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
Findings Of Fact At all times relevant hereto, Phyllis A. Crosby, Respondent, was registered as a real estate broker by the Florida Board of Real Estate, and was qualifying broker for Crosby Realty Corporation, a corporate real estate broker (Exhibit 4). Crosby had actual knowledge of the hearing scheduled to be heard September 3, 1986, and failed to appear. William Nolte and Marilyn Nolte owned a duplex in Tampa, Florida that they desired to sell. They talked with Wade Black and Dale Peterson, real estate salesmen with American Realty Company, and agreed to give American Realty Company an exclusive right of sale agreement, a listing agreement to list the property for rent before sale, and to pay a $100 commission for each tenant. The exclusive listing agreement dated February 26, 1985 was attached to Exhibit 2, deposition of Marilyn Nolte, as Exhibit 2. Pursuant to these agreements, tenants for each of the apartments were obtained and a buyer for the property was subsequently found. In March 1985, Crosby purchased American Realty's assets which included the Nolte agreements. Salesmen licenses of Black and Peterson were transferred to Crosby Realty. Rental and deposit checks from the two tenants, totalling $1,130.00, were obtained by Black and/or Peterson and delivered to Respondent. This money was never deposited into Respondent's escrow account. The Noltes demanded remittance of the $1,130.00 minus $200 (commission), or $930.00 from Respondent on numerous occasions and made numerous phone calls to the Crosby Realty Company office to obtain this money without success. On March 13, 1985, a buyer for the Nolte property was secured by Tam- Bay Realty, and the property was sold with the closing taking place June 9, 1985. Prior to the closing, Nolte wrote to the American Title Company, who closed the transaction, regarding the $930.00 owed Nolte by Respondent and this $930.00 was deducted from the commission paid Respondent. At the closing, Respondent appeared, took the check representing Crosby Realty's Commission less the $930.00 deducted to pay Nolte, and left before the final papers were signed. No commission for the rentals of the sale was ever paid by Respondent to Black or Peterson. Respondent, during 1985, had three accounts in the Citrus Park Bank in Tampa. One was the Crosby escrow account, one was the Crosby Realty general account, and one was the Phyllis A. Crosby personal expense account. Numerous overdrafts were drawn on the general account and personal expenses account and the bank notified the Respondent that these overdraft charges would be deducted from her escrow account as a set-off to keep the bank from losing money because of these overdraft charges. During June 1985, the bank debited the escrow account $88.50 (debit memo Exhibit 1), the July statement contained a debit memo of $283.00, and in August, debit memos of $126.76 and $62.88 appeared. In September 1985, Citrus Park Bank closed all of Respondent's accounts. On April 29, 1985, Respondent leased office space and a townhouse from Carlton Properties in Tampa. She signed a three-year lease effective May 1, 1985, which provided for two months free rent for the office, with tenant to make a security deposit in the amount of $817.79 (which equals one month rent) due June 1, 1985. This deposit was never made and she was evicted in July. The townhouse lease provided for two weeks free rent with the security deposit due May 15, 1985. Respondent made this payment and one additional payment, but the check for the second payment was returned marked insufficient funds. She was evicted July 22, 1985. Respondent leased office space on July 9, 1985, from Ayers-Siera Insurance Association in the Carrolwood Village Center for a broker's office. She gave the lessor a check for $842.00 for the August rent and a security deposit. She moved into the office space and the check, written on the Crosby Realty general account, bounced. It was returned for collection twice, marked insufficient funds. When run through a third time, the check was returned marked "account closed." Eviction proceedings were instituted and Respondent's furniture was moved out of the office by the Sheriff in early October. The lessor has never received any monies from Respondent. In September or early October 1985, Respondent entered into a three year lease agreement with Paramount Triangle to lease office space commencing November 1, 1985. She moved her offices into that space and occupied the premises until April or May 1986 when she departed. During the period that Respondent occupied this office space, only one rental check from her was honored by the bank. Numerous checks given to Paramount Triangle for rent were not honored by the bank. Finally, the last check from Respondent dated March 6, 1986, which Paramount Triangle tried to deposit, was returned showing the account on which the check was drawn was closed on March 4, 1986. Pamela Glass was employed as a secretary by Respondent from July 6, 1986 through August 6, 1986. During this period, Respondent refused to accept certified mail and became very angry with Glass when she once signed for a certified letter addressed to Respondent. Glass received numerous phone calls from people complaining about not being paid for billing sent to Respondent. When her pay was not forthcoming at the end of the month, Glass quit. Glass also testified, without contradiction, that Respondent held accounts for utilities under various aliases she used for this purpose. Frank Maye, investigator for Petitioner, failed to get escrow account records from Respondent when requested and made appointments with her to audit her escrow accounts which were not kept by Respondent. Failing to obtain the records from Respondent, Maye subpoenaed the records from the bank.
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
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order revoking the license of Respondent, Annette J. Ruffin, to be a real estate broker. RECOMMENDED this 27th day of May, 1987, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 27th day of May, 1987.
The Issue The issue in this case is whether the Respondent, Shirley Bemenderfer, committed the violations alleged in an Administrative Complaint issued by the Petitioner, Department of Business and Professional Regulation, Division of Real Estate, on December 31, 2001, and, if so, the penalty that should be imposed.
Findings Of Fact Petitioner, the Department of Business and Professional Regulation, Division of Real Estate (hereinafter referred to as the "Department"), is the state agency charged with the duty to prosecute administrative complaints pursuant to Section 20.125, and Chapters 120, 455, and 475, Florida Statutes (2000). At the times material to this proceeding, Shirley K. Bemenderfer is and was a licensed Florida real estate broker. Ms. Bemenderfer's license number is 9995621. For her last issued license, Ms. Bemenderfer was an active broker at 1801 Okeechobee Road, Fort Pierce, Florida 34950. She operated under the trade name of Florida Properties of Fort Pierce. Ms. Bemenderfer has held a real estate license for 30 years. On December 9, 1999, Dawn Luchik, an investigator for the Department, conducted an audit of Ms. Bemenderfer's property management escrow account. The property management escrow account maintained by Ms. Bemenderfer was a single account by which she recorded the receipts and disbursements of all property owners for whom she maintained property (hereinafter collectively referred to as the "Property Owners"). Using information provided by Ms. Bemenderfer, Ms. Luchik compared the "Trust Liability," or the net amount of funds entrusted to Ms. Bemenderfer by the Property Owners, with the net amount of money in the bank account in which Ms Bemenderfer actually deposited the funds. Based upon information initially provided by Ms. Bemenderfer, the Property Owners relevant to this proceeding consisted of individuals identified as Thomas, James C. Kelley, Pulliam, Esquivel, and Samaro. Based upon Ms. Bemenderfer's property management escrow account (hereinafter referred to as the "Escrow Account"), the balances for the Property Owners as of December 9, 1999, were as follows: Thomas $2,565.49 Kelley 97.43 Pulliam 414.52 Esquivel 1,600.00 Samaro (179.86) Total $4,497.58 Information provided by Ms. Bemenderfer indicated that the total balance as of December 9, 1999, for the bank account in which the funds of the Property Owners were maintained (hereinafter referred to as the "Bank Account") totaled $9,650.44. A number of checks which were written and reflected in the Escrow Account had not yet cleared the Bank Account and, therefore, these checks were totaled and added back to the Escrow Account balance as of December 9, 1999. Those checks (hereinafter referred to as the "Outstanding Checks"), according to the information provided by Ms. Bemenderfer, included the following 1/: Payee Check Number Amount Bemenderfer 5213 $125.00 Thomas 52?? 