The Issue The issue is whether Respondent's alcoholic beverage license should be disciplined on the ground Respondent allegedly violated Section 561.20(2)(a)4., Florida Statutes.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: When the events herein occurred, Respondent, David Carl Boston, operated a restaurant and lounge under the name of Mr. D's Restaurant and Lounge at 2262 Orchard Street, Jacksonville, Florida. Respondent has been issued special restaurant license number 26-0701, series 4COP SRX, by Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (Division). Respondent began operating his restaurant and lounge in February 1996, but ceased doing business in July 1997. Respondent's license authorizes him to sell alcoholic beverages on the premises, so long as the restaurant has at least 2,500 square feet of service area, it can seat at least 150 patrons at tables, and at least 51 percent of the gross revenue is derived from the sale of non-alcoholic beverages and food. Respondent was aware of this requirement when he applied for a license. Indeed, item 10 on his application specifically noted these special requirements. Accordingly, Respondent knew, or should have known, that he would need adequate records to show that these requirements were being met. To enforce the above requirements, the Division performs periodic audits of all restaurants holding special licenses. As a part of that audit process, on February 3, 1997, special agent Myers contacted Respondent and requested that he "[p]roduce within 14 days all records including but not limited to all sales receipts, register tapes, invoices for food, alcoholic bev. & non-alcoholic bev., employee time records, all purchase and sales receipts, as required per Florida law." The records were to cover the twelve-month period from February 1996 through January 1997. Respondent acknowledged receiving the Notice to produce the records on February 3, 1997, by signing the Notice in agent Myers' office. Within a few days, Respondent produced a large plastic shopping bag full of records, which has been received in evidence as Petitioner's Exhibit 3. The bag includes receipts for alcoholic beverage purchases and other miscellaneous items, but virtually no receipts for food purchases. There are also so- called "summary sheets," which are handwritten summaries of receipts for food and alcoholic beverage sales for most of the months during the audit period, and cash register tapes which ostensibly support the entries on the summaries. The records are poorly organized and unsophisticated, and they are very difficult for a third person to analyze. Thus, they fail to comport with Division Rule 61A-3.0141(3)1., Florida Administrative Code, which requires that a licensee must "maintain separate records of all purchases and gross retail sales of food and non-alcoholic beverages and all purchases and gross retail sales of alcoholic beverages." Because of the lack of receipts for food purchases, the Division could not establish a percentage of food sales for the audit period. Receipts for food purchases are typically used by the Division as a measuring stick against purchases of alcoholic beverages to determine an allocation of revenues. Despite several subsequent conversations between agent Myers and Respondent in an effort to obtain further clarification and documentation, agent Myers could not establish the appropriate division of revenues between food and alcoholic beverages. On the evening of February 6, 1997, agent Myers visited Respondent's premises between 8:00 p.m. and 9:00 p.m. He found approximately five customers on the premises, all at the bar, and only one employee, who was acting as bartender. The kitchen was shut down, and no food was visible to the naked eye. Agent Myers did notice a bag of frozen chicken wings in a freezer, but no other food was on the shelves or in the refrigerator. He also counted the chairs on the premises and found only 111. On February 18, 1997, agent Myers returned to the premises and found only 107 chairs for patrons. On both visits by agent Myers, Respondent had less seating capacity for food customers than is required under his special license. In addition, contrary to a Division rule requirement, full-course meals were not available at those times even though the restaurant was serving alcoholic beverages. At hearing, Respondent initially contended that he was confused as to the requirements for his license. Given the plain language in item 10 of his application, however, which clearly identifies the restrictions, this explanation has not been accepted. At the same time, it is noted that Respondent offered to voluntarily surrender his license to the Division in July 1997, since he knew that he could not meet the special conditions imposed under the law. The Division refused, however, on the ground an Adminstrative Action was pending against his license. Respondent acknowledged that on both February 7 and 18, 1997, he had less chairs for food customers than is required. Therefore, this portion of the charges has been sustained. In mitigation, he attributed this to his birthday party on one of those evenings and a "talent show" to be held on another evening, although virtually no customers were on the premises on either date when the inspections took place. Respondent has a menu from which customers can order, and he says he also has a daily luncheon buffet. In explaining the lack of food purchase receipts, Respondent claimed that most of his food was purchased from Premier Meats in Jacksonville, Florida, a retailer that caters to small businesses, such as Respondent's. According to a representative of Premier Meats, Nathanial A. Griffin, that firm conducts a "cash and carry" business, with no accounts receivables, and thus it does not invoice its customers. Griffin recalled that Respondent regularly made weekly purchases of chicken wings, gizzards, and white filets, which totaled between $60.00 to $80.00 per week, on average. Assuming this to be true, this equates to approximately $250.00 to $300.00 per month in food purchases from that vendor. The undersigned has independently reviewed the summary sheets, which Respondent says were prepared on a contemporaneous basis from cash register tapes. They reflect that the following revenues were derived from food and alcoholic beverage sales during the months of February 1996 Food through December 1996: Alcohol February 119.70 86.00 March 1200.10 851.85 April 3678.10 731.20 May 3121.27 1170.00 June 3026.90 956.00 July 1401.50 770.04 August 1771.25 1540.70 September 1504.85 2789.32 October 372.25 742.25 November 2941.01 2217.50 December 1376.04 948.50 Total 20513.97 12803.36 If the testimony of witness Giffin is accepted, then Respondent's food purchases from Premier Meats during the eleven month period would be no more than $3000.00. Given the lack of any other food receipts, the large number of receipts for purchases of alcoholic beverages, and the description of the premises on the two occasions when agent Myers inspected the closed kitchen, it is found that the summaries are not credible, due to a lack of underlying documentation. Therefore, it is found that Respondent did not derive at least 51 percent of his gross revenue from sales of food and non-alcoholic beverages, as charged in the Administrative Action.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division of Alcoholic Beverages and Tobacco enter a Final Order revoking Respondent's special restaurant license no. 26-07010 for violating Section 561.20(2)(a)4., Florida Statutes, without prejudice to obtain any other type of license, but with prejudice to obtain another SRX special license for five years from the date of the Final Order. Respondent should also have a $1,000.00 administrative fine imposed. DONE AND ENTERED this 24th day of June, 1998, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 24th day of June, 1998. COPIES FURNISHED: Richard Boyd, Director Division of Alcoholic Beverages and Tobacco 1940 North Monroe Street Tallahassee, Florida 32399-1007 Thomas D. Winokur, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-1007 David Carl Boston 2262 Orchard Street Jacksonville, Florida 32209 Lynda L. Goodgame, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue At issue in this proceeding is whether Respondent committed the offense set forth in the Administrative Action and, if so, what penalty should be imposed.
