within the meaning of Florida Administrative Code Rule 61J2-14.012(1). 5/ Respondent failed to maintain trust funds in her real estate brokerage escrow account until disbursement was authorized within the meaning of Section 475.25(1)(k). 2. The Timoll Transaction In June, 1993, Respondent negotiated a property management agreement with Lawrence and Sheila Timoll (the "Timolls") who were residents of New York. Pursuant to the property management agreement, Respondent agreed to manage a rental house owned by the Timolls and located in Florida. (the "Timoll property"). On July 14, 1993, Respondent procured tenants for the Timoll property. William and Sambri Dulmage (the "Dulmages") executed a one year lease. Pursuant to the terms of the lease, the Dulmages agreed to pay a security deposit of $625 and rent at the monthly rate of $600. Respondent received $4,800 from the Dulmages as payment of rent, a security deposit, and expenses associated with the Timoll property. Respondent never delivered any part of the $4,800 to the Timolls. Respondent represented to the Timolls that they were not entitled to any of the $4,800 because the Dulmages had vacated the property and stopped paying rent. Respondent also represented that she had incurred expenses for repairs and maintenance to the Timoll property. 6/ The Dulmages in fact occupied the Timoll property for the duration of the lease and timely paid all amounts in accordance with the terms of the lease. The Timolls knew that the Dulmages were complying with the lease and arranged for the rent to be paid directly to the Timolls in February, 1994. With three minor exceptions, 7/ Respondent did not incur expenses for maintenance and repairs to the Timoll property. 8/ From July 14, 1993, through February 22, 1994, the Timolls made repeated demands for Respondent to deliver the rent and security deposit, and to account for the expenses allegedly incurred by Respondent. Respondent produced property accounting forms describing expenses for maintenance and repairs to the Timoll property. With three minor exceptions, the accounting forms provided by Respondent contained fabricated expenses for maintenance and repairs. 9/ Respondent misappropriated $4,419.45 10/ paid to her by the Dulmages and converted those funds to Respondent's personal use. Those funds were paid to Respondent in trust for the Timolls. The Timolls authorized Respondent to collect those funds in trust and to remit the funds to them. Respondent breached the trust of both parties in a business transaction within the meaning of Section 475.25(1)(b). Respondent misrepresented and concealed her use of escrow funds for personal purposes. Respondent engaged in false pretenses to justify her misappropriation and conversion of escrow funds. Respondent's failure to account for the escrow funds paid to her in the Timoll transaction and her failure to produce records needed by Petitioner to audit Respondent's account constitutes culpable negligence. When considered in their totality, the acts committed by Respondent in the Timoll transaction constitute fraud and dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Respondent failed to timely account or deliver rental trust funds within the meaning of Section 475.25(1)(d). Respondent failed to preserve and make available to Petitioner all books, records, and supporting documents and failed to keep an accurate account of all trust fund transactions within the meaning of Rule 61J2- 14.012(1). Respondent failed to maintain trust funds in her real estate brokerage escrow account until disbursement was authorized within the meaning of Section 475.25(1)(k). 3. The Veil Transaction On November 29, 1993, Respondent entered into a short term lease agreement between Respondent, as the landlord, and Herman J. and Joyce Veil (the "Veils") as tenants (the "Veil transaction"). The Veils lived out of state. They paid Respondent a deposit of $1,919.36 to secure the seasonal rental of Unit 511, Ocean Walk Condominiums ("unit 511"). On March 1, 1994, the Veils traveled to Melbourne and discovered that unit 511 was not available. Respondent never provided the Veils with a rental unit of any kind. The Veils demanded the return of their deposit. On March 11, 1994, Respondent issued check number 1127 in the amount of $1,394.01. Respondent represented to the Veils that $1,394.01 was the total amount due. Respondent deducted $525.35 for motel charges allegedly incurred by Respondent to provide the Veils with temporary lodging for 11 days while Respondent attempted to procure an alternate rental for the Veils. The deduction of $525.35 was not authorized by the Veils. The Veils did not agree to pay for their own motel room. In addition, the motel charges deducted by Respondent included charges for two nights paid by the Veils. After Respondent issued check number 1127 for $1,394.01, Respondent ordered the bank to stop payment on the check. The bank erroneously cashed the check and subsequently requested the Veils to return the proceeds. The Veils refused. Respondent misappropriated $525.35 paid to her by the Veils and converted those escrow funds to Respondent's personal use. Those funds were paid to Respondent in trust for the Veils' seasonal condominium. Respondent breached that trust in a business transaction within the meaning of Section 475.25(1)(b). Respondent misrepresented and concealed her use of escrow funds belonging to the Veils. Respondent engaged in false pretenses to justify her misappropriation and conversion of the escrow funds. Respondent's failure to account