405.00 Paigon 5231 70.00 Samaro 4811 630.36 Samaro 4969 795.77 Samaro 4576 137.46 Total $3,414.86 The amount of the Outstanding Checks, $3,414.86, was added to the Escrow Account total, $4,497.58, to arrive at what the Bank Account total should have reflected: $7,912.44. A comparison of the Bank Account balance of $9,650.44 with the adjusted Escrow Account of $7,912.44, reflected a large discrepancy between the two accounts of $1,738.00. Because the accounts did not balance, Ms. Luchik discussed the matter further with Ms. Bemenderfer to give her an opportunity to explain the cause of the discrepancy. In an effort to explain the discrepancy, Ms. Bemenderfer gave Ms. Luchik additional information concerning the portion of the Escrow Account attributable to Samaro. Based upon the modified information provided by Ms. Bemenderfer to Ms. Luchik, Ms. Bemenderfer's records indicated that the Samaro portion of the Escrow Account had a positive balance of $119.96 rather than the negative balance of ($179.86) initially reported by Ms. Bemenderfer. The modified balance was caused by a number of payments from the account which Ms. Bemenderfer reported had been made prior to December 9, 1999. Additionally, the new information reflected that three checks previously deducted from the Samaro account had been added back because they had never been cashed by Samaro. Those checks (hereinafter referred to as the "Three Samaro Checks") consisted of the following: Payee Check Number Amount Samaro 4811 630.36 Samaro 4969 795.77 Samaro 4576 137.46 Total $1,563.59 Ms. Luchik modified her calculations to reflect the new positive balance in the Samaro portion of Escrow Account, but failed to remove the Three Samaro Checks from the total of the Outstanding Checks reflected in Finding of Fact 7. Using the modified Samaro account balance, Ms. Luchik determined that the total amount of the Escrow Account was $4,797.40. Ms. Luchik them made the following calculation: Escrow Account Balance $4,797.40 Plus Outstanding Checks 3,414.86 Adjusted Escrow Account Balance $8,212.26 Compared to Bank Account Balance 9,650.44 Overage $1,438.18 The overage, or the amount of funds in the Bank Account in excess of the amount recorded in the Escrow Account, was reflected in an Office Inspection & Escrow/Trust Account Audit Form issued by Ms. Luchik on December 9, 1999. Ms. Bemenderfer signed the Office Inspection & Escrow/Trust Account Audit Form. Ms. Bemenderfer was unable to explain why there was an overage. The evidence at hearing proved that Ms. Luchik's calculation of the overage on December 9, 1999, was incorrect. In fact, based upon the information provided to Ms. Luchik by Ms. Bemenderfer during the audit, the overage was actually much higher than determined by Ms. Luchik. The discrepancy was caused by a simple mathematical error in Ms. Luchik's calculations. Ms. Luchik correctly added the Three Samaro Checks back to the Escrow Account to reflect the corrected portion of the account attributable to Samaro but she had already added those same three checks back to the Escrow Account as part of the Outstanding Check balance. Therefore, the amount of the Three Samaro Checks was added to the Escrow Account twice, inflating the balance of the Escrow Account by the amount of the Three Samaro Checks, or $1,563.59. When the Three Samaro Checks are correctly removed from the Outstanding Check amount, the actual overage on December 9, 1999, based upon the information provided by Ms. Bemenderfer was actually much higher than determined by Ms. Luchik: Escrow Account Balance $4,797.40 Plus Outstanding Checks: Amount Used by Ms. Luchik $3,414.86 Reduced by the Three Samaro Checks 1,563.59 1,851.27 Adjusted Escrow Account Balance $6,648.67 Compared to Bank Account Balance 9,650.44 Overage $3,001.77 Based upon the best information available to the Department as of December 9, 1999, Ms. Bemenderfer appeared to have $3,001.77 in her Bank Account in excess of the amount of money she was holding in the Escrow Account for the Property Owners. The evidence failed to prove where the purported excess money came from or who it belonged to. The evidence also failed to prove that the excess amount was in any way caused by Ms. Bemenderfer for any reason other than her simple negligence or incompetence. The December 9, 1999, audit also discovered, based upon records provided by Ms. Bemenderfer, that Ms. Bemenderfer's records of the individual Property Owner's accounts which make up the Escrow Account, often reflected a negative balance. A negative balance indicates that amounts have been expended on behalf of an individual Property Owner in excess of funds received for that individual Property Owner. Ms. Bemenderfer was unable to explain the negative balances. At the request of Ms. Bemenderfer, Ms. Luchik returned to conduct a second audit of her accounts on April 12, 2000. At this time, Ms. Bemenderfer had closed the Bank Account, account number 664413 (hereinafter referred to as the "Original Bank Account"), and opened a new one, account number 1498797 (hereinafter referred to as the "New Bank Account"). As to the Original Bank Account, Ms. Bemenderfer reported that there was no trust fund liability in the Escrow Account. The balance of the Original Bank Account, however, reflected a shortage in the account as of April 11, 2000, of $473.44, apparently reflecting that she had theoretically disbursed $473.44 more than she had received on behalf of the Property Owners. Apparently realizing she had a negative balance in the Original Bank Account, Ms. Bemenderfer deposited $500.00 in the account on the day of the audit, April 12, 2000. Therefore, instead of reflecting a shortage of $473.44 when Ms. Luchik began the audit, the Original Bank Account reflected an overage in the account of $26.56. This amount was reflected by Ms. Luchik in an Office Inspection & Escrow/Trust Account Audit Form completed on April 12, 2000. Ms. Bemenderfer was unable to explain why there was a $473.44 shortage in the Original Bank Account, what the $500.00 deposit she made was attributable to, or why the account ended up with a $26.56 overage. Based upon the best information available to the Department as of April 12, 2000, Ms. Bemenderfer appeared to have $26.56 in the Original Bank Account in excess of the amount of money she had received and disbursed to the Property Owners from the Escrow Account. The evidence also proved that the excess was caused by a deposit of $500.00 made by Ms. Bemenderfer. Finally, the evidence failed to prove that the overage or shortage was in any way caused by Ms. Bemenderfer for any reason other than her simple negligence or incompetence. The April 12, 2000, audit also determined that there was a $124.91 overage in the New Bank Account, which Ms. Bemenderfer was unable to explain. Based upon the best information available to the Department as of April 12, 2000, Ms. Bemenderfer appeared to have $124.91 in her New Bank Account in excess of the amount of money she was holding in the Escrow Account for the Property Owners. The evidence failed to prove where the purported excess money came from or who it belonged to. The evidence also failed to prove that the excess amount was in any way caused by Ms. Bemenderfer for any reason other than her simple negligence or incompetence. Monthly reconciliation statements which Ms. Bemenderfer completed were also reviewed by Ms. Luchik (hereinafter referred to as the "Reconciliations"). There are numerous overages and shortages reflected in the Reconciliations. Ms. Bemenderfer failed to provide an written explanation in the Reconciliations for the overages or shortages and she failed provide a written explanation in the Reconciliations for the correction action that would be taken to eliminate the overages or shortages. In conclusion, Ms. Bemenderfer failed to maintain her Escrow Accounts in a reasonable, understandable fashion as of December 9, 1999, and April 12, 2000. Her accounts simply do not balance. Ms. Bemenderfer's accounts as of December 9, 1999, and April 12, 2000, reflect the negligent and incompetent manner in which the accounts had been maintained. The evidence failed to prove, however, any intentional wrong on her part or that Ms. Bemenderfer benefited in any way from the manner in which the accounts were maintained. On May 19, 1999, the Florida Real Estate Commission adopted a stipulation signed by Ms. Bemenderfer in settlement of an Administrative Complaint issued against her on April 21, 1998. In the April 21, 1998, Administrative Complaint it was alleged an audit conducted in 1997 had revealed an overage of $1,731.36 in Ms. Bemenderfer's bank account, that she had failed to prepare Reconciliations, and that there were shortages in the account of Ron Cason, even though the overall account balance showed an overage. Pursuant to the terms of the stipulation, Ms. Bemenderfer admitted the factual allegations of the Administrative Complaint, agreed that those allegations constituted the violations alleged, and agreed to pay a $1,000.00 fine and costs, serve a one-year probation period, and attend a seven-hour escrow management course.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the a final order be entered finding that Shirley K. Bemenderfer violated Section 475.25(1)(e) and (o), Florida Statutes; requiring that she pay an administrative fine of $500.00; and that she be placed on probation for one year during the first three months of which she shall successfully complete at least a four-hour escrow management course prescribed by the Florida Real Estate Commission. DONE AND ENTERED this 29th day of January, 2003, in Tallahassee, Leon County, Florida. LARRY J. SARTIN 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 29th day of January, 2003.
The Issue The issues in this case are framed by the Administrative Complaint filed against the Respondent on November 1, 1991. In it, the Petitioner, the Department of Professional Regulation, Division of Real Estate, charges in six counts that the Respondent: committed dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in business transactions, in violation of Section 475.25(1)(b), Fla. Stat. (Counts I and III); operated as a broker under a trade name without causing the name to be noted in the records of the Florida Real Estate Commission and placed on his license, or operated as a member of a partnership or as a corporation, or as an officer or manager thereof, without the partnership or corporation being the holder of a valid current registration, in violation of Section 4775.42(1)(k) and, therefore, Section 475.25(1)(e), Fla. Stat. (Count II); failed to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized, in violation of Section 475.25(1)(k), Fla. Stat. (Count IV); failed to preserve and make available to the Petitioner all books, records, and supporting documents, and failed to keep an accurate account of all trust fund transactions, together with such additional data as good accounting practice requires, in violation of F.A.C. Rule 21V-14.012(1) and, therefore, Section 475.25(1)(e), Fla. Stat. (Count V); and failed to prepare and sign required written monthly escrow reconciliation statements, in violation of F.A.C. Rule 21V-14.012(2) and, therefore, Section 475.25(1)(e), Fla. Stat. (Count VI). The issues are whether the evidence sustains the charges and, if so, how the Respondent should be disciplined.