Findings Of Fact At all times material hereto, Respondent Loroco, Inc., held license number 16-01137, series 4COP, authorizing the sale of alcoholic beverages for consumption on and off the premises known as Jesters Bar & Grill, located at 801 Northeast 62nd Street, Fort Lauderdale, Florida (the "licensed premises"). In December 1996, the Department randomly selected Respondent for a beverage surcharge audit.1 The purpose of such audit was to resolve whether the monthly reports submitted and the surcharges remitted by the vendor since January 1, 1995, were accurate or, stated differently, whether such submittals were supported by retail records maintained by the vendor. In April 1997, the Department's auditor met with Respondent's accountant (Joel Marcus) to inform him of the audit procedures and to request the documentation required for the audit. Subsequently, Respondent confirmed that it had elected the "purchase method" of reporting, and that it claimed a deduction (adjustment) for alcoholic beverages sold in their original containers for consumption off premises (package sales).2 Respondent further advised the Department that it had documentation to support the deduction it claimed for package sales; however, it failed to produce (or account for the absence of) any such documentation during the course of the audit or at anytime thereafter.3 Since Respondent was unable to produce any documentation to support its package sales deduction, the Department offered to delay the audit for six months (rather than concluding the audit and denying Respondent's claim for the package sales deduction) to allow Respondent an opportunity to maintain records of package sales for a six-month period (referred to as a six-month prospective audit) and, if those records produced a reliable result, apply that percentage of package sales to the entire audit period. As for the records to be kept during the prospective audit period, the Department requested that Respondent maintain, inter alia, a beginning and ending inventory for all alcoholic beverages in the package store; a price list identifying each product by name, bottle size, and category (i.e., beer, wine, or liquor), which would permit specific identification of the product on cash register tapes when a package sale was made; and a daily cash register tape (reflecting each package sale), as well as a daily summary showing the date and gallonage by category and the bank deposit made for each day's activities. Respondent's accountant acknowledged agreement with such procedures, and the prospective audit period began July 1, 1997, and extended through December 31, 1997. In January 1998, after the prospective audit period ended, the Department's auditor sought Respondent's records so that he could conclude the audit; however, it was not until around April 1998 that any records were produced. Notably, the only record produced by Respondent was a log book, which ostensibly recorded the daily package sales. Sales were variously described by brand name or generic name (i.e., vodka, gin, rum, tequila, chardonnay), and the number of items sold was identified by the number of bottles, with or without reference to bottle size. Stapled to each page of the log book was what was represented to be a cash register tape which showed daily gross sales in dollars. Notably, there was no beginning and ending inventory; the log book contained no price reference; Respondent produced no price list identifying each product by name, bottle size, and category; and there was no daily case register tape which itemized (identified) each product sold. Notwithstanding the failings of Respondent's record keeping, the Department's auditor attempted to accommodate Respondent by speaking with its manager to secure the quantity (gallonage) and price of each item sold so that he could discern whether the prospective audit would support a package sale deduction. However, such additional information merely reinforced the inadequacy or unreliability of Respondent's record keeping, and demonstrated that there was no record basis or, stated differently, no "factual, substantial evidence" to support a package sales deduction. Rule 61A-4.063(9), Florida Administrative Code. In so concluding, it is observed that Respondent's records were not only woefully inadequate, but were also inherently unreliable. Such unreliability is evident from the fact that the cash register tape, which purported to represent daily gross sales in dollars, failed to match the total of daily sales in the log book; the actual monthly reports submitted (and surcharge paid) to the state during the period of the prospective audit (July 1, 1997, through December 31, 1997) claimed a package sales deduction that was, without explanation, at material variance from the package sales reported in the log book; and the package sales reported in the log book bore no rational relationship to any package sales deduction claimed by Respondent for any of the audit period. Consequently, it must be concluded that Respondent failed to demonstrate its entitlement to a package sales deduction for the audit period of January 1, 1995, through December 31, 1997, and that, as alleged by the Department, Respondent has an outstanding tax liability of $64,157.86 (surcharge due of $44,421.05, penalties due of $15,352.33, and interest due of $4,384.48), as of April 15, 1998.4
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered which finds Respondent guilty of violating the provisions of Section 561.29(1)(b), Florida Statutes, as alleged in the Administrative Action. It is further RECOMMENDED that for such violation the final order require the satisfaction of the debt to the Department or the execution of a mutually-agreeable payment plan within 30 days of the entry of the final order, failing which Respondent's satisfied or a payment plan is approved. DONE AND ENTERED this 23rd day of August, 1999, in Tallahassee, Leon County, Florida. WILLIAM J. KENDRICK 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 23rd day of August, 1999.
The Issue Should Petitioner discipline Respondent's Series 2-APS alcoholic beverage license for allegedly failing to disclose the direct interest in the beverage license held by M. Kashani, for falsely swearing to a material statement in the application for Respondent's alcoholic beverage license, and for allowing an employee to exchange U.S.D.A. food coupons for cash?
