Findings Of Fact Petitioner Auburn Ford, Jr., was employed by Respondent as a Lottery Investigator from November 1987 until his demotion to the position of Security Officer on August 23, 1991. Respondent admits that Petitioner was the only black Lottery Investigator and that he was replaced by a white male. Petitioner's demotion, as a disciplinary action by Respondent, was detailed in a letter dated August 23, 1991, to Petitioner from Respondent's representative. In that letter, it was asserted that Petitioner's demotion was the result of his entry into a high security area without legitimate business reasons on July 14, 1991; his entry into a high security area through use of an access card of a subordinate Security Officer, as opposed to use of his own card; his untruthful response concerning use of a telephone in the high security area; and his inaccurate reporting of hours worked in the month of June, 1991. As a Lottery Investigator, Petitioner's duties included implementation of lottery procedures and policies; maintaining controlled access where appropriate; as well as providing training, guidance and supervision of lottery Security Officers. Lottery Investigators are sworn or certified law enforcement officers while Security Officers are unsworn. At the time of his demotion, Petitioner worked the 11 p.m. to 7 a.m. shift along with Linda Koss, another Lottery Investigator. Along with Koss, he jointly supervised the Lottery Security Officers assigned to that shift. The building housing the lottery department is a secure facility in that all persons entering the building must have access authority evidenced by an access badge. In the absence of an access badge, a temporary or visitor's badge allows access to the building in the company of an escort. Within the lottery building, there are areas which are subject to additional security. Access to these areas is limited to the individuals working in those areas and others who have a work-related need to be there. Each employee's access area is determined by the employee's supervisor. An employee's access badge is then programmed for that particular employee's approved access. Lottery Investigators and Security Officers have access to all areas within the building. Each employee is required to sign an access card receipt form upon receipt of the individual employee's access badge. The receipt states that access privileges accompanying the badge are to be used only by that particular employee and that improper or unauthorized use of the badge could subject the employee to termination or other disciplinary action. Security personnel, including Petitioner, signed such a receipt form and knew that exchanging access cards was a violation of security policies. Policies and procedures of Respondent governing access badges establish a comprehensive scheme designed to ensure lottery security through controlled access to the lottery building and areas within the building. Allen Dees was head of Respondent's Bureau of Security and supervisor of Lottery Investigators and Security Officers, during Petitioner's tenure as a Lottery Investigator. Dees orally instructed employees subject to his supervision to refrain from interfering with items on desks throughout the building. The instruction was repeated emphatically after an incident where the theft of personal employee items resulted in the resignation from employment by one Division of Security employee and termination of another's employment. Since Division of Security employees are alone in the lottery building after normal working hours, any unexplained interference with or use of employees' desks, equipment or property often results in the visitation of suspicion upon security employees. In the course of performing their duties, Lottery Investigators and Security Officers periodically conduct watch tours. These tours consist of walking through specified areas of the building to check for security or safety violations. A watch tour of the executive offices is appropriately called The Executive Watch Tour. This tour includes the entire second floor of the lottery building where the executive offices are located, as well as an area known as the On-Line Game area. Watch tours have a minimum and maximum length of time for completion. The length of allotted time for these tours is established to permit an unhurried but consistent inspection of the areas on the tour. Lottery Investigators and Security Officers conducting a tour are to proceed steadily during that activity and not dawdle. Within the On-Line Game area is located the computer system which runs and maintains the integrity of the on-line gaming system of the Lottery, as well as other sensitive and confidential information. Access to this area is controlled by an access card or badge reader which allows entry only to those persons involved in the gaming operation and to security personnel. Security personnel are instructed to use their access badges to enter the area and remain only long enough to permit a determination that there are no safety or security problems in the area. Entering and remaining in this high security area for reasons other than determining