Findings Of Fact The Petitioner, the Department of Professional Regulation, Division of Real Estate, prosecutes violations of the licensing laws and regulations governing real estate brokers in the State of Florida. The Respondent, John A. Rorabacher, is now and was at all times material to this case, a licensed real estate broker in the State of Florida, having been issued license number 0254845 in accordance with Chapter 475, Florida Statutes. The last license issued to the Respondent, effective November 12, 1991, was as a broker, in limbo, and was issued to his home address. Upon application filed in February, 1988, the Respondent registered The Ladysmith Group, Inc., as a real estate brokerage, effective March 1, 1988. The Respondent was the corporation's sole officer, director and shareholder. Operating through The Ladysmith Group, Inc., through October, 1991, the Respondent acted as property manager and agent for the Spring Hill Executive Center, owned by Nimit and Cattaliya Talvanna. He secured tenants and prepared leases for office space at the Spring Hill Executive Center that provided for lease payments to be made to the Talvannas "c/o The Ladysmith Group, Inc., 5467 Spring Hill Drive, Spring Hill, Florida 34606." He corresponded with tenants on the letterhead of The Ladysmith Group, Inc. He placed lease payments he received on behalf of the Talvannas into an escrow account maintained by The Ladysmith Group, Inc. He arranged for repairs and maintenance and renovations to the Talvanna property on their behalf. 2/ While maintaining the registration of The Ladysmith Group, Inc., the Respondent applied in March, 1988, to also register his broker license with Consumers Aid Realty, Inc. (Consumers Aid), which registration became effective on May 9, 1988. 3/ In addition to being a broker for the company, the Respondent also was a part owner. He was a signatory on the company's rental escrow account. In December, 1989, the Respondent had the Florida Real Estate Commission cancel the registration of The Ladysmith Group, Inc., and the cancellation became effective January 5, 1990. However, the Respondent continued to operate through The Ladysmith Group, Inc., as described in Finding 3, above. He did this in part to minimize confusion among tenants, who were used to making their lease payments through The Ladysmith Group, Inc., and in part to shield the payments from liens and/or seizure by the IRS, to which the Respondent owed back taxes. Sometime in May or June, 1990, Winston Griffith acquired an ownership interest in Consumers Aid. Griffith did not then possess and never has possessed a real estate license in the State of Florida. The Respondent remained with the company as a part owner and as a broker for the company. He continued to be a signatory on the company's rental escrow account. 4/ However, by the end of July, 1990, the Respondent secured other full-time employment and changed his status with the company from that of an active broker (involved primarily in sales and listing) to that of a consultant. Another broker remained with the company full-time. In late October, 1990, the remaining broker at Consumers Aid gave notice of her intention to resign and cancel her registration with the company. Griffith informed the Respondent, who cooperated in Griffith's search for a replacement. The Respondent agreed to be fully responsible for the brokerage in the interim. After approximately four to six weeks, a replacement named Mr. Foster was secured in December, 1990, supposedly to act as the full-time broker for the company so that the Respondent could continue in his status as consultant. But the evidence suggests that Mr. Foster never actually served as the full-time broker and that the Respondent nonetheless continued in the status of consultant. It is not clear from the evidence who, if anyone, performed the function of broker for the company during the time Mr. Foster was the nominal full-time broker. In April, 1991, the Respondent returned to the brokerage on a more or less full-time basis for about three months. During this time, there was no discussion of Mr. Foster, or his status with company, or whether he was ever there, or whether he would ever be back. It is clear the Respondent knew that he was the company's only broker and that he was fully responsible for the brokerage during those three months. In June, 1991, the Respondent, acting for the Talvannas as described in Finding 3, above, prepared a lease for office space at the Spring Hill Executive Center for execution by Griffith, for Consumers Aid, as tenant. The lease is dated June 27, 1991. Among other things, the lease provided, on the first page, that the lessee would be responsible for a pro rata share of insurance and real estate taxes. When informed of the provision for payment of a pro rata share of insurance and real estate taxes, Griffith protested that he was unaware of the provision, notwithstanding the terms of the lease, and refused to pay those items. At the beginning of August, 1991, the Respondent's status with Consumers Aid changed again. He secured full-time employment elsewhere and ceased acting as a broker for the company. The Respondent knew that the company had no other broker, but only two real estate sales persons and Griffith, who had no real estate license. Nonetheless, he allowed Griffith to use his license until Griffith could hire another broker. In late August, 1991, the Respondent prepared a notice to the Florida Real Estate Commission that he was cancelling his registration with Consumers Aid. The evidence is not clear when this notification was sent to the Commission. The cancellation was not made effective until November 12, 1991. On or about August 20, 1991, the Respondent, acting for the Talvannas as described in Finding 3, above, sent a letter to Griffith demanding unpaid rents less the pro rata share of insurance and property taxes. The letter was on the letterhead of The Ladysmith Group, Inc. On or about August 22, 1991, Griffith paid a portion of the monies demanded in the August 20, 1991, letter and made a note of the payment in the upper right-hand corner of the letter. Still acting for the Talvannas as described in Finding 3, above, the Respondent continued to collect rents due under the Consumers Aid lease in the name of The Ladysmith Group, Inc., and deposited them in the escrow account maintained by The Ladysmith Group, Inc. On September 27, 1991, an investigator with the Department conducted a review and audit of the rental escrow account maintained by Consumers Aid. Normally, in conducting such an audit, lease agreements are reviewed to determine the trust liability, which is compared to the reconciled bank balance. But all lease agreements, bank statements and cancelled checks for the rental escrow account of Consumers Aid were not available at the time of the audit. Instead, the company's accountant provided figures representing the amount which should have been held in escrow and totalling $11,470. The reconciled bank balance on closure of the company's rental escrow account on September 26, 1991, was $2,399.77, showing a shortage of $9,070.23. The September 27, 1991, audit also showed that monthly reconciliation reports for the Consumers Aid rental escrow account were not being prepared despite a detailed explanation of the requirement during an audit performed approximately one year earlier. The Respondent was present, along with others from Consumers Aid, during parts of the earlier audit. At the time of the September 27, 1991, audit, the Commission records still indicated that the Respondent was registered as a broker for Consumers Aid and showed his address as being 5467 Spring Hill Drive, Spring Hill, Florida 32606-4597, the location of Consumers Aid. For reasons not revealed by the evidence, Griffith did not give the DPR investigator the Respondent's home address, and the investigator left word at the home of the Respondent's parents for him to contact the investigator. The Respondent never contacted the investigator.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Real Estate Commission enter a final order: (1) suspending the Respondent, John A. Rorabacher, for two (2) years; (2) conditioning reinstatement upon either successful completion of the required broker's course or approved Real Estate Commission continuing education, including in the area of escrow accounts, to be specified by the Commission; and (3) fining the Respondent $1,000 to be paid within 30 days. RECOMMENDED this 28th day of February, 1992, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of February, 1992.