for escrow funds paid to her in the Veil transaction and her failure to produce records needed by Petitioner to audit Respondent's accounts constitutes culpable negligence. When all of the facts and circumstances surrounding the Veil transaction are considered, Respondent's attempt to stop payment of her check to the Veils constitutes dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Respondent failed to timely account or deliver rental trust funds within the meaning of Section 475.25(1)(d). Respondent failed to preserve and make available to Petitioner all books, records, and supporting documents and failed to keep an accurate account of all trust fund transactions within the meaning of Rule 61J2-14.012(1). Respondent failed to maintain trust funds in her real estate brokerage escrow account until disbursement was authorized within the meaning of Section 475.25(1)(k). 4. The Sella Transaction On February 14, 1994, Respondent procured a construction contract between Militano Construction, Inc. (the "seller"), and Mr. Lino Sella, (the "buyer"). The buyer lived in Italy and required an interpreter for his negotiations with Respondent. On February 14, 1994, the buyer entrusted Respondent with an escrow deposit of $12,250. The buyer authorized Respondent to administer funds entrusted to her because the buyer was in Italy. 11/ On February 15, 1994, Respondent cashed the check for the escrow deposit. Respondent obtained a cashier's check for $12,250 made payable to "Wilson Realty." Respondent then endorsed the cashier's check for her personal use. 12/ In July, 1994, the buyer authorized Respondent to release the escrow deposit to the seller upon issuance of a certificate of occupancy ("CO") by the City of Indian Harbour Beach, Florida (the "city"). The city issued the CO on September 1, 1994. After the city issued the CO, the seller repeatedly made verbal demands for Respondent to deliver the escrow deposit. On September 9, 1994, the seller wrote a letter to Respondent demanding the escrow deposit. On September 13, 1994, the buyer physically inspected the house, found that it was acceptable, and again authorized disbursement of the escrow deposit. The seller again demanded the escrow deposit. Respondent never delivered the escrow deposit. Respondent never accounted for the deposit to the seller, the buyer, or Petitioner. The seller was unable to pay approximately $9,000 to subcontractors used to construct the buyer's house. The subcontractors recorded mechanics' liens against the Sella property and precluded the seller from delivering good and sufficient title to the buyer. The seller's failure to provide the buyer with good and sufficient title precluded the seller from satisfying its obligations under the terms of the contract with the buyer and caused the seller to breach the contract. The buyer incurred legal expenses in an attempt to quiet title to his house. The seller incurred legal expenses in an attempt to recover the escrow deposit from Respondent. Respondent misappropriated a $12,250 escrow deposit in the Sella transaction and converted that escrow deposit for personal use. The escrow deposit was given to Respondent in trust. Respondent breached that trust in a business transaction within the meaning of Section 475.25(1)(b). Respondent misrepresented and concealed her use of the escrow deposit in the Sella transaction. Respondent's failure to account for the escrow deposit and her failure to produce records needed by Petitioner to audit Respondent's escrow account constitutes culpable negligence. When considered in their totality, the acts committed by Respondent in the Sella transaction constitute fraud and dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Respondent failed to timely account or deliver trust funds within the meaning of Section 475.25(1)(d). Respondent failed to preserve and make available to Petitioner all books, records, and supporting documents and failed to keep an accurate account of all trust fund transactions within the meaning of Rule 61J2-14.012(1). Respondent failed to maintain trust funds in her real estate brokerage escrow account until disbursement was authorized within the meaning of Section 475.25(1)(k). 5. The Stanley Transaction In March, 1994, Respondent procured a construction contract between Atlantic Construction, Inc. (the "seller"), and Trevor and Carol Stanley (the "buyers") who are residents of New York. The buyers entrusted Respondent with an escrow deposit of $7,800. The buyers were unable to qualify for a mortgage and terminated the agreement in accordance with the terms of the construction contract. The buyers agreed to forfeit $500 of the escrow deposit to Respondent as real estate commission. On July 12, 1994, the buyers demanded that Respondent return $7,300 of their escrow deposit. Respondent claimed the entire $7,800 escrow deposit and neither delivered the $7,300 agreed to by the buyers nor accounted for any of the escrow deposit. Petitioner was unable to audit Respondent's escrow account. The bank where the escrow account was maintained closed the account because the account was overdrawn. The bank charged off $3,483.45 in overdrawn funds. Respondent misappropriated a $7,300 escrow deposit in the Stanley transaction and converted the escrow deposit to Respondent's personal use. Those funds were given to Respondent in trust. Respondent breached that trust in a business transaction within the meaning of Section 475.25(1)(b). Respondent misrepresented and concealed her use of escrow funds in the Stanley transaction. Respondent's failure to account for the escrow deposit and her failure to produce records needed by Petitioner to audit Respondent's account constitutes culpable negligence. When considered in their totality, the acts committed by Respondent in the Stanley transaction constitute fraud and dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Respondent failed to timely account or deliver trust funds within the meaning of Section 475.25(1)(d). Respondent failed to preserve and make available to Petitioner all books, records, and supporting documents and failed to keep an accurate account of all trust fund transactions within the meaning of Rule 61J2-14.012(1). Respondent failed to maintain trust funds in her real estate brokerage escrow account until disbursement was authorized within the meaning of Section 475.25(1)(k). 