the existence of safety or security problems is unauthorized. On the night of July 14, 1991, Petitioner approached Ed Maxwell, a Security Officer subject to Petitioner's supervision, and demanded Maxwell's access badge. Maxwell, who was monitoring the security computer console at the time and saw that Petitioner's own badge was in Petitioner's shirt pocket, knew that allowing another person to use his access badge was a violation of security policy, but complied since Petitioner was his supervisor. Maxwell later observed from the computer console that his access badge was being used to open the access-controlled door to the On-Line Game Area. When Petitioner later returned his badge, Maxwell asked why Petitioner had not used his own badge. Petitioner simply responded that he was the supervisor and expected Maxwell to do what he requested. Maxwell reported the incident to Linda Koss, the other Lottery Investigator on duty in the building at the time and met later with security chief Dees on July 23, 1991. After the meeting, Maxwell filed a written report dated July 24, 1991, with Dees regarding the incident. On July 31, 1991, Frank Carter, Director of Respondent's Division of Security, wrote a memorandum to Petitioner. In the memorandum, Carter detailed several allegations of misconduct by Petitioner, including Petitioner's use of Security Officer Maxwell's card to the enter the On-Line Games Area and Petitioner's entry into the closed office of Respondent's Deputy Secretary of Marketing. Carter's memorandum requested a response from Petitioner. Petitioner's written response stated that the allegations were untrue. Petitioner's presence in the On-Line Game Area on the date in question was confirmed by a copy of a real-time print out of telephone calls made from that location. A telephone call lasting approximately 16 minutes had been made from the On-Line Game Area to Petitioner's home on July 14, 1992. On August 3, 1991, Maxwell again wrote a memorandum to Dees, complaining about what he perceived as harassment from Petitioner for reporting the previous badge borrowing incident. In the memorandum, Maxwell detailed altercations where Petitioner had called him a "dishonest honkey" and a "liar", as well as attempting to instigate a physical confrontation with Maxwell. Further, Maxwell related that Ford had called his home at midnight when Maxwell was out sick, demanding that Maxwell bring in a doctor's excuse or suffered a loss of pay for the sick time. On August 5, 1991, Koss wrote a memorandum to Dees in which she supported Maxwell's version of the events occurring on the midnight shift and voiced her concern that the effectiveness of the shift was deteriorating. On August 14, 1991, both Petitioner and Koss wrote memorandums to Dees. Each blamed the other for an escalating atmosphere of hostility between two factions on the midnight shift: One faction comprised of Koss and Maxwell, and the other faction comprised of Ford and two other Security Officers. On August 15, 1991, Carter, along with Respondent's Deputy Secretary of Operations and Director of Personnel Administration, met with the midnight shift personnel. During the course of the meeting, Petitioner admitted to use of Maxwell's card in entering the On-Line Game area as well as entry of the Deputy Secretary of Marketing's office. When asked directly if he had ever made a personal call from the On Line Game area, Petitioner stated that he had not. Later Petitioner conceded he had made the July 14, 1992 telephone call from the On-Line Game Area to his home. Petitioner began working the midnight shift in April of 1991. At that time, Koss was already working the midnight shift and was warned by another Lottery Investigator that Petitioner was not always accurate in his report of his hours worked. Koss began keeping track of Petitioner's attendance by noting his absences on her personal calendar. She had no knowledge of whether absences were approved or unauthorized. Koss observed Petitioner's June 1991 time sheet on the desk of an assistant and noticed that he reported having worked on June 12 and June 13, 1991. She had noted on her calendar that Petitioner had been absent on those days with the exception of four hours of excused absence to attend firearms training. She reported the discrepancy to Dees. Dees in turn consulted system computer records to determine if Petitioner had signed into the system on those days and determined that he had not. Consequently, it was determined that Petitioner had falsified his time sheet by recording his presence on both days. The exchange of access badges by Security Officers was a frequent occurrence even though it was known to be a security violation. The practice was frequent with the midnight shift and went unreported to the chief of security, who would have instituted disciplinary proceedings had he known of the practice. Testimony was presented by Randy Ringpfiel, a Security Officer, to the effect that the practice was also widespread among Lottery Investigators and known to management, but Ringpfiel's testimony is rejected in view of his demeanor and lack of credibility while testifying. Previously, in February