Findings Of Fact Effective October 12, 1993, the alcoholic beverage license number 52- 01222, Series 2-APS, held by Mohammad Kashani, d/b/a Quick Serv, for the location at 2066 West Silver Springs Boulevard, Ocala, Marion County, Florida, was revoked by Petitioner. The basis for the revocation concerned Mr. Kashani's conviction of criminal possession of a controlled substance in New York State, which disqualified Mr. Kashani from holding a Florida alcoholic beverage license. On October 13, 1993, Petitioner received Respondent's application for an alcoholic beverage license, Series 2-APS, for the license establishment known as Quick Serv, located at 2066 West Silver Springs Boulevard, Ocala, Marion County, Florida. When Respondent made the application, she was unaware that the alcoholic beverage license number 52-01222, Series 2-APS, held by Mr. Kashani, had been subject to investigation and revocation. Respondent first learned of the revocation of Mr. Kashani's alcoholic beverage license on the hearing date. Although Respondent was unaware of the investigation of the alcoholic beverage license held by Mr. Kashani and the revocation of that license for a criminal offense, Respondent was aware that a different pending criminal case for which Mr. Kashani stood accused might effect Mr. Kashani's ability to continue to hold the alcoholic beverage license for the establishment at West Silver Springs Boulevard. When Respondent submitted the application for the alcoholic beverage license, she had been living with Mr. Kashani, although they were not married. The couple had children together at the time the application was made. Subsequently, Respondent and Mr. Kashani were married and had been married for approximately two and one-half years when the hearing was held. Before Respondent made the application for the beverage license, she had worked at the establishment at 2066 West Silver Springs Boulevard, while Mr. Kashani was in jail awaiting trial for alleged violation of laws unrelated to the New York offense. Mr. Kashani's predicament concerning the pending criminal trial led Respondent to discuss with him the possibility that Respondent would take over the business at 2066 West Silver Springs Boulevard as a means to support Respondent and her children should Mr. Kashani be incarcerated following his trial. It took a period of time for Respondent to obtain the necessary information to complete the application for the alcoholic beverage license. Before the application was submitted, Mr. Kashani had been released from jail on bond pending his trial. The trial was conducted on January 3, 1994, and Mr. Kashani was found not guilty. Respondent was issued alcoholic beverage license number 52-01290, Series 2-APS, to do business as Quick Serv at the West Silver Springs Boulevard location. It is that license which is subject to administrative discipline in this case. In preparing the sworn application, Petitioner sought the advice of an attorney. She also entered into certain business arrangements with Mr. Kashani, which were disclosed in her application for alcoholic beverage license. Among the arrangements between Respondent and Mr. Kashani, which were entered into when Mr. Kashani was still incarcerated, awaiting trial, was a transfer of the assets of the Quick Serv business and the execution of a lease between Respondent and Mr. Kashani, in which Respondent was the lessee for the property which Mr. Kashani owned, where the business was located on West Silver Springs Boulevard. Mr. Kashani is the owner of the property upon which the Quick Serv establishment is located and is responsible for the payment of a mortgage on the property and the property taxes for that parcel. In particular, on September 21, 1993, while Mr. Kashani was incarcerated, a Bill of Sale, selling to Respondent all merchandise, inventory and store equipment at the Quick Serv, for a nominal consideration, $10.00, was executed by Mr. Kashani. A lease was entered into on that date for the period of September 1, 1993 through March 31, 1996. The rental amount contemplated by the lease was $400.00 per month. Under the terms of the lease, the Respondent was required to pay for all water, gas, electricity, and other utilities associated with the licensed premises. Finally, on September 21, 1993, an assignment was made from Mr. Kashani to Respondent of the Quick Serv telephone numbers and trade name. In taking over the Quick Serv business, Respondent opened a business bank account. This account was opened before Respondent obtained the alcoholic beverage license. In its details, the application which Respondent submitted to obtain her alcoholic beverage license disclosed that she had invested no funds, personal or otherwise, in Quick Serv. The application disclosed the existence of the Bill of Sale dated September 21, 1993. It disclosed the existence of the lease between Respondent and Mr. Kashani. In the application, Respondent did not specifically disclose the name of Mr. Kashani, or any other person, as having an interest, directly or indirectly. The application also reminded the applicant to list the names of persons whose interest was that of lender, joint account holder, or co-signer. Nothing was stated in response to that item. The application disclosed that the basis for purchasing the business was a "gift". No money was disclosed as having been invested by the Respondent. With the application, Respondent revealed the assignment of the Quick Serv telephone numbers and trade name to her from Mr. Kashani. In the application, Respondent indicated that she was the 100 percent owner of any stock in the business, notwithstanding that there was no indication that the business had been incorporated. This information was imparted under the application section having to do with the disclosure of liens, titles and interest of all officers, directors, stockholders, limited partners and general partners of the business for which the license was sought. Although Respondent did not specify in the section designed to reveal the names and types of interest that Mr. Kashani would have in the Quick Serv business, either directly or indirectly, the other information concerning his association with the business that has been described did identify Mr. Kashani's involvement with the business, as contributing the assets for operating Quick Serv and remaining as landlord for the property under the lease terms. Contrary to the business arrangements which have been described between Respondent