6. Respondent's Conduct Respondent evidenced a gross disregard for the rights and property of others, applicable laws, and the legal process. 13/ Respondent's conduct demonstrated culpable intent to commit the offenses for which she is charged. Respondent has made no attempt at restitution to any of the five clients she harmed, and has made no attempt to pay the overdraws charged off by the bank. Respondent has made no attempt to pay the Sella subcontractors or otherwise remove any cloud on the title to the Sella property. Respondent ignored valid subpoenas issued by Petitioner. Respondent engaged in dilatory acts and misrepresentations. Respondent delayed this proceeding through repeated false pretenses that she was represented by counsel who was unable to appear for previously scheduled formal hearings. Respondent participated in this proceeding for a frivolous purpose. There was a complete absence of a justiciable issue of law or fact in Respondent's defense. Respondent's defense was baseless and a sham. It was no more than a stonewall defense presented for the purpose of delay. Respondent failed to show any of the facts asserted in her defense. She called no witnesses and submitted no material exhibits for admission in evidence. Respondent's cross examination of Petitioner's witnesses nominally attempted to create issues but failed to produce any competent and substantial evidence to support those issues. Respondent repeatedly attempted to establish issues either by unsworn representations or by arguing with witnesses during cross examination. Respondent's sworn testimony at the formal hearing was not credible and was unpersuasive. No competent and substantial evidence supported her testimony. Any evidence that Respondent adduced during her testimony, her cross examination of other witnesses, and in her exhibits was immaterial. Respondent's conduct in this proceeding constituted a reckless waste of quasi-judicial resources as well as a waste of the time and money of Petitioner and its witnesses. Many of those witnesses had already lost time and money as a result of Respondent's conduct before this proceeding began.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent guilty of violating Sections 475.25(1)(b), (d)1., (e), and (k); and Rule 61J2- 14.012(1); revoking Respondent's real estate license; and imposing a fine of $20,000. RECOMMENDED this 15th day of November, 1995, in Tallahassee, Florida. DANIEL S. MANRY 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 November 1995.
Findings Of Fact At all times relevant to the charges brought against the Respondent, Jimmy D. Hill, he was a licensed real estate broker in the State of Florida, holding license number 0144888. On June 20, 1983, a contract for the purchase of Unit 219 in Polynesian Village in Bay County, Florida, was signed by Margaret Gorshi and Glenn Coker. The buyers paid a total of $3,000 as an earnest money deposit which the Respondent deposited into his escrow account at Bay Bank and Trust Company in Panama City. This real estate transaction was subject to the buyers obtaining 90 percent financing, and it was scheduled to close on or before September 15, 1983. The transaction did not close because the buyers were not able to obtain the necessary financing, and in September of 1984 the buyers requested that their earnest money deposit be returned. On September 27, 1984, the Respondent's office manager forwarded a check for $3,000 dated September 24, 1984, to the buyers. This check was drawn on the Respondent's escrow account at Bay Bank and Trust Company in Panama City. This check was presented for payment in November of 1984, but it was not paid by the bank, and was returned because of insufficient funds in the Respondent's escrow account. The Respondent's escrow account was closed in July of 1985 without this check having been honored. Sometime prior to the issuance of the check to refund the buyer's deposit, another check in the amount of $5,400 was cashed at Bay Bank and Trust Company, drawn on the Respondent's business checking account at First National Bank. When this check was not honored by First National Bank due to insufficient funds, it was returned to Bay Bank and Trust Company. Upon receipt of this dishonored check, Bay Bank and Trust Company departed from its standard banking policy by charging the full amount thereof against the Respondent's trust or escrow account. As a result, the Respondent's escrow account became out of balance by $5,400. The Respondent's escrow account balance was at least $3,000 from June, 1983, through July, 1984. This balance was $1,600 on August 31, 1984; $1,600 on September 30, 1984; $600 on October 31, 1984; and from November 1984, through July, 1985, when the account