Findings Of Fact Petitioner is an agency of the State of Florida charged with the responsibility and duty to prosecute violations of the statutes and rules regulating the practice of real estate in the State of Florida. Respondent, Benjamin C. Rolfe, is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0318091 in accordance with Chapter 475, Florida Statutes. The last license issued to Mr. Rolfe was as a broker with Squires Realty of the Palm Beaches, Inc., 721 U.S. 1, #217, North Palm Beach, Florida. Respondent, Duane C. Heiser, is now and was at all times material hereto a licensed real estate broker in the State of Florida having been issued license number 0038233 in accordance with Chapter 475, Florida Statutes. The last license issued to Mr. Heiser was as a broker effective February 8, 1991, at Duane C. Heiser Realty Co., 1312 Commerce Lane A1, Jupiter, Florida. On or about December 12, 1998, a Final Order was issued by the Florida Real Estate Commission and received by Mr. Heiser whereby his real estate broker's license was suspended for two (2) years from January 12, 1989, through January 10, 1991. During the month of October 1989, Mr. Heiser violated the lawful suspension order of the Commission by personally delivering rental checks to and ordering the disbursement of escrow funds from the Property Management-Operating Account, which is an escrow account, of Squire's Realty Company of the Palm Beaches, Inc. Between March 22 and March 26, 1990, the escrow account records of Mr. Rolfe, who was the qualifying broker for Squire's Realty of the Palm Beaches, Inc., were audited by Petitioner's authorized representatives. The Escrow/Trust Account Audit revealed that Respondent Rolfe failed to properly document and reconcile the Property Management-Operating Account, which is an escrow account. Mr. Rolfe was responsible for this account. Mr. Rolfe was negligent regarding the management of this escrow account by allowing a suspended licensee, Mr. Heiser, access to this account. Mr. Rolfe and Petitioner stipulated that the appropriate penalty for Mr. Rolfe's violation of Section 475.25(1)(b), Florida Statutes, would be the imposition of an administrative fine in the amount of $300.00 and the placement of his licensure on probation for a period of one year. They further stipulated that the administrative fine was to be paid within thirty days of the filing of the final order. They also stipulated that during his term of probation Mr. Rolfe would be required to complete sixty hours of continuing education with thirty of those sixty hours being the thirty hour management course for brokers. They further stipulated that Mr. Rolfe would be required to provide to Petitioner satisfactory evidence of his completion of those sixty hours of continuing education and that those sixty hours of continuing education are to be in addition to any other continuing education required of Mr. Rolfe to remain active and current as a real estate broker in the State of Florida. Mr. Heiser and Petitioner stipulated that the appropriate penalty for Mr. Heiser's violation of Section 475.25(1)(b), Florida Statutes, would be the imposition of an administrative fine in the amount of $300.00 and the placement of his licensure on probation for a period of one year. They further stipulated that the administrative fine was to be paid within thirty days of the filing of the final order. They also stipulated that during his term of probation, Mr. Heiser would be required to complete sixty hours of continuing education with thirty of those sixty hours being the thirty hour management course for brokers. They further stipulated that Mr. Heiser would be required to provide to Petitioner satisfactory evidence of his completion of those sixty hours of continuing education and that those sixty hours of continuing education are to be in addition to any other continuing education required of Mr. Heiser to remain active and current as a real estate broker in the State of Florida.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered which: Dismisses Counts I, III, and V of the Administrative Complaint; Finds Mr. Heiser guilty of having violated a lawful order of the Florida Real Estate Commission in violation of Section 475.25(1)(e), Florida Statutes, as alleged in Count II of the Administrative Complaint. It is further recommended that the Final Order impose an administrative fine in the amount of $300.00 upon Mr. Heiser and place his licensure on probation for a period of one year. It is also recommended that the conditions of probation require that Respondent Heiser pay the said administrative fine within thirty days of the filing of the final order and that he be required to complete sixty hours of continuing education during his term of probation. It is further recommended that as part of the sixty hours of continuing education, Mr. Heiser be required to successfully complete the thirty hour management course for brokers, that he be required to provide satisfactory evidence of completion of such continuing education to Petitioner, and that these sixty hours of continuing education be in addition to any other continuing education required of Respondent Heiser to remain active and current as a real estate broker in the State of Florida. Finds Mr. Rolfe guilty of culpable negligience in a business transaction in violation of Section 475.25(1)(b), Florida Statutes, as alleged in Count IV of the Administrative Complaint. It is further recommended that the Final Order impose an administrative fine in the amount of $300.00 upon Mr. Rolfe and place his licensure on probation for a period of one year. It is also recommended that the conditions of probation require that Respondent Rolfe pay the said administrative fine within thirty days of the filing of the final order and that he be required to complete sixty hours of continuing education during his term of probation. It is further recommended that as part of the sixty hours of continuing education, Mr. Rolfe be required to successfully complete the thirty hour management course for brokers, that he be required to provide satisfactory evidence of completion of such continuing education to Petitioner, and that these sixty hours of continuing education be in addition to any other continuing education required of Respondent Rolfe to remain active and current as a real estate broker in the State of Florida. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 30th day of December, 1991. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 1991. COPIES FURNISHED: James H. Gillis, Esquire Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Neil F. Garfield, Esquire Garfied & Associates, P.A. World Executive Building Suite 333 3500 North State Road 7 Fort Lauderdale, Florida 33319 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792 Darlene F. Keller Division Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801
The Issue The issue for consideration in this case is whether the Respondents' Florida licenses as real estate broker, salesperson and brokerage corporation, respectively, should be disciplined because of the matters alleged in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Division of Real Estate, was the state agency in Florida responsible for the regulation of the real estate profession and the licensing of real estate professionals. Respondents Frank E. Smith, Elaine M Smith, and Sunshine Properties of Tampa, Inc., were licensed real estate professionals, a broker, a sales person, and a brokerage corporation respectively. Respondent Frank E. Smith was the qualifying broker for Respondent, Sunshine Properties of Tampa, Inc.. On or about July 23, 1991, the Respondents and Carolyn Chaple entered into a management agreement whereby Respondent agreed to rent and manage Ms. Chaple's residence located in Tampa. The terms of the management agreement signed by Ms. Chaple and Ms. Smith called for the company to render a monthly statement of receipts, charges and disbursements, and to remit the net proceeds each month to Ms. Chaple whose address was listed in the agreement as P.O. Box 12003, Brooksville, Florida 34601. For performing this service, Respondents were to receive a commission of 8% of the monthly gross receipts. The agreement also called for the Respondents to: ... hire, discharge and pay all engineers, janitors and other employees; to make or cause to be made all ordinary repairs and replacements necessary to preserve the premises in its present condition and for the operating efficiency thereof and all alterations required to comply with lease requirements, and to do decorating on the premises; to negotiate contracts for nonrecurring items not exceeding $100.00 and to enter into agreements for all necessary repairs, maintenance, minor alterations and utility services; and to purchase supplies and pay all bills. An amendment to the agreement, initialed by Ms. Chaple only, made the provision subject to a lease agreement purportedly attached but which was not offered into evidence. Ms. Chaple contends that lease provided she would be responsible only for those repairs costing in excess of $250.00 and which she had approved. This added provision was not, however, initialed by Respondents and, therefore, never became a binding part of the management agreement, regardless of what Ms. Chaple intended. Ms. Smith asserts that if Ms. Chaple had insisted on that change, she would not have entered into the agreement. It is found, therefore, that there was no agreement limiting Ms. Chaple's liability for repairs. Pursuant to the management agreement, Respondents solicited and obtained tenants for Ms. Chaple's property. Respondent admittedly did not send a copy of the first lease to Ms. Chaple, but the tenancy was short lived and terminated when the tenant moved out owing rent. Ms. Chaple claims the Respondents did not advise her of this situation. Instead, she claims, she heard of it from neighbors. However, on December 30, 1991, Respondents obtained another lessee for the property at a rental of $600.00 per month for 12 months. Respondents' fee was %8 of that ($48.00) resulting in a net monthly rental to Ms. Chaple, exclusive of repair expenses if any, of $552.00 per month. Ms. Chaple claims that though she repeatedly asked for a copy of the management agreement she had signed, she never got one. When she began to ask for accountings, she says she got some but not all. By the same token, she claims she did not get all the receipts relating to the repair work done on her property. Between December 4, 1991 and August 16, 