and Mr. Kashani, the contract for electric services at Quick Serv has always been in Mr. Kashani's name at pertinent times, as has the contract for telephone services at that establishment. Mr. Kashani holds a membership in Sam's Club as a primary member, issued in the name of Quick Serv on October 21, 1993. On or about February 18, 1994, Mr. Kashani's name was added to the signature card for the bank account which Respondent had opened for the Quick Serv business. That signature authorizes Mr. Kashani to draw checks on the bank account. He has drawn checks on the bank account to pay for, among other items, the purchase of inventory for the Quick Serv business from Sam's Club. Generally, Mr. Kashani has routinely written checks on the bank account to purchase inventory for the Quick Serv business. In addition, Mr. Kashani has written checks on the Quick Serv bank account opened by Respondent to pay his real estate mortgage for the Quick Serv location. While Mr. Kashani has made mortgage payments from the bank account, Respondent has never made lease payments to Mr. Kashani, in accordance with the lease between Respondent and Mr. Kashani. Following his trial on January 3, 1994, Mr. Kashani began to perform duties in operating the Quick Serv business. His association was not that of an employee who was compensated for his services, nor under terms of a managerial contract with Respondent. As Respondent describes it, Mr. Kashani has been "helping me out". The duties that Mr. Kashani has performed in the store are the same as Respondent has performed. This includes stocking and operating the cash register. Mr. Kashani's involvement extends to advising Respondent of what to do in the business. Respondent described this arrangement as one in which "he knows better business than I do". After Respondent obtained the alcoholic beverage license, Petitioner's investigator has been to the Quick Serv on more than 10 occasions. When the visits were made Mr. Kashani was usually behind the counter working. Respondent was only seen on one occasion. The United States Department of Agriculture (U.S.D.A.) instituted an investigation of the Quick Serv store during the period of December 8, 1994 through August 1, 1995 to ascertain whether food stamps were being improperly exchanged for cash at that location. To achieve its purpose, its investigator, George Carson, employed the assistance of an investigative aide, George Evans. Essentially, Mr. Carson gave Mr. Evans U.S.D.A. food stamps to be presented to an employee at Quick Serv, in exchange for cash, if the employee was willing. On December 8, 1994, Mr. Evans entered the Quick Serv and spoke to Mr. Kashani. Mr. Evans asked Mr. Kashani if Mr. Kashani wanted to buy any food stamps. Mr. Kashani replied that he did not know Mr. Evans. Another man was in the store. Mr. Kashani called out to that individual and asked the unidentified man, if he, the unidentified person, knew Mr. Evans. The response was "yes". Mr. Kashani then asked for the food stamps. Mr. Evans handed them to him. Mr. Kashani obtained money from his pocket and from an undisclosed location within the store and gave cash in exchange for the food stamps. The food stamp value was $80.00. The cash exchanged was $40.00. On March 10, 1995, Mr. Evans returned to the Quick Serv. On this occasion, he had $195.00 in food stamps. Once in the store, Mr. Evans addressed Mr. Kashani and asked him if he was buying food stamps again. Mr. Kashani said that he did not know him. Mr. Evans told him that he did know him and that he had bought "some" from Mr. Kashani a while back, after which Mr. Evans handed Mr. Kashani $195.00 in food stamps. In turn, Mr. Kashani gave Mr. Evans $95.00 in cash. The $95.00 was obtained from Mr. Kashani's pocket. On August 1, 1995, Mr. Evans returned to the store. He again asked Mr. Kashani if he would buy food stamps. Mr. Kashani told Mr. Evans that he did not know him. Mr. Evans replied "you bought some from me a couple of weeks ago, three or four times", to which Mr. Kashani replied "I was just testing you". Mr. Evans then handed Mr. Kashani $325.00 in food stamps, and Mr. Kashani gave Mr. Evans $150.00 in cash from the cash register in exchange. Respondent was not in attendance on any of the occasions at which food stamps were exchanged for cash.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered dismissing the amended administrative action against Respondent. DONE AND ENTERED this 19th day of July, 1996, in Tallahassee, Florida. CHARLES C. ADAMS, 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 19th day of July, 1996. APPENDIX TO RECOMMENDED ORDER The following discussion is given concerning the proposed findings of fact of the parties. Petitioner's Proposed Findings of Fact 1-4. Subordinate to facts found. With the exception of paragraph 5(e), subordinate to facts found. The reference in paragraph 5(e) to information about spouses does not pertain, in that, at the time the application was made, Respondent and Mr. Kashani were not married. Subordinate to facts found. With the exception of the last sentence in paragraph 7, subordinate to facts found. The last sentence is not supported by competent evidence. 8-15. With the exception of the reference to a traffic ticket being paid by check, subordinate to facts found. The reference to the traffic ticket is not supported by competent evidence. Subordinate to facts found. Not supported by competent evidence. 18-22. Subordinate to facts found. Respondent's Proposed Findings of Fact 1-11. Subordinate to facts found. 12. Not necessary to the resolution of the dispute. 13-16. Subordinate to facts found. 17-18. Rejected, in the suggestion that Mr. Kashani did not have an interest, either direct or indirect, in the business. 19. Not necessary to the resolution of the dispute. 20-22. Subordinate to facts found. 23. Subordinate to facts found, with the exception that the date should read January 3, 1994. 24-28. Subordinate to facts found. Not supported by competent evidence. Subordinate to facts found. Contrary to facts found. Subordinate to facts found. 33-34. Constitute conclusions of law. COPIES FURNISHED: Thomas D. Winokur, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-1007 Donna M. Meek, Esquire 20 South Main Street Gainesville, Florida 32601 John J. Harris, Director Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issues in the case are whether the allegations of the Administrative Complaint are correct, and, if so, what penalty should be imposed.