was closed, the escrow account balance was $585. Without the unauthorized debit of $5,400, the balance was sufficient to enable the refund check to the buyers in the amount of $3,000 to clear. Although the Bay Bank and Trust Company issued a debit memo reflecting the charge of $5,400 to the Respondent's escrow account, the Respondent did not receive it. He testified that it must have been intercepted or diverted from him, by office personnel. The Respondent learned that his $3,000 check to the buyers had bounced in November or December, 1984. On February 25, 1985, the Respondent issued a replacement check for $3,000 to purchase a cashier's check which he intended to forward to the buyers. This check was given to an office employee to purchase the cashier's check, but the employee did not do so. Approximately three months later, in May of 1985, the Respondent was notified by an attorney for the buyers that they had not received the refund. The buyers had retained this attorney to obtain their refund from the Respondent, and after two or three discussions with the attorney, the Respondent finally forwarded his check for $3,400 plus, to counsel for the buyers in August of 1985. Although the Respondent's first refund check was caused to bounce by the bank's unauthorized charge of another check to his escrow account, the Respondent was negligent in not reviewing his escrow account statements so as to be informed of the bank's charge to his escrow account. The Respondent also failed to follow-up to assure that the buyers received the first replacement check when it was written in February, 1985. He did not regularly review the balances in his escrow account monthly after July of 1984, and only when he was contacted by the Real Estate Commission's investigator did he perform a thorough reconciliation of his escrow account in July, 1985. The Respondent also failed to supervise his employees and establish policies pertaining to review and verification of the balances in his escrow account.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Respondent, Jimmy D. Hill, trading as Jim Hill Associates, be assessed an administrative fine of $1,000. THIS RECOMMENDED ORDER entered this 25th day of September, 1986 in Tallahassee, Leon County, Florida. WILLIAM B. THOMAS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of Division of Administrative Hearings this 25th day of September, 1986. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-1067 Department of Professional Regulation, Division of Real Estate vs. Jimmy D. Hill, t/a Jim Hill Associates Case No. 86-1067 Rulings on Petitioner's Proposed Findings of Fact: 1-10. Accepted. 11. Rejected because not a factual finding. 12-17. Accepted. Rulings on Respondent's Proposed Findings of Fact: (Paragraphs not numbered, but referred to in order.) Accepted. First sentence accepted. Second, third and fourth sentences rejected as not supported by corroborating evidence and thus are self-serving. Fifth, sixth and seventh sentences accepted. First sentence accepted. Second and third sentences rejected as not supported by corroborative evidence and thus are self-serving. Accepted. Accepted. First sentence accepted. Second and third sentences rejected as irrelevant. COPIES FURNISHED: Arthur R. Shell, Jr., Esquire Department of Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Michael C. Overstreet, Esquire 225 McKenzie Avenue Panama City, Florida 32401 Fred Roche Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Wings S. Benton, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Mr. Harold Huff Executive Director Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802
The Issue The issue in this case is whether the allegations of the Administrative Complaints are correct and, if so, what penalty should be imposed.
Findings Of Fact R. Granger Bruner is and at all material times has been licensed as a real estate broker, Florida license number 0010871. CASE NO. 90-2462 On or about September 9, 1989, Mr. Bruner obtained a contract from Alabama resident Earl W. Reed in which Mr. Reed offered to purchase certain property from owner Gary Salter. 1/ Mr. Reed, by his check, deposited with Mr. Bruner the sum of $1,000, as an earnest money deposit in connection with Mr. Reed's offer to purchase Mr. Salter's property. Mr. Bruner erroneously deposited Mr. Reed's earnest money deposit check into the Granger Bruner Realty operating account at People's National Bank of Niceville. Mr. Bruner's escrow account, where the earnest money deposit should have been held, was at the local Barnett Bank in the name of Granger Bruner Realty Trust Account. On or about September 14, 1989, the listing agent for Mr. Salter contacted Mr. Bruner's office and informed Mr. Bruner that Mr. Salter had withdrawn the property from the market. By letter dated September 21, 1989, Mr. Bruner notified Mr. Reed that the property had been withdrawn from the market and that the earnest money deposit was being returned. Enclosed with the letter was People's National Bank of Niceville check #509 drawn on the operating account of Granger Bruner Realty in the amount of $1,000 payable to Earl Reed. The letter and check were mailed to Mr. Reed at his address in Alabama. Mr. Reed apparently did not receive the letter or check, and became concerned about the return of his deposit money. The administrative complaint alleges that Mr. Reed continued to demand return of the deposit. Although the Department introduced a copy of Mr. Reed's complaint, Mr. Reed did not testify. The evidence does not establish that Mr. Reed