1992, Ms. Chaple wrote several detailed letters to the Respondents requesting information on the status of the first tenancy and efforts being made to receive compensation, and detailed explanations for expenditures made and charged to her on the account statements that were sent. She also complained of the lateness of the statements, of the Respondents' notice of intended termination of the agreement, and an explanation of large expense charged almost every month. Respondents claim they furnished Ms. Chaple a copy of the management agreement on at least 3 separate occasions by mailing a copy to her Brooksville address, that address listed for her in the agreement. Ms. Chaple, however, was living in Houston, Texas during all this period and requested the use of the Brooksville address, apparently her father's post office box. Respondents also claim they sent Ms. Chaple a monthly statement of account along with her net rent check each month. Every check sent was cashed by Ms. Chaple indicating she received them. There is no explanation as to why she did not also receive the account statements. In light of Ms. Chaple's moves, and the use of an intermediary to transmit mail, it cannot be said Respondents did not send the agreements. This is not to say Ms. Chaple did receive them all, merely that the Respondents dispatched them to her. Ms. Chaple also claimed she never got a copy of a lease from the Respondents. Respondent, Elaine Smith, admits this indicating she did not send copies of leases to owners as a matter of practice. It is noted that Ms. Chaple repeatedly requested itemized explanations for the major expenditures deducted from the rent each month and characterized on the account statement solely as "maintenance." The management agreement obliging the owner to pay for such expenditures as a deduction from rent is silent on the need on the Respondents to explain such deductions. The agreement obliges the agent to "render a monthly statement of receipts, disbursements and charges and to remit each month the net proceeds to the [owner]." While it may be true the monthly statement of accounting showing "maintenance" might be acceptable evidence to the Internal Revenue Service, when, as here, such expenses are relatively large and frequent, it is not at all unusual or unreasonable for the owner to request and expect to receive an explanation of those deductions. To be sure, Respondents did send some receipts as requested, but it is clear they did not do so in all cases. Clearly the mere use of the word, "maintenance" does not constitute a sufficient showing of "disbursements" or "charges" as are called for in the agreement. This is so especially in light of the fact Respondents also operated a maintenance company through which they contracted for almost all maintenance and repair work except air conditioning. The charge to the owners was cost plus 10%. Ms. Chaple ultimately filed a complaint with the Division which, on March 18, 1992, sent its investigator, J.L. Graham, to the Respondents' office. As a part of her investigations, Ms. Graham did an audit of the Respondents' escrow accounts maintained at the Sun Bank in Tampa. She discovered that Respondents maintained a security escrow account which had a shortage of $5,780.00 and a rental escrow account which had a shortage of $4,261.31. Respondents admit a shortage had existed ever since the business was purchased in 1986 and claim that due to the shrinking inventory of properties they managed, the need to pay $500.00 a month on the purchase price, and $1,300.00 a month on obligated rent, they did not have sufficient income from operations to reimburse the accounts the amount of the shortages. There is no evidence that Respondents misappropriated any of the funds represented by the shortages and it is accepted they did not cause or increase either shortage. However, it is equally true they did nothing to eradicate or reduce either, routinely drawing their lawful commissions which were placed in the company's operating account and used to pay routine expenses. In any event, within 2 days of Ms. Graham's inspection, Respondents borrowed the money to reimburse the escrow accounts for the amount of the shortages in full. Ms. Graham also found that Respondents failed to prepare and sign written monthly reconciliations of the escrow accounts and had no supporting documentation for the accounts other than the check register, leases and the management agreements. Respondents' books were primarily kept in a computer and the information in support of the escrow accounts was not being kept in a manner readily accessible to the Division's representatives. Mr. Smith admits he did not do the required reconciliations, claiming that between the computer records and the bank statements, he knew what was going on. This is insufficient to satisfy the Division's requirements. Mr. Smith contends that immediately after the audit, he began doing the required reconciliations and would be willing to furnish them to the Division on a repeated basis if necessary. Respondents also failed to prepare and furnish to the tenants of clients' properties the required disclosure of agency relationship, notifying the tenants in writing that they, Respondents, represented the respective landlords, not them. Respondents asserted they made it clear to each tenant that they did not own the units being rented, but this does not meet the rule or statutory requirement. Review of the corporation records also revealed that Mrs. Smith, a licensed salesperson, was listed as an officer of the brokerage corporation. Respondents admit this but claim they did not know it was improper and that their accountant failed to so advise them. Gennie Amick has known and been friends with Respondents for more than 7 years. She has used their services in the past as managers of property she then owned and both her son and her daughter do so at the present time. They have had absolutely no complaints about the Respondents' management. Ms. Amick knows Mrs. Smith very well and considers her to be a very honorable person. Respondent's integrity has never been questioned, to the best of Amick's knowledge, and she goes out of her way to help her clients, doing more than her contract requires of her. Mr. Smith is also an honorable person. Because of Ms. Amick's trust in the Respondents, she loaned them $6,000.00 when she learned of their difficulties with the Division and this loan was repaid when Respondents thereafter mortgaged their home. Respondents have owned Sunshine Properties of Tampa, Inc. since they bought it in 1986, paying $20,000.00 for the business. They put $1,500.00 down and agreed to pay the balance off at $500.00 per month. They also agreed with the seller to rent his office for $1,300.00 per month. It was these commitments, and the shrinking of the client list, which prevented them from making up the shortages in the escrow accounts. Mr. Smith has been in the real estate business, both in Florida and elsewhere, since 1967. He has been licensed as a broker since 1988 and he and his wife have operated Sunshine, which does not handle sales, only property management, since 1986. It is their livelihood. He became the qualifying broker for the firm in 1988. Neither he nor Mrs. Smith has been the subject of a complaint before now. At no time did either Respondent intend to break any rules or to unlawfully profit by their improper actions. They claim any infractions are as a result of ignorance rather than design and so it would appear. Their relationship with Ms. Chaple was less than an acceptable business relationship, yet Ms. Chaple did not make a good witness. It appeared she had her own agenda to follow and her memory of facts seemed selective. She appears to be difficult to deal with and it is reasonable to believe that much of the difficulty she had with the Respondents was as a result of her own attitude and approach.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore recommended that a Final Order be entered placing all Respondents' licenses on probation for a period of 1 year under such terms and conditions as may be prescribed by the Division and imposing an administrative file of $500.00 upon each Respondent Smith for a total fine of $1,000.00. RECOMMENDED this 18th day of February, 1993, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of February, 1993. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-3898 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: 1. - 5. Accepted and incorporated herein. Accepted and incorporated herein except for the word, solicited. & 8. Accepted and incorporated herein, Rejected as not established by clear and convincing evidence. Accepted and incorporated herein. Accepted and incorporated herein. FOR THE RESPONDENT: 1. - 4. Accepted and incorporated herein 5. Accepted to the extent that the evidence shows the agree-ment and accountings were sent to the best evidence available to the Respondents. 6. Not a Finding of Fact but a Conclusion of Law, 7. & 8. More a comment on the state of the evidence, than a Finding of Fact. 9. & 10. Accepted and incorporated herein. 11. - 14. Accepted. Rejected as implying the disclosures made satisfied the rule requirements. Accepted. & 18. Accepted as to what Respondent's did and that no harm to the public or any client resulted, but rejected to the extent public benefit is asserted. 19. & 20. Accepted but relevant only to the quantum of punishment to be imposed. 21. - 23. Accepted. 24. - 26. Accepted and incorporated herein. COPIES FURNISHED: James H. Gillis, Esquire DPR, Division of Real Estate Hurston Building - N308 400 West Robinson Street Orlando, Florida 32801-1772 Sheldon L. Wind, Esquire 110 E. Hillsborough Avenue Tampa, Florida 33504 Jack McRay General Counsel DPR 1940 North Monroe Street Tallahassee, Florida 32399-0792 Darlene F. Keller Division Director Division of Real Estate 400 W. Robinson Street P.O. Box 1900 Orlando, Florida 32802-1900
The Issue The issues in this case are whether S. Dudley Carson, the Respondent (1) failed to comply with a lawful order of the Florida Real Estate Commission; (2) deposited or intermingled personal or operating funds in the broker's trust account; (3) concealed a violation during the course of an investigation; (4) improperly disbursed funds from the broker's trust account; (5) engaged in fraudulent or dishonest dealing in a business transaction; and (6) is guilty of a course of conduct to the extent that he is not trustworthy. If yes, to one or more of the foregoing, what penalty should be imposed.