Findings Of Fact The Petitioner is the state agency responsible for regulation of establishments licensed for the sale of alcoholic beverages in the State of Florida. Robert DeCosey is the sole owner and operator of the Respondent. At all times material to this case, the Respondent held Special Restaurant License No. 63-05489, Series 4-COP/SRX. Pursuant to law, the Respondent must derive at least 51 percent of his gross sales from food and non-alcoholic beverages in order to maintain the license, and the Respondent is required to maintain sufficient records to document such sales. The Petitioner conducted an audit for the period of April 1, 2008, through July 31, 2008. Based upon information that the Respondent provided to the auditor, the auditor estimated that 41.2 percent of the Respondent's gross revenue came from the sales of food and non- alcoholic beverages. The sales information provided to the auditor by the Respondent lacked supporting documentation and was not reliable. The Respondent maintained no verifiable information regarding his gross sales during the audit period. The Respondent provided no credible information regarding inventory levels, and, accordingly, the auditor was unable to calculate the Respondent's expenses. Sales prices were not provided during the audit, and, therefore, the calculation of revenue was little more than speculative. At the hearing, the Respondent testified that the "business model" he utilized focused on "special events" and that he did not open the restaurant on a routine basis. He testified that food was available during the events and served buffet-style. There was no documentation to support the testimony, and it has been rejected. The Respondent testified that he rented the facility during non-business hours to patrons who wanted to bring in their own food and alcoholic beverages, some of whom may have left food or alcohol behind after the private event concluded. He also testified that he opened the facility for events during which no food was available. Although the Petitioner asserted subsequent to the hearing that such practices were violations of state beverage law, the violations were not alleged in the Administrative Complaint and are outside the scope of this proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a final order revoking the special license held by Urban Hospitality Ventures, Inc., d/b/a DeCosey's Restaurant and Lounge. DONE AND ENTERED this 27th day of January, 2010, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 27th day of January, 2010. COPIES FURNISHED: Robert DeCosey Urban Hospitality Ventures, Inc., d/b/a DeCosey’s Restaurant and Lounge 2349 Lake Debra Drive, No. 617 Orlando, Florida 32835 Michael B. Golen, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 40 Tallahassee, Florida 32399 Reginald Dixon, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 John R. Powell, Director Division of Alcoholic Beverages and Tobacco Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-1020
The Issue The issues in this case are whether Respondent owes an additional surcharge tax liability on the sale of alcoholic beverages and, if so, how much and what penalties should be imposed.
Findings Of Fact Respondent is licensed by Petitioner as an alcoholic beverage vendor. Since January 1982, Respondent has held a 4COP license, which permits him to operate a package store, in which beer, wine, and liquor are sold for consumption off premises, and a bar, in which these alcoholic beverages are sold for consumption on the premises. Respondent sells beer, wine, and liquor for consumption on and off premises at a place of business known as Big Still Liquors, which is located at 1042 N. Tamiami Trail, North Ft. Myers. The Legislature introduced the surcharge in 1990. By Form DBR 44-005E, which is called "Election of Surcharge Payment Method and Certified Inventory Report," Respondent elected an accounting method by which to track and report sales of alcoholic beverages subject to the surcharge. On July 9, 1990, Respondent checked the box on the form that states: "I hereby permanently elect to pay future surcharges based upon purchases." The other alternative on the form is the sales method, in which the surcharge is calculated directly from retail sales. The sales method requires that the vendor record at retail the gallonage, as well as sales price. Also, the vendor must distinguish among beer, wine, and liquor sold at retail. Like most vendors, however, Respondent records sales by sales price, not volume. The issues in this case arise out of two factors. First, the surcharge applies to volume of alcoholic beverages, not the sales price or purchase cost. As noted above, Respondent's sales records are expressed in dollars. Second, the surcharge applies to alcoholic beverages sold for consumption on premises, not to package sales. Although purchases from wholesalers can easily be determined in terms of volumes, Respondent purchases all alcoholic beverages through the package store and does not purchase alcoholic beverages separately for the bar. Thus, factual issues arise in determining the volume of beer, wine, and liquor sold through the bar. Even though a vendor elects the purchase method, rather than the sales method, Petitioner must calculate the volume of alcoholic beverages sold at retail. Petitioner has devised a formula for this purpose. The audit in the present case took place at the start of 1993 and covered July 1990 through December 1992. The auditor obtained the invoices of the wholesale distributors that sold beer, wine, and liquor to Respondent during December 1992, January 1993, and February 1993. From these invoices, the auditor determined Respondent's cost of goods sold for these three months. The auditor then estimated the markup on the alcoholic beverages. For liquor, the auditor asked Respondent's counterperson the amount of markup for larger bottles and smaller bottles. The percentage markups were 25 percent and 35 percent, respectively. Recording the sales prices of two smaller items and two larger items, the auditor then calculated the actual markup and found that these estimates were quite accurate. The auditor next averaged the markup to 30 percent. It is unclear whether he attempted to estimate the relative proportion of larger items to smaller items. It is clear that this markup applies to liquor and possibly to wine, but not to beer, where the markup is much less. The auditor then found the breakdown between package store sales and bar sales for December 1992 through February 1993. Expressed as a percentage of total sales, package sales accounted for 51.1 percent, 61.3 percent, and 49.3 percent for the three months, respectively. The auditor averaged these figures and determined that 53.9 percent of all Big Still sales were through the package store. Next, the auditor applied the 53.9 percent factor to the total purchases from wholesale distributors during the 30-month audit period. After a reduction to reflect the 30 percent markup, the auditor calculated the package- store factor, which is deducted from total volume to yield the residual volume of beer, wine, and liquor, which is presumed to have been sold through the bar. The lower the markup, the higher the package-sale factor, which is to the vendor's advantage as the package-sale factor is a deduction because it is not subject to the surcharge. Numerous questions arise in the application of Petitioner's formula in this case. Questions include the reasonableness of the methods of estimating markup and differentiating between package and bar sales. In the absence of records from Respondent, however, Petitioner's approach would prevail. However, Respondent has separately accounted for bar and package store sales for years. Motivated by a desire to reduce employee pilferage, Respondent has required employees to record all transfers of beer, wine, and liquor from the package store to the bar. To ensure compliance, Respondent has also required that all empties be returned to the package store in order to monitor bar sales. Respondent reported and paid the surcharge in accordance with the volumes of alcoholic beverages reflected on its internal records. There is no surcharge deficiency.