made repeated demands on Mr. Bruner for return of the deposit. The complaint further alleges, but the evidence does not establish, that the September 21, 1989 check was not mailed until September 28, 1989. On September 30, 1989, Mr. Reed met in Crestview with Mr. Bruner and demanded the return of his earnest money deposit. Mr. Bruner issued check #2924 in the amount of $1,000 from Mr. Bruner's wife's personal account payable to Earl Reed. Mr. Bruner subsequently had a stop-payment order issued against the first check to Mr. Reed. CASE NO. 90-2463 Prior to October 6, 1989, Elaine Brantley, an auditor/investigator for the Department contacted Mr. Bruner and made an appointment to perform a routine audit on Mr. Bruner's accounts. Prior to October 6, 1989, Mr. Bruner was aware that his escrow account was short. On that date, Mr. Bruner deposited approximately $1,400 into his escrow account to cover the shortage. The deposit resulted in an overage in the account. Upon Ms. Brantley's arrival, Mr. Bruner informed her that the escrow account was short, that he'd gotten behind in bookkeeping, and that his secretary was depositing additional funds into the escrow account. Ms. Brantley had Mr. Bruner telephone the bookkeeping department at Barnett Bank. With Mr. Bruner's approval, Ms. Brantley asked for and obtained the balance of the escrow account by telephone from a bank employee. 2/ Mr. Bruner then informed Ms. Brantley that escrow account liabilities totaled $1,727.38. Ms. Brantley reviewed the account's check ledger and determined that the escrow account was indeed short. During the audit, Ms. Brantley noted an escrow account check #453 dated 7/25/89 in the amount of $500 made payable to Mr. Bruner. Ms. Brantley stated that Mr. Bruner said that he had disbursed the funds to himself to cover a mortgage payment he made to a third party identified as Ms. Penner. At hearing, Mr. Bruner testified that he had used his escrow account to cash a $400 check for another person, and that check #453 was drafted to recover his personal funds from the account. He stated that the check was written in error and that the transaction was not handled correctly. He admitted that he did not know the balance of the escrow account at the time the check was written. The recorded checkbook balance at the time was $340.19. At the time of the audit, Ms. Brantley also noted check #487 dated 9/26/89 in the amount of $500 to Ms. Penner. The evidence establishes that check #487 was Mr. Bruner's personal mortgage payment to Ms. Penner.
Recommendation Based upon the foregoing Findings of fact and Conclusions of Law, it is RECOMMENDED: That the Department of Professional Regulation, Division of Real Estate, enter a Final Order suspending the licensure of R. Granger Bruner for a period of 90 days, and imposing a total fine of $2,000, including $1,000 pursuant to Rule 2IV-24.001(3)(1), Florida Administrative Code, and $1,000 pursuant to Rule 21V-24.001(3)(c) and (f), Florida Administrative Code. It is further recommended that R. Granger Bruner be required to successfully complete a course of education related to management of operating and escrow trust accounts and be required to file escrow account status reports with the Commission at such intervals as the Commission deems appropriate. DONE and ENTERED this 17th day of April, 1991, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM 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 17th day of April, 1991. APPENDIX TO RECOMMENDED ORDER CASE NO. 90-2462 The Petitioner did not file a proposed recommended order. The Respondent filed a "Proposed Order" which sets forth proposed findings of fact. The proposed findings are accepted as modified in the Recommended Order except as follows: "Proposed Order" Accepted as to failure to prove exact amount of escrow account shortage. Rejected as to whether a shortage existed, contrary to evidence. Rejected. The testimony at hearing that certain deposits were not received is contrary to information provided to auditor and was not credited. Although the testimony related to the escrow account balance was unsupported hearsay, the auditor's testimony related to deposits and liabilities was based upon admissions by the Respondent. See Section 90.803(18), Florida Statutes. Rejected, conclusion of law. Rejected, not supported by weight of evidence. 8-9. Rejected, unnecessary. 10. Rejected, immaterial. 11-12. Rejected, unnecessary. "Finding of Fact" The Respondent also filed a separate statement entitled "Finding of Fact" which includes additional proposed findings of fact. The proposed findings are accepted as modified in the Recommended Order. COPIES FURNISHED: James H. Gillis, Esquire Senior Attorney Department of Professional Regulation Division of Real Estate Hurston North Tower 400 W. Robinson Street P.O. Box 1900 Orlando, Florida 32802-1900 Bart O. Moore, Esquire Moore, Kessler & Moore 102 Bayshore Drive Niceville, Florida 32578 Darlene F. Keller, Director Division of Real Estate Department of Professional Regulation Division of Real Estate Hurston North Tower 400 W. Robinson Street P.O. Box 1900 Orlando, Florida 32802 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact The Department is the state agency charged with the licensing and regulation of real estate brokers. Respondent's real estate broker license number 0325307 was active in Florida between October 1985 and November 1987. During this period, the business address registered at the Department for AmBest Realty was: 333-31st Street North #24, St. Petersburg, Florida 