Findings Of Fact Petitioner is a state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida; in particular, Chapters 455, and 475, Florida Statutes, and Rule Chapter 61J-2, Florida Administrative Code. Respondent, S. Dudley Carson, is now and was at all times material hereto a licensed real estate broker in Florida having been issued license number 3001085 and 3004369 in accordance with Chapter 475, Florida Statutes. On or about April 19, 1994, the Commission entered a Final Order against Respondent whereby Respondent's real estate license was placed on probation for one year. Furthermore, the Final Order required Respondent to complete a 30-hour broker management course within one year of the filing of the Final Order. The Final Order was filed on May 6, 1994, and provided in pertinent part: The licensee shall enroll in and satisfactorily complete a 30-hour broker management course within one (1) year of the filing date of this Order. These course hours are in addition to any other education required to maintain a valid and current license. Failure to complete all conditions of probation may result in a new complaint being filed. This Order shall be effective 30 days from date of filing with the Clerk of the Department of Business and Professional Regulation. (emphasis supplied) In accordance with the provisions of the Final Order, Respondent had until May 6, 1995, in which to satisfactorily complete a 30-hour broker management course. When Respondent read the Final Order, he mistakenly believed that he had one year from the effective date of the Final Order rather than one year from the filing date of the Final Order to complete the required course. Respondent initially registered for a 30-hour management course to be offered in March 1995, but was unable to take the course due to a business conflict. At that time, Respondent did not realize that the next 30-hour course would not be offered until June 1995. In May 1995, Respondent registered for the next available course that was offered in June 1995. After registering for the June course, but prior to taking it, Respondent received a letter from Petitioner requesting that Respondent provide proof of having completed the required 30-hour course. Thereafter, Respondent immediately contacted Petitioner by telephone inquiring to how he could request an extension. Based on information obtained by telephone from Petitioner's staff, by letter dated May 18, 1995, Respondent requested an extension of time to complete the course. On May 23, 1995, Petitioner placed Respondent's request for an extension of time to comply with the educational requirement on the Commission's June 20, 1995, agenda for consideration. Thereafter, Petitioner advised Respondent's attorney, Steven Voigt, that the matter had been tabled and no formal action was taken by the Commission. Respondent completed the 30-hour broker management course on June 30, 1995, and on that same day so advised Petitioner by letter. Respondent had no further contact from Petitioner regarding his request for an extension until eleven months after the request was made and almost ten months after the Commission tabled the matter. That communication was by Administrative Complaint I that Petitioner filed against Respondent on April 21, 1996. As to the Administrative Complaint II, Respondent was licensed at all times material herein as a real estate broker for Crescent Management, Inc., and for RE/MAX on the Key. The broker is the person ultimately responsible for properly maintaining and reconciling all escrow and trust accounts. Further, the broker is charged with knowledge of and compliance with applicable laws and rules relative to trust accounts. Petitioner interprets governing regulations to preclude a broker from keeping retained earnings or commissions in an escrow account, and to remove such earnings or commissions when they accrue, but never less than at least once a month. Moreover, Petitioner interprets certain relevant provisions as prohibiting real estate brokers from maintaining "personal funds" in their escrow or trust account to pay personal or office expenses. Where an escrow or trust account has a deficit, if everyone who had funds in that account made a demand for the same, there would be insufficient funds to satisfy all claims. At all times material hereto, Respondent maintained account number 1622184907 at Barnett Bank in the name of Crescent Management, Inc. (Crescent Management Account). Rental security deposits and owners' funds were kept in the Crescent Management Account. The checks drawn on this account were styled "operating escrow." Stephanie Aucoin was employed by Respondent as an officer manager for Respondent from August 1992 through April or May 1995. While employed as the officer manager and in regard to Crescent Management, Ms. Aucoin's duties included determining which bills and expenses were to be paid and to whom and the amount to be paid. Ms. Aucoin was also responsible for preparing checks via computer and presenting the checks to Respondent for his review and signing. Respondent trusted Stephanie Aucoin and relied upon her to properly prepare the checks. The following checks drawn on the Crescent Management Account between January 1994 and February 1995 are the subject of the instant case: Check No. 5458 dated January 3, 1994, made payable in the amount of $246.40 to Pelican Press; Check No. 5460 dated January 3, 1994, made payable in the amount of $74.67 to Prestige Printing; Check No. 5347 dated January 21, 1994, made payable in the amount of $11,100.91 to RE/MAX on the Key; Check No. 5391 dated February 2, 1994, made payable in the amount of $82.00 to the Division of Real Estate; Check No. 6439 dated July 25, 1994, made payable in the amount of $237.83 to Sarasota Board of Realtors; Check No. 7388 dated December 31, 1994, made payable in the amount of $19,700.11 to RE/MAX on the Key; and Check No. 7005 dated February 16, 1995, made payable in the amount of $4,119.29 to American Express. Respondent signed and authorized five of the seven checks noted in the above paragraph. The checks signed by Respondent were Check Nos. 5458, 5460, 5347, 5391, and 6439. It is undisputed that Check No. 7388 dated December 31, 1994, made payable in the amount of $19,700.11 to RE/MAX on the Key, contained Respondent's forged signature and that Stephanie Aucoin had forged Respondent's signature. Contrary to Ms. Aucoin's testimony, Respondent did not request or authorize Ms. Aucoin to issue the check or sign his name to the check. Respondent had not seen this check prior to Petitioner's Investigator Hayes showing him a copy of the check during the May 1996 audit. The last check in question is Check No. 7005 dated February 16, 1995, made payable in the amount of $4,119.29 to American Express. Although she was not an authorized signatory on the Crescent Management Account, Stephanie Aucoin signed her own name on this check. Respondent never authorized or directed Ms. Aucoin to pay his American Express bill using the Crescent Management Account. Stephanie Aucoin's testimony lacks credibility. After Ms. Aucoin's employment was terminated, she filed a claim for unemployment compensation benefits. The claim was denied by the appeals referee by decision dated August 17, 1995, finding that she "had been signing checks without the owner's permission and had forged the owner's signatures on some of the checks . . . claimant was using company funds to pay her personal bills." On May 16, 1996, Stephanie Aucoin made the following statement in her sworn Petition For Injunction For Protection Against Repeat Violence filed against the Respondent: "Dudley Carson is under investigation for commingling of funds (escrow) and tax fraud . . . the chief investigator (Marie Hayes) had informed me that these charges are of a valid nature and that I could possibly be in danger by Mr. Carson." The statement of Ms. Aucoin is false in that Marie Hayes never made such a statement to Stephanie Aucoin. During the course of Stephanie Aucoin's employment as officer manager for Respondent, Ms. Aucoin and Respondent developed a romantic relationship, beginning in November 1993. The personal relationship was an intermittent one, with Respondent terminating the relationship with Ms. Aucoin three different times, first in late February 1994, next in late November 1994, and finally in early March 1995. Eventually, Respondent believed that Ms. Aucoin had been diverting business funds for her personal use. Based on this belief, Respondent fired Ms. Aucoin on or about April 28, 1995. Soon after he fired Stephanie Aucoin, Respondent employed Chip Harris to review the Crescent Management escrow records and bank statements. The records were in poor order, and it was determined that there was a shortage of escrow funds in the bank account. As soon as practicable, Respondent deposited personal funds into the Crescent Management Account to cover the shortage: $25,000 on July 10, 1995, and $20,063.09 on July 13, 1995. Respondent has made no claim to the $45,063.09 that he deposited into the Crescent Management Account for the benefit and protection of those persons entitled to the trust funds. The proper course of action to be taken by a broker upon discovery a shortage in an escrow account is to replace the missing funds as soon as possible. On July 25, 1995, Petitioner audited Respondent's escrow account's maintained by Respondent for Carson and Associates Ltd., Inc., t/a RE/MAX on the Key and Crescent Management, Inc. Petitioner found that all accounts were in good order and balanced. The two deposits of $25,000 and $20,063.09 had been made into the Crescent Management Account on July 10, 1995, and July 13, 1995, respectively, and prior to the July 25, 1995, audit. Nevertheless, the investigator did not question Respondent about the deposits nor did Respondent volunteer information concerning the deposits. On May 10, 1996, Petitioner completed an audit of the escrow accounts maintained by Respondent for Carson and Associates Ltd., Inc., t/a RE/MAX on the Key and found that all accounts balanced. On May 15, 1996, Petitioner completed an audit of the escrow account maintained by Respondent for Crescent Management, Inc., and found the account to be in good order and balanced. During the time period pertinent to this proceeding, Crescent Management, Inc. earned a 15 percent rental management fee on all rental funds collected. The Crescent Management Account was labeled as an "operating escrow account" and the source of all funds in this account consisted of rent payments by tenants. Of the rents deposited into the account, 