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, enter a final order dismissing the Administrative Action against Respondent. ENTERED on November 29, 1994, in Tallahassee, Florida. ROBERT E. MEALE 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 on November 29, 1994. APPENDIX Rulings on Petitioner's Proposed Findings 1-3: adopted or adopted in substance. 4-12: rejected as subordinate. 13-14 (first sentence): rejected as recitation of evidence. 14 (remainder)-15: adopted or adopted in substance. 16-18: rejected as recitation of evidence. 19-25: adopted or adopted in substance; provided, however, Petitioner failed to prove that the result was more accurate than the result produced by Respondent. 26: rejected as recitation of evidence. 27-30: adopted or adopted in substance. 31-34: rejected as recitation of evidence and subordinate. Rulings on Respondent's Proposed Findings 1-2: adopted or adopted in substance. 3: rejected as irrelevant. 4: rejected as repetitious. 5-6: adopted or adopted in substance. 7-8: rejected as irrelevant. 9: adopted or adopted in substance. 10-end: rejected as subordinate, repetitious, recitation of evidence, irrelevant, not findings of fact, and not in compliance with order of hearing officer requiring numbered paragraphs with no more than four sentences per paragraph. COPIES FURNISHED: Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 Richard D. Courtemanche, Jr. Senior Attorney Department of Business and Professional Regulation Division of Alcoholic Beverages and Tobacco 1940 N. Monroe St. Tallahassee, FL 32399-1007 Harold M. Stevens Harold M. Stevens, P.A. P.O. Drawer 1440 Ft. Myers, FL 33902
The Issue The issue presented here concerns the entitlement of Foxie's of Orlando, Inc., d/b/a Foxie's lunge to change the corporate officers listed with the State of Florida, Division of Alcoholic Beverages, in License No. 58-1133, Series 2- COP, by substituting the name Carol Valdyke for Wiley U. Pridgen.
Findings Of Fact The Petitioner, Foxie's of Orlando, Inc., is a Florida corporation owned by Carol Valdyke. She is also the President, Secretary and Treasurer of the corporation. Foxie's Lounge of Orlando, Inc., is the record holder of License No. 58-1133, Series 2-COP, which was issued by the Respondent, State of Florida, Division of Alcoholic Beverages and Tobacco. This agency, among other functions, is responsible for the licensure of certain entities who wish to sell alcoholic beverages in the State of Florida. This action arises from the attempt of Foxie's Lounge of Orlando, Inc., to gain the permission of the Respondent to change its corporate officers from Wiley U. Pridgen to Carol Valdyke and the subsequent rejection of that effort, followed by a request by the licensee to be granted a hearing. The Director of the State of Florida, Division of Alcoholic Beverages and Tobacco, asked that the matter be heard by the State of Florida, Division of Administrative Hearings, and there ensued a de novo hearing on June 3, 1980. The facts reveal that License No. 58-1133, Series 2-COP, was held by Wiley U. Pridgen on October 5, 1979. At that time, Pridgen asked the Respondent to grant a transfer of the license from Pridgen as an individual to the corporation, Foxie's of Orlando, Inc. (From the record, it is not clear whether the corporation had been formed effective October 5, 1979; however, it was established that the corporation was in existence on October 31, 1979.) On October 31, 1979, in a transaction which Wiley U. Pridgen, as 100 percent owner, stockholder, President and Secretary of the corporation entered into with Carol Valdyke, the corporation was sold to Valdyke and she became the 100 percent owner. At the time she became the President, Secretary and Treasurer of the corporation, and Pridgen signed over the outstanding shares of stock in favor of Valdyke. Terms and conditions of this sale may be found in the Petitioner's Exhibit 6 and Petitioner's Composite Exhibit 9 admitted into evidence. Following the sale, Pridgen and Valdyke went to the offices of the Division of Alcoholic Beverages and Tobacco in Orlando and indicated to a licensing official, Robert Bishop, a beverage officer, that Valdyke was assuming the corporation, Foxie's of Orlando, Inc. On this occasion, Valdyke filled out a personal questionnaire. A copy of the personal questionnaire may be found as Petitioner's Exhibit 4 admitted into evidence. Pridgen had previously told Bishop that he intended to transfer the corporate license to Valdyke after the corporation had been formed and subsequent to the time that the license had been transferred from Pridgen's name individually into the corporate name, Foxie's of Orlando, Inc., and the October 31, 1979, events were in furtherance of that design. On November 1, 1979, a temporary license in behalf of Foxie's of Orlando, Inc., d/b/a Foxie's Lounge, 2915 South Orange Blossom Trail, Orlando, Florida, was issued in License No. 58-1133, Series 2-COP. This was in response to the October 5, 1979, application for transfer of license from Wiley U. Pridgen to Foxie's of Orlando, Inc. A copy of that temporary license may be found as Petitioner's Exhibit 11 admitted into evidence. A permanent license was issued for the benefit of Foxie's of Orlando, Inc., effective November 26, 1979, related to License No. 58-1133, Series 2-COP. This license authorized the sale of alcoholic beverages at 2015 South Orange Blossom Trail, Orlando, Florida. A copy of the license may be found as Petitioner's Exhibit 12 admitted into evidence. On December 7, 1979, the Respondent received final information from Carol Valdyke, the owner of Foxie's of Orlando, Inc., necessary to effectuate her request to become the President, Secretary and Treasurer and listed owner/stockholder of the license holder, Foxie's of Orlando, Inc., for purposes of complying with Respondent's regulations related to these changes. The materials associated with that request included the Certificate of Incumbency and Declaration of Stock Ownership, a copy of which may be found as the Petitioner's Exhibit 5 admitted into evidence. At that point in time, from the facts presented in the hearing, it is concluded that the agency was aware of