33713. Respondent was the qualifying broker for this real estate firm. The real estate office at the above-mentioned address was officially closed by Respondent in November 1987. At this particular time, there had been a decrease in real estate sales throughout the state. Respondent changed careers and became a long haul trucker in order to provide for his family under the then prevailing real estate market conditions. Post Office Box 12811, St. Petersburg, Florida 33733, was acquired by Respondent in November 1987 so that he could continue to receive communications regarding his former real estate practice, if necessary. His current profession as a long haul trucker frequently required his absence from the state for days at a time. The use of the post office box allowed him to review all correspondence regarding AmBest Realty whenever he returned to St. Petersburg, Florida from his trucking route. Respondent did not surrender or account for his license to the Real Estate Commission when he closed or moved his real estate business to his home in November 1987. By statute, Respondent was required to do so within 10 days of the address change or office closure. Notification to the Board should have been done by Respondent on a form provided by the Real Estate Commission for that purpose. Respondent's license ceased to be in force when he closed the real estate office at 333-31st Street North #24, St. Petersburg, Florida. In March 1988, Respondent attempted to allow his broker license to automatically revert to inactive status, pursuant to Section 475.182(3), Florida Statutes [1987]. Although this decision ignored the previous deactivation of the license, it corroborates Respondent's testimony that the office closed in November 1987. When Respondent attempted to place the license in an inactive status in March 1988, it was his intention to reactivate his license within a four-year period if the real estate market recovered from its slump. Respondent notified the Department of his new mailing address at the post office box prior to his attempted placement of the license in an inactive status. Respondent's failure to notify the Board of the change in his business address caused the Board to improperly rely on that business address as the proper location for office inspections and the Department's review of escrow/trust accounts. In August of 1990, an investigator with the Department unsuccessfully attempted to contact the Respondent at the registered business address at 333- 31st Street North #24, St. Petersburg, Florida. The real estate office and a real estate sign were no longer at the location. Respondent was later contacted by the investigator through the home address previously listed on his license that had been replaced in March 1988 by the post office box number. The investigator requested Respondent make his escrow trust account records and supporting documentation available for inspection. Respondent advised that he was unable to comply with the request as his original escrow trust account records had been stolen in a garage burglary in late November 1987. No effort was made by Respondent to reconstruct or to aid in the reconstruction of the missing records. No additional mitigating factors were presented at hearing other than the break-in to the location where Respondent stored his original escrow trust account records.
Recommendation Based upon the foregoing, it is RECOMMENDED: That Respondent, James E. Willis t/a AmBest Realty be found not guilty of Count I of the Administrative Complaint. That Respondent be found guilty of violation of Section 475.25(1)(e), Florida Statutes, as set forth in Count II, based upon his failure to preserve and make available to the Department all escrow trust account records with supporting documentation, as required by Rule 21V-14.012(1), Florida Administrative Code. That the privilege of Respondent Willis to reinstate his real estate broker's license be suspended for three years, subject to a reduction in the suspension term if the escrow trust account records are reconstructed and presented to the Board. DONE and ENTERED this 14th day of January, 1992, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of January, 1992. COPIES FURNISHED: JAMES H GILLIS ESQUIRE DPR - DIVISION OF REAL ESTATE 400 W ROBINSON ST ORLANDO FL 32801 1772 JAMES E WILLIS, AMBEST REALTY PO BOX 12811 ST PETERSBURG FL 33733 2811 DARLENE F KELLER/EXECUTIVE DIRECTOR DPR - DIVISION OF REAL ESTATE 400 W ROBINSON ST ORLANDO FL 32801 1772 JACK McRAY ESQ/GENERAL COUNSEL DEPT OF PROFESSIONAL REGULATION 1940 N MONROE ST TALLAHASSEE FL 32399 0792
Findings Of Fact Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida, in particular Section 20.30, F.S., Chapters 120, 455, and 475, F.S., and the rules promulgated pursuant thereto. Respondent Charles B. Harvey, Jr. is now and was at all times material hereto a licensed real estate broker in the State of Florida having been issued license number 0474466 in accordance with Chapter 475, F.S. The last license issued was as a broker t/a Commercial & Investment Realty, 1116D Thomasville Road, P. O. Box 785, Tallahassee, Florida 32317. On or about April 17, 1992, Petitioner's Investigator Juanita Waller conducted a routine office/inspection audit of Respondent at 1116D Thomasville Road, Tallahassee, Florida and discovered that Respondent's trust account #077780-00242743 had an approximate shortage of $3,343.07, calculated as $29,205.00 in total trust liability but only $25,861.93 as reconciled bank balance. Thereafter, the Respondent wrote Investigator