15 percent belonged to Respondent as an earned rental management fee and the balance belonged to the owners after deducting payment of the owners' expenses. As each check from the Crescent Management Account was issued, either the "Owners'" account was charged or the "Fee, Property" account was charged. The "Fee, Property" account consisted solely of the funds generated by the 15 percent management fees. Each month, the accounts were reconciled and if there was a shortage or overage of funds, corrective action was taken. The accounting procedure implemented by Respondent and described in paragraph 30 above utilized real estate property management software program, RPM. This program had been recommended to Respondent by one of Petitioner's investigators in 1993. Under this system, one account is set up on computer and all transfers are made internally. Respondent is no longer using this accounting method, but now uses Quick Books, a recognized bookkeeping system, without any apparent problems. In regard to the checks noted in paragraph 16 above, Petitioner alleges that these seven checks were "unauthorized disbursements" in that Respondent used the escrow account to directly pay personal and office overhead and related expenses. However, Petitioner acknowledged that if earned fees in the escrow account were used for third party payments, there is no misappropriation. Furthermore, Petitioner's investigator supervisor testified that where there is no shortage of the escrow funds, the practice implemented by Respondent is just "very poor bookkeeping." In January 1994, the following checks referenced above were issued: Check No. 5458 for $246.40 to Pelican Press, Check No. 5460 for $74.67 to Prestige Printing and Check No. 5347 for $11,108.91 to RE/MAX on the Key. All three of these checks are listed on the January 1994 Trust Account Reconciliation form prepared on February 8, 1994, and signed by Respondent. At the end of January 1994, there was an overage of $1,532.09, representing "Management Fees." The corrective action taken was to remove the $1,532.89 overage and put it in the operating account. Thus, the funds used for payment of these checks were not trust funds, but fees earned by Respondent and to which he was entitled. Check No. 5391 dated February 2, 1994, for $82.00 was payable to the Division of Real Estate for payment of renewal fees. The check cleared the Crescent Management Account on February 18, 1994. The bank statement for February reflects that on February 1, 1994, the account had a beginning balance of $52,109.45, eighteen deposits and credits totaling $95,676.64, and 135 checks and debits totaling $71,799.87. At the end of the statement period, on February 28, 1994, the Crescent Management Account had a balance of $75,986.22. The funds used to pay the $82.00 check when it cleared the bank came from the "Fee, Property" split of the operating account and represented funds generated from the broker's 15 percent rental commission fee. Accordingly, trust funds were not used in regard to payment of this check. Check No. 6439 dated July 25, 1994, for $237.83 and payable to the Sarasota Board of Realtors cleared the Crescent Management Account on August 2, 1994. The bank statement for the period August 1, 1994, through August 31, 1994, reflects that the account had a beginning balance of $45,409.21, 15 deposits totaling $50,287.19; 102 checks and debits totaling $37,184.09; and an ending balance of $58,512.31. The funds used to pay the $237.83 check came from the "Fee, Property" split of the operating account and represented funds generated by the broker's 15 percent rental commission. Trust funds were not used to pay this check. Check No. 7388 dated December 31, 1994, for $19,700.11 payable to RE/MAX on the Key for overhead expenses cleared the Crescent Management Account on January 31, 1995, with funds from the "Fee, Property" split of the operating account with funds generated by the broker's 15 percent rental commission. The bank statement for the period ending January 31, 1995, reflects a beginning balance of $177,991.84; 15 deposits totaling $137,308.35; and 111 checks and debits totaling $116,469.67, resulting in an ending balance of $197,830.52. Trust funds were not used to pay this check. This check appears on the Trust Account Reconciliation form for the month of January 1995, performed on February 9, 1995, and signed by Respondent on that date. According to the Reconciliation Statement, there was a shortage in the trust account of $961.97, resulting from an overpayment to a customer. The amount of the shortage is the difference between the broker's trust liability of $179,159.46 and the adjusted account balance of $178,197.49. The Reconciliation statement further noted under "corrective action taken" that the "customer will reimburse." Check No. 7005 dated February 16, 1995, for $4,119.29, payable to American Express appears on the Trust Reconciliation Statement for the period ending February 28, 1995, performed on March 10, 1995, and signed by Respondent. The Reconciliation Statement shows that the account was in balance with no overages or shortages. The monthly bank statements for the period ending February 28, 1995, reflects a beginning balance of $197,830.52; 13 deposits of $95,753.08; 115 checks and debits totaling $75,951.56, with an ending balance of $217,632.40. The check cleared the Crescent Management Account on February 17, 1995, with funds from the "Fee, Property" split of the operating account with funds generated by the broker's 15 percent rental commission. Trust funds were not used to pay this check. Respondent has been disciplined on two prior occasions. In Case Nos. 92-83432 and 92-84338, Petitioner entered a Final Order on July 20, 1993, which adopted a Stipulation between Respondent and Petitioner. Pursuant to the Stipulation, Respondent neither admitted nor denied the allegations, but was reprimanded, fined $300, and required to take a 30-hour broker management course. The underlying administrative complaint in this matter, based on an August 7, 1992, audit by Petitioner, alleged that (1) Respondent's escrow account was not properly reconciled and had an overage of approximately $661.50; (2) Respondent failed to inform clients that a certain escrow account was an interest bearing account; and (3) Respondent's required office sign was incorrect in that letters were not all at least an inch in height and the words "Lic. Real Estate Broker" were not included. On May 6, 1994, a second Final Order was entered against Respondent in FDBPR Case Nos. 93-84352 and 93-5419. This Final Order required Respondent to pay a fine of $300 and placed Respondent on probation for a year. The administrative complaint which served as the basis for the final order was filed on January 25, 1994, and was based on a September 20, 1993, audit and investigation performed by Petitioner at Respondent's request. The Administrative Complaint alleged that Respondent had failed to properly reconcile his rental escrow accounts for July and August 1993 and had a total escrow shortage of $842.31. The September 20, 1993, audit was performed at the request of Respondent. During May of 1993, the Respondent had concerns as to the proper handling of the rental property management escrow account by his bookkeeper. As a result of these concerns, Respondent contacted Petitioner and requested that Petitioner conduct an audit. In response to Petitioner's request, Petitioner conducted an audit on September 20,1993, which revealed a shortage in the escrow account of $842.31. It was determined that this was due to errors by the bookkeeper. Therefore, the bookkeeper immediately replaced the escrow account funds. The Respondent then terminated the bookkeeper's employment. Nonetheless, the Petitioner filed an eight-count Administrative Complaint on January 20, 1994, against the Respondent charging escrow violations. The Respondent admitted the facts alleged in the January 20, 1994, Administrative Complaint and requested an informal hearing. The Commission heard the matter on April 19, 1994, and a Final Order was filed on May 6, 1994, providing for a reprimand, a $300 fine and completion of a 30-hour broker management course. The Respondent paid the fine and timely completed the course.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order finding that Respondent has violated Section 475.25(1)(e) Florida Statutes, as alleged in the Administrative Complaint filed on April 21, 1996, and imposing an administrative fine of $1,000. RECOMMENDED that all counts of the Administrative Complaint issued September 23, 1996, be dismissed. DONE AND ENTERED this 7th day of October, 1997, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUMCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 7th day of October, 1997. COPIES FURNISHED: Geoffrey T. Kirk, Senior Attorney Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32802 Frederick Wilsen, Esquire Gillis and Wilsen, P.A. 1415 East Robinson Street, Suite B Orlando, Florida 32801 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Henry M. Solares, Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900
The Issue Whether Respondent Kenneth M. Mossell's real estate license should be disciplined because he allegedly engaged in dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction; collected money in connection with a real estate brokerage transaction except in the name of his employer and with the express consent thereof; registered as an officer of a corporation while licensed as a salesman; operated as a broker while licensed as a salesman; and failed to account and deliver any secret or illegal profit in violation of Subsections 475.25(1)(b) and (e); 475.42(1)(b) and (d), Florida Statutes; Rule Sections 21V-14.012(2) and (3), and 21V-5.016, Florida Administrative Code; and whether Respondent L. Jean Jones DuBrian's real estate license should be disciplined based upon the charge that she is guilty of dishonest dealing by trick, scheme, or device, culpable negligence or breach of trust in business transactions; operated as a broker under a trade name without causing said name to be noted in the Commission records and placed on her license; or operated as a member of a partnership or as a corporation or as an officer or manager thereof, without said partnership or corporation holding a valid current registration; failed to prepare and sign required written monthly escrow reconciliation statements, all in violation of Subsections 475.25(1)(b) and (e); 475.42(1)(k), Florida Statutes, and Rule Sections 21V-14.012(2) and (3), Florida Administrative Code.