the sale of the corporation to Valdyke, as reflected in Petitioner's Composite Exhibit 9, which features the Promissory Note and Security Agreement. A licensee application investigation was commenced after the case had been assigned to an employee within the agency on December 7, 1979. The investigation was completed on January 16, 1980, as established through a copy of the license application investigation which may he found as Petitioner's Exhibit 7 admitted into evidence. The only reservation about granting the request which was made in the investigative report was that comment found in Item 21. This item is a question which solicits comments from the investigator on the subject of reasons for approval or disapproval and, in responding, the comment "Yes" was made and by explanation stated, "See administrative case number 29383 pending". This reference in Item 21 to Petitioner's Exhibit 7 concerning case number 29383, means case number 29383-A, which is a Notice to Show Cause/Administrative Complaint containing allegations of October 31, 1979, and November 7, 1979, which had been placed against Foxie's of Orlando, Inc., License No. 58-1133, Series 2-COP. The exact date of the preparation of the allegations as set forth in a Notice to Show Cause document was not established in the hearing. It was shown that the Notice to Show Cause/Administrative Complaint and Notice of Informal Conference was served on Wiley U. Pridgen on March 17, 1980. A copy of the Notice to Show Cause and Notice of Informal Conference together with the statement of service may be found as the Petitioner's Composite Exhibit 3 admitted into evidence. Case DABT number 29383-A is now pending before the Division of Administrative Hearings as DOAH No. 80-1039. There had been another case, DABT number 29332-A, which had been placed against Foxie's of Orlando, Inc., License No. 58-1133, Series 2-COP. This case was premised upon allegations of violations which occurred in May, 1979, and shows service of the Notice to Show Cause/Administrative Complaint and Notice of Informal Conference on January 2, 1980. A copy of this Notice to Show Cause/Administrative Complaint and Notice of Informal Conference may be found as Petitioner's Composite Exhibit 2 admitted into evidence. This case was subsequently dismissed by order of the Director of the Division of Alcoholic Beverages and Tobacco dated April 7, 1980, a copy of which order may be found as Petitioner's Exhibit 1 admitted into evidence. Sometime between December 7, 1980, the completion date of Carol a1dyke's request for change of officers and ownership/stockholder, and March 7, 1980, the Director of the Division of Alcoholic Beverages and Tobacco issued a memorandum to the corporation, Foxie's Lounge of Orlando, Inc., denying the request to change the officers. This relates to the change of officers from Wiley U. Pridgen to Carol Valdyke. No mention was made in the course of the denial of the application about the subject of the change of ownership/stockholder. A copy of the memorandum of denial may be found as the Petitioner's Exhibit 10 admitted into evidence.
Recommendation It is RECOMMENDED that Petitioner, Foxie's Lounge of Orlando, Inc., d/b/a Foxie's Lounge, holder of License No. 58-1133, Series 2-COP, be allowed to change the officers reflected in its license from Wiley U. Pridgen to Carol Valdyke. DONE AND ENTERED this 26th day of June, 1980, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of June, 1980.
Findings Of Fact Wedgewood is the holder of Division of Beverage license number 62-1626, 4-COP SRX, which authorized Wedgewood to sell alcoholic beverages for consumption on the premises at retail only. Wedgewood is advertised as a resort with private villas, hotel rooms, two restaurants and a disco with live entertainment. An ad published on page 81 of Cruise Magazine, Volume 3, No. 4, however, makes no reference to any of the facilities except the appearance of an entertainment group known as The Village People. On the other hand, an ad in the November 19, 1977, issue of Florida Alive gives equal emphasis to hotel facilities, restaurant facilities and disco facilities. Wedgewood has promulgated and distributed a flyer advertising daily happy hour with special prices for alcoholic beverages. That same flyer advertises the sale of sandwiches and emphasizes that dining facilities are available nightly. Wedgewood has produced two menus. One appears to be a lunch menu which contains a soup, fifteen different sandwiches, three salads, five hot entrees, french fries, six desserts and beverages without reference to alcoholic beverages. Wedgewood has also produced a dinner menu containing appetizers, soups, five seafood entrees, five beef entrees, and two fowl entrees, with soup, salad and an assortment of desserts. The only reference to alcoholic beverages contained in the menu suggests that one's favorite after dinner drink is available. Wedgewood has two restaurants with complete facilities for serving and preparing for the requisite number of full course meals. For the period, June 15, 1977, through January 30, 1978, Wedgewood shows gross revenues of $162,685.00, composed of $22,991.00 for food sales and $139,694.00 for alcoholic beverage sales. These figures indicate that Wedgewood has derived approximately 14 percent of its total revenue from food services. One of the criteria contained in Rule 7A-3.15, Florida Administrative Code, used in determining whether or not the holder of a restaurant license is a bona fide restaurant is: The restaurant must derive at least 51 percent of its gross revenue from the sale of food and non-alcoholic beverages. The 51 percent shall be determined by taking the average monthly gross revenue of the sale of food and non-alcoholic beverages over a period of any calendar year. DABT urges that the gross receipts evidence of the approximate seven month period should be used in making a determination that the licensee is not a bona fide restaurant. However, DABT is arguing against its own regulations. Unless the revenues are analyzed over a calendar year as provided in the Rule, the percentage of revenue from the sale of food and non-alcoholic beverages may not properly be used as a criterion. Accordingly, the evidence as to the revenues will not be considered in the determination of the instant case. Wedgewood has advertised and held out to the public to be a place where meals are prepared and served, as evidenced by its comprehensive menus. The evidence shows that space is provided with adequate kitchen and dining room equipment and that there are employed sufficient numbers and kinds of employees for preparing, cooking and serving meals for guests. While Wedgewood obviously engages in the sale of alcoholic beverages, there is insufficient evidence to establish that such sale is subordinate to the sale of food. Equal advertising space is given to both functions and accordingly, it is found, as a matter of fact, that the principal business of the restaurant is to cater to and serve full course bona fide meals to the general public and the primary operation of the restaurant is for the preparation and cooking and serving of meals and not for the sale of alcoholic beverages.