Waller and provided evidence that a portion of the missing funds was caused by an $875 "bad check" which had been deposited into his escrow account. Additionally, Investigator Waller found that Respondent failed to properly reconcile his escrow account by comparing the total trust liability with the reconciled bank balance of the trust account, as required by the rules of the Commission. Rather, he had been balancing his checkbook only. Respondent has been completely cooperative with Petitioner agency and upon notification of his errors and omissions immediately began the process of correcting the procedures used in reconciling his escrow account in accord with the requirements of the agency. He also immediately made restitution from his own monies to his escrow account as soon as he was made aware what had happened. It is noted that reconciliation of monthly written statements were not required by the agency until shortly before Respondent was investigated, however he had a duty to apprise himself of all statutes and rules and to govern himself accordingly. Likewise, he accepted "full responsibility" for allowing funds from individual clients' accounts to be used to pay for expenses incurred by other clients' properties, and has taken steps to prevent such occurrences in the future. No loss has been incurred by any party. Respondent has made good any payments owed.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That a Final Order be issued and filed by the Florida Real Estate Commission finding the Respondents not guilty of breach of trust but guilty of culpable negligence as charged in Count I of the Administrative Complaint, guilty of having failed to maintain trust funds in escrow as charged in Count II of the Administrative Complaint, and guilty of having failed to properly reconcile his escrow account as charged in County III of the Administrative Complaint and further ordering that all the Respondent's licenses, registrations, certificates and permits be reprimanded and placed on probation for a period of one year and Respondent be required to pay an administrative fine of $300 (total) within sixty (60) days of the entry of the Final Order and that before the end of the probationary period he successfully complete and provide satisfactory evidence to the Florida Real Estate Commission of having successfully completed the thirty (30) hour Brokerage Management course, these education hours to be in addition to any other professional education required by the Respondent by the licensing provisions of this state, and further providing that if all these requirements not be successfully fulfilled as required by the Final Order, then all the Respondent's licenses, registrations, certificates and permits shall be suspended until all such requirements are completed but in no event shall such suspension exceed ten (10) years. RECOMMENDED this 12th day of January, 1993, 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 12th day of January, 1993. APPENDIX TO RECOMMENDED ORDER 92-6154 DOAH CASE NO. 92-6154 The following constitute specific rulings, pursuant to S120.59 (2), F.S., upon the parties' respective proposed findings of fact (PFOF) Petitioner's PFOF: 1-5 Accepted. 6 Accepted as modified. Respondent's filed no PFOF: COPIES FURNISHED: Charles B. Harvey, Esquire 1018-104 Thomasville Road Tallahassee, FL 32303 James H. Gillis, Esquire Department of Professional Regulation Division of Real Estate P. O. Box 1900 Orlando, FL 32802 Jack McRay General Counsel 1940 North Monroe Street Tallahassee, FL 32399-0792 Darlene F. Keller Division Director 400 West Robinson Street Post Office Box 1900 Orlando, FL 32802-1900
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The Respondent was at all times material to this proceeding a licensed real estate broker in the state of Florida having been issued license number 0035275. The last license issued was as a broker, d/b/a Silver Springs Real Estate, Corp., 4121 East Silver Springs Boulevard, Ocala, Florida 32671. On or about August 3, 1984, the Respondent obtained Teri L. Lochman (Lochman) as a tenant of certain residential property belonging to Gail and Valerie Cox (Cox) that was involved in a sale to A. Pillot. In connection with this sale, a lease had been prepared between A. Pillot as Lessor and A. Alongi as Lessee. Lochman signed this lease as Lessee, and in connection with this lease, paid Respondent $1,600.00 representing $700.00 for the first month's rent, $700.00 for the last month's rent and $200.00 security deposit. These funds were paid by Lochman to Respondent in two separate checks in the amount of $500.00 and $1,100.00 dated August 5, 1984 and August 13, 1984, respectively. The Pillot/Cox escrow account, which had previously been established in Respondent's escrow ledger, was credited with these funds and the funds deposited in Respondent's real estate brokerage trust bank account, No. 805 0006583, in the Sun Bank of Ocala (Trust Account), on August 9, 1984 and August 17, 1984, respectively. Upon attempting to move into the home she had rented, Lochman discovered that Cox was still in possession because the sale had not gone through. At this point, August 17, 1984, Lochman and Cox signed an agreement which would allow Lochman to reside in the home rent free for two weeks while Cox was out of town in return for acting as a security guard. Sometime after the August 17, 1987 agreement was executed by Lochman and Cox, Lochman and Cox signed a handwritten month to month lease of the premises requiring Lochman to pay Cox $700.00 for