Findings Of Fact Petitioner is the state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of Florida, specifically Chapters 120, 455 and 475, Florida Statutes, and rules and regulations promulgated thereunder. Respondent DuBrian is now, and was at all times material hereto, a licensed real estate broker in the State of Florida having been issued license number 0306696 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker, c/o United Team, Inc. t/a ERA, 5844 Main Street, New Port Richey, Florida. Respondent Mossell is now, and was at all times material hereto, a licensed real estate salesperson in Florida, having been issued license number 0538751. The last license issued was as a non-active salesperson, 3432 Lori Lane, New Port Richey, Florida. Linda Sychowski, Frederick Reimer and Mary Patricia Mossell were officers of Majestic Realty and Leasing, Incorporated (Majestic), which was formed during May of 1989. Respondent Mossell was the primary financial investor. On or about April 16, 1990, Sychowski filed Majestic's annual report for 1990 with the Secretary of State listing Mary Patricia Mossell as Director/Treasurer, Sychowski as Director/President and Reimer as Director/Vice President. Respondent DuBrian was never an officer, director or shareholder of Majestic. During August 1989, pursuant to a verbal agreement, Respondent DuBrian became qualifying broker for Majestic. During August 1989, Sychowski notarized Respondent DuBrian's signature on a document titled "State of Florida, Department of Professional Regulation, Division of Real Estate, Application and Request for Licensure of a Real Estate Brokerage Corporation or Partnership." Respondent DuBrian's name appears on the portion of the form listing all corporate officers and directors. During October 1989, Respondent Mossell opened an escrow account at Citizens and Southern Bank (C & S) on behalf of Majestic. Respondent Mossell and Sychowski were signatories on the C & S account and Respondent Mossell signed as Secretary of the corporation. On September 20, 1990, Sychowski notified the Department of Professional Regulation that Respondent DuBrian had been terminated as broker of record for Majestic. President Linda Sychowski denies that she had any understanding that Respondent DuBrian would operate an independent real estate company outside of Majestic or that DuBrian would receive commissions for real estate activities except through Majestic. Sychowski is not a real estate licensee and relied upon Respondent DuBrian's competency as a broker. During April 1990, Sychowski signed check numbers 119 and 120 drawn on Majestic's escrow account. Those checks were payable to Respondent Mossell's wife, Mary Patricia Mossell, as reimbursement for the return of a security deposit and cleaning services. Sychowski learned, subsequent to Respondent DuBrian's termination, that DuBrian operated a real estate brokerage company out of her home independent of her activities as a broker with Majestic. She learned of DuBrian's other brokerage activities during a deposition in conjunction with a civil suit filed by DuBrian against Majestic. During October 1989, Jonathan Rummey entered into a lease agreement to rent property at 5416 Aloha Boulevard. Rummey paid monthly rent pursuant to the agreement and vacated the property during October 1990. Initially Rummey paid rent to Majestic and later DuBrian notified him that she had moved to another real estate company and that the rent was to be paid directly to her. Rummey understood that DuBrian was acting as an agent for the landlord and, as such, was receiving a commission from the landlord. Respondent Mossell was aware that Respondent DuBrian was conducting a real estate rental business from her home. Mossell knew this when DuBrian was hired as the qualifying broker for Majestic. Mossell permitted DuBrian to continue operating her independent rental brokerage business. Mossell allowed this since he thought that it would not be financially prudent for DuBrian to leave her ongoing business and hire on with a new firm, Majestic, which had no rental accounts. During April 1989, Scott Spoerl entered a lease agreement with Respondent DuBrian for rental property he owned. The agreement provided that rental payments would be made to Respondent "L. Jean DuBrian, Registered Real Estate Broker." Respondent DuBrian received ten percent of the rents collected as her fee for providing rental services to Spoerl. Spoerl received checks for his portion of the rent from Respondent DuBrian's account entitled "L. Jean Jones DuBrian Escrow Account." During May 1990, DPR Investigator Marjorie May conducted an inspection and escrow account audit of Majestic. At the time, Respondent DuBrian was Majestic's qualifying broker. During that audit, Investigator May discovered that Respondent DuBrian was not preparing and signing monthly reconciliation reports. During October 1988 Walter Hankinson, Jr., and his wife entered into an agreement to rent property for $500 per month from DuBrian. The Hankinson's paid monthly rent to Respondent DuBrian personally. The Hankinsons vacated the property during January 1992. The bank account entitled "Kenneth Mossell or Jean DuBrian, Special Account Number One," account number 1519555601 maintained at Barnett Bank had statements dated October 11, 1989, and November 9, 1989. No other statements were issued for that account. Two checks were drawn on the above-referenced account, one payable to and endorsed by Kathy Renquist and one dated October 23, 1989, payable to cash. The latter check was endorsed and cashed by Respondent Mossell. The referenced account was a personal and not a business account. Escrow accounts are usually identified as such. Banks label escrow accounts as such because the account is not directly charged. When bank accounts are set up, the account is designated as the customer instructs. The customer signs the signature card after the account title is typed in. During July 1989, Arthur Wagenseil entered a lease agreement to rent property from Respondent DuBrian. Respondent DuBrian represented the landlord and the monthly lease payments were paid directly to her. In July 1989, James Irwin entered a one year lease agreement with Wagenseil. As part of the agreement, Irwin paid Respondent DuBrian a ten percent (10%) commission of rents received. Typically, Respondent DuBrian received the rent from the tenant, deducted the necessary expenses and her commission, and remitted the balance to the landlord (Irwin). Respondent DuBrian advised Irwin that she had arranged with Majestic to keep her clients and business the way she was doing it at the time. During July 1989, Edmund Lekowski entered a two year lease agreement to rent property, paying $390 per month in rent to Respondent DuBrian as agent for the landlord. In May 1989, Frederick Reimer participated in the formation of Majestic as a director and principal. The other officers of the corporation were Sychowski and Mary Patricia Mossell. Majestic was established to engage in the business of renting and leasing realty. Reimer is not licensed as a real estate salesperson or broker. Reimer met Respondent DuBrian when she applied for and was hired as the broker for Majestic. Respondent Mossell was a part owner of Majestic and, as noted, was the primary financial investor. The corporate escrow account was maintained at C & S Bank and Respondent DuBrian was not a signatory on the account. Respondent DuBrian was employed at Majestic to meet the requirement of having a broker on staff. Reimer relied on Respondent DuBrian's knowledge of real estate law. Reimer was unaware of Respondent's DuBrian's operation of a separate rental/leasing business from her home. Respondent DuBrian was not an officer of Majestic nor did she inform Reimer of the legal requirement that she be an officer of the corporation and a signatory on the escrow account. Leo Huddleston, an investigator with Petitioner, met with Respondents DuBrian and Mossell on March 19, 1991, at which time Respondent DuBrian acknowledged that she was not a signatory on the Majestic escrow account because she was not a stockholder or shareholder. During the March 19, 1991 interview, Respondent DuBrian advised Huddleston that she was conducting a rental business, as a broker, separate and distinct from Majestic. During the March 19, 1991, meeting, Respondent DuBrian advised Investigator Huddleston that she was unaware that radon and agency disclosures and written monthly reconciliations were required. Also, during that meeting with Investigator Huddleston, Respondent Mossell advised that he was a signatory on the Majestic escrow account and that he withdrew $310 from that escrow account when a Mr. Schlatterman vacated some rental property that was leased from Majestic. Respondent Mossell's withdrawal was based on repayment and reimbursement to his wife for cleaning the Schlatterman's vacated apartment and a $250.00 cash refund of a security deposit that Mary Mossell had given to the tenant, Schlatterman. Respondent Mossell did not provide Investigator Huddleston with documentation for the claim on the Schlatterman's security deposit. In this regard, the Schlatterman's experienced an emergency and had to vacate on a weekend when the banks were closed. At the time of Investigator Huddleston's interview of Respondents during March 1991, Respondent DuBrian acknowledged that while she was employed as qualifying broker for Majestic, she was also operating an independent rental business. Investigator Huddleston's investigation of the Petitioner's records revealed that Respondent DuBrian was only registered as qualifying broker for Majestic and for no other company.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding that: Respondent L. Jean Jones DuBrian's real estate license be suspended for a period of six (6) months and that she be issued a written reprimand and ordered to complete 24 hours of post licensure education within the period of suspension or as soon thereafter as is practicable. Respondent Kenneth M. Mossell be reprimanded and ordered to complete 18 hours of post licensure education within one year of the issuance of the Final Order. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 5th day of October, 1992. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of October, 1992. APPENDIX TO RECOMMENDED ORDER CASE NOS. 92-1072 AND 92-1322 Rulings on Petitioner's Proposed Recommended Order: Paragraph 17, rejected as unnecessary. Paragraph 19, rejected as unnecessary and irrelevant. Paragraph 37, rejected as unnecessary. Paragraph 57, adopted as modified, Paragraph 40, Recommended Order. COPIES FURNISHED: Janine B. Myrick, Esquire Senior Attorney Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 L. Jean Jones DuBrian 7326 Baltusrol Drive New Port Richey, Florida 34654 Kenneth Milton Mossell 3432 Lori Lane New Port Richey, Florida 34655 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792 Darlene F. Keller Division Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801