The Issue Whether respondent's alcoholic beverage license should be disciplined on charges that it operated its restaurant in violation of beverage rules.
Findings Of Fact At all times relevant to this proceeding, respondent conducted business as Oscar's Restaurant and Lounge (the "licensed premises" or "premises") at 901 Southwest Eighth Street, Miami, Florida, under a special restaurant alcoholic beverage license, No. 23-2059-SRX (Series 4-COP-SRX), issued prior to April 18, 1972. I. At 2:30 p.m. on November 8, 1979, when beverage officer Louis J. Terminello inspected the licensed premises, the kitchen area was not in use. The kitchen lights were off, no kitchen employees were present, and no food was being prepared. Although alcoholic beverages were being served to approximately three patrons in the bar section of the premises, no food had been served. (Testimony of Terminello.) Officer Terminello then asked Oscar Sarmiento, the on-site representative of respondent, to produce business records reflecting the purchases and sales of alcoholic beverages, food, and nonalcoholic beverages. Mr. Sarmiento replied that the requested records were not on the premises, that they were at the office of respondent's accountant, Mark Thaw. (Testimony of Terminello.) Respondent contends, without corroboration, that DABT, through Officer Terminello, had given oral permission to keep these business records off premises, at its accountant's office. Officer Terminello denied having given such permission. Taking into account the interest and bias of the witnesses, Officer Terminello's denial is accepted as the more credible and is persuasive. The fact that, before or during the time in question, DABT agents inspected respondent's records at its accountant's office does not, by itself, establish that respondent had permission from DABT to keep business records offsite. (Testimony of Terminello, Sarmiento.) Before leaving the premises that day, Officer Terminello explained to Mr. Sarmiento the requirements of special restaurant alcoholic beverage licenses and provided a written notice of deficiencies. (Testimony of Terminello.) At 2:30 PM. on December 5, 1979, Officer Terminello returned to the licensed premises to conduct a follow up inspection. The kitchen area was, again, not in use. A small amount of food was found in the refrigerator. The stove was cold. No food was being prepared or served. Silverware was insufficient to accommodate 200 customers. Several patrons in the bar area were being served alcoholic beverages by Guano Salas, the employee in charge of the premises. (Testimony of Terminello.) At 2:00 P.M.. on the next day, December 6, 1979, Officer Terminello returned to the premises and found a similar situation: the kitchen was not in use, no food was being prepared or served, and patrons were being served alcoholic beverages in the bar area. He then arranged to have another beverage officer, Leonard Del Monte, attempt to purchase an alcoholic beverage and a meal. At 3:00 P.M.., Officer Del Monte entered, ordered an alcoholic beverage, and asked for "something to eat." Juana Salas, the employee in charge, told him that he could go "down the street," that there were plenty of restaurants in the area. He asked for a menu but was net given one. Although there were patrons drinking in the bar area, none were eating or being served meals. (Testimony of Terminello, Del Monte.) At 5:30 P.M.. on December 7, 1979, Officers Terminello and Del Monte returned to the premises. Officer Del Monte, in an undercover capacity, ordered and was served an alcoholic beverage. He requested a menu but Ms. Salas told him that no food was being served. Other Patrons were being served drinks but none were consuming meals. (Testimony of Terminello, Del Monte.) At 4:40 P.M.. on December 11, 1979, Officers Terminello and Del Monte again entered the premises. Patrons were at the bar drinking but no food was being prepared or served. When Officer Del Monte ordered a meal, he was told that food was not being served because the kitchen was being disinfected. He ordered and was served an alcoholic beverage. (Testimony of Terminello, Del Monte.) During each of the foregoing inspections of the licensed premises, Officers Terminello and Del Monte remained on the premises for approximately 20- 30 minutes. (Testimony of Del Monte, Terminello.) Oscar Sarmiento, former owner of the licensed premises, testified that, to his knowledge (although he was not always on the premises) meals could almost always be purchased on the premises, that lunch could normally be purchased in the early and mid-afternoons. (Testimony of Sarmiento.) II. Prior to February 28, 1979, Oscar Sarmiento was the owner and president of respondent. On February 28, 1979, Elma Sarmiento, his wife, became sole owner and was elected president, treasurer, and secretary of respondent corporation. (Testimony of Sarmiento; R-3, R-4.) On February 28, 1979, Rene Valdes, a beverage license broker acting on behalf of respondent, filed with DABT forms indicating that Elma Sarmiento owned all stock of the respondent corporation and that she was elected president, treasurer, and secretary at the corporate director's meeting held on February 28, 1979. 3/ (In anticipation of the change in ownership, Mrs. Sarmiento had been fingerprinted by DABT on November 13, 1978.)(Testimony of Valdes; R-2, R-3, R-4.) III. By final order dated December 12, 1979, that portion of Rule 7A-3.15, Florida Administrative Code, which requires special restaurant licensees to "discontinue the sale of alcoholic beverages whenever the service of full course meals is discontinued" was declared an invalid exercise of delegated legislative authority by a Division of Administrative Hearings hearing officer. Gainesville Golf and Country Club, Inc. v. Division of Alcoholic Beverages and Tobacco, Department of Business Regulation, DOAH Case No. 79-1851R, affirmed, 402 So.2d 616 (Fla. 1st DCA 1981). DABT concedes that this portion of Rule 7A-3.15 is ineffective 4/ and any evidence concerning violation of it "cannot be used as an indication that the licensee was operating in a manner not consistent with its alcoholic beverage license." (Challenge to the validity of Rule 7A-3.15 filed by DABT on April 27, 1982.)
Recommendation Based on the foregoing, it is RECOMMENDED: That DABT impose a civil penalty of $1,000 against respondent for the rule and statutory violations as described above. DONE AND RECOMMENDED this 5th day of August, 1982, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of August, 1982.