the first month's rent, $700.00 for the last month's rent and a $200.00 damage deposit. This payment was conditioned upon Lochman receiving her refund from the Respondent. There was no credible evidence that Respondent agreed to release Cox from any previous agreement with Respondent wherein Respondent acted as agent for Cox in obtaining Lochman as a tenant or the handling of Cox's property, i.e. mowing grass or preparing house for rent. Additionally, there was no credible evidence that Respondent agreed to Lochman dealing directly with Cox. Respondent was at all times relevant to this proceeding acting as agent for Cox, and therefore, demanded from Cox her commission for obtaining Lochman as a tenant and reimbursement for other services rendered before returning Lochman's rental deposit. There is no credible evidence that the Respondent agreed to return Lochman's rental deposit without first obtaining her commission or reimbursement for other services rendered from Cox. There is no credible evidence to show that Cox paid Respondent her commission or reimbursed Respondent for other services rendered or that Cox made a demand on Respondent to pay the Lochman rental deposit to Lochman. There is credible evidence that Lochman made a demand on Respondent for the return of her rental deposit and that Respondent refused to return Lochman's rental deposit because there was a dispute between Respondent and Cox concerning Respondent's commission and reimbursement for other services rendered. Lochman did not pay Cox the rent for the month of September, 1984, therefore, she contends that Respondent only owes her $900.00 of the rental deposit. Upon Respondent's refusal to pay her the balance of the rental deposit, Lochman obtained a default judgment for $900.00 in civil court, however, and although the record is not clear, the default judgment may have been set aside. (See transcript, page 15, lines 9-13). The evidence is clear that check no. 257 drawn on the Trust Account in the amount of $1,465.00, paid on April 18, 1985, included $1,278.00 from the Pillot/Cox escrow account and depleted the funds in the Pillot/Cox escrow account. However, there was no evidence presented to show that the Lochman rental deposit was paid to Respondent. Likewise, there was no evidence presented to show that Cox did not receive the Lochman rental deposit. There was no evidence presented to show the payee on Check No. 257, or any other check, drawn on the Trust Account. There was no evidence presented to show that Respondent commingled trust funds and personal funds in the Trust Account in regard to deposits and withdrawals. There was insufficient credible evidence to show that Lochman was entitled to delivery of $900.00 or any funds from the Trust Account. There was no evidence that Respondent notified the Real Estate Commission (Commission) of the conflicting demands on the Lochman rental deposit or followed any of the procedures set forth in the statutes to resolve such a conflict.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, it is, therefore, RECOMMENDED that the Commission enter a Final Order finding the Respondent guilty of failing to notify the Commission of the conflicting demands on the trust funds and failing to follow the procedures set forth for resolving such conflict in violation of Section 475.25(1)(d), Florida Statutes and that Respondent's real estate broker's license be suspended for a period of six (6) months, stay the suspension, place the Respondent on probation for a period of six (6) months under the condition that the issue of conflicting demands on the trust funds be resolved within sixty (60) days and under any other conditions the Commission feels appropriate, and assess an administrative fine of $300.00 to be paid within sixty (60) days of the date of the Final Order. It is further RECOMMENDED that the Final Order DISMISS Counts I, III, IV and V of the Administrative Complaint filed herein. Respectfully submitted and entered this 1st day of May, 1987, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of May, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2387 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties in this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner 1.-2. Adopted in Finding of Fact 1. 3. Adopted in Findings of Fact 8 and 9. 4.5 Rejected as not supported by substantial competent evidence in the record. Additionally, Petitioner has treated certain facts in this case as background in unnumbered paragraphs which I have numbered 6-10. Adopted in Finding of Fact 2 as clarified. Adopted in Finding of Fact 4 except for the phrase that Respondent agreed to the return of the rental deposit which is rejected as not being supported by substantial competent evidence in the record. I did not find Lochman's testimony credible in this regard. Adopted in Findings of Fact 8 and 9 as clarified. Adopted in Finding of Fact 10 as clarified. This paragraph is a statement of Lochman's testimony and not presented as a fact, therefore, is rejected. Rulings on Proposed Findings of Fact Submitted by the Respondent For the reasons set forth in the Background portions of this Recommended Order, there has been no rulings of Respondent's Proposed Findings of Fact. COPIES FURNISHED: Van Poole, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Harold Huff Executive Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32801 James H. Gillis, Esquire Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Jeffrey J. Fitos, Esquire Valley Forge Military Academy Wayne, Pennsylvania 19087