of 1991, Petitioner accompanied a shipment of lottery tickets to an incinerator facility in Panama City, Florida, where lottery materials were to be destroyed in accordance with a contract between Respondent and the incinerator facility. An argument occurred with personnel at the incinerator. Petitioner perceived that the argument and disagreement with the incinerator workers resulted from the fact that they were white and he was black. Petitioner reported to Dees that the incinerator personnel were discriminating against him. A subsequent meeting was held between Respondent's management officials and management personnel from the incinerator facility. Respondent's management informed the incinerator management that racial discrimination toward its employees would not be tolerated. The attitude of incinerator personnel was not a result of racism. Instead, employees at the facility simply disliked dealing with shipments from Respondent since those shipments required special consideration in the process of destruction by burning. For instance, Respondent's security personnel were required to observe and oversee the actual destruction of all lottery materials. Often, the material from scratch off tickets complicated matters because the level of pollutants in these materials would exceed air quality and heat restrictions under which the facility was constrained to operate. Assured by incinerator management personnel that the altercations with Petitioner were not racial in nature, Respondent's management later transferred Petitioner, at his request, to the midnight shift which did not require performance of any duties associated with the incinerator facility. Carter, along with Respondent's Deputy Secretary of Operations and Respondent's General Counsel, met following the August 15, 1991 meeting with personnel of the midnight shift. The purpose of the meeting was to consider the appropriate disciplinary action to be imposed on Petitioner in view of the infractions committed by him. Since, in addition to violation of lottery security policies, the infractions involved dishonesty both in answering questions and in completing time sheets accurately, the options of termination and demotion were considered. Demotion to the position of Security Officer was determined to be the appropriate penalty after a review of Petitioner's past work performance and prior disciplinary actions. The consensus of management was that a great deal had been invested in the training of Petitioner and he had proven in the past that he could be a satisfactory employee, although not as a supervisor. It was felt that supervisors must be dependable and honest and permit upper level management to rely on their representations. This is particularly important with regard to security personnel assigned to supervisory positions on the night shift where there is no direct supervision beyond the Lottery Investigators on duty. In order to permit Petitioner to be considered for promotion back to the position of Lottery Investigator if his performance improved, the demotion of Petitioner from a sworn or certified law enforcement officer position to an unsworn position was not reported to the Florida Department of Law Enforcement. An action that very likely prevented an investigation and possible removal of Petitioner's law enforcement officer certification by that agency. Prior to his demotion, Petitioner received three performance evaluations. The first of these was an evaluation covering the period of November 13, 1987 to November 13, 1988, where Petitioner received an overall rating of "achieves standards". The evaluation included individual ratings in the categories of reliability, punctuality, and technical application which were "exceeds standards". Petitioner received a "below standards" rating in the category of communication skills. The second evaluation of Petitioner's performance covered the period November 13, 1988 to November 13, 1989. He again received an overall rating of "achieves standards." The evaluation showed that he exceeded standards in the area of technical application, and was deficient or below standards in the category of reliability and punctuality. Petitioner's third evaluation covered the period November 13, 1989 to November 13, 1990. Again, he achieved overall standards and exceeded standards in the area of technical application. He was deficient or below standards in the category of reliability and punctuality, as well as a category termed "other" where his attitude was noted to be poor regarding his work. His comments that he had no incentive were also documented in the evaluation. Petitioner was placed on a performance improvement plan from January 30, 1991, through April 30, 1991, which he satisfactorily completed. Respondent's discipline policy provides that discharge is an appropriate penalty for the first offense of a security policy violation. Penalties for the first offense of falsification of documents range from a written warning to discharge. There is no listed penalty for failing to truthfully answer questions posed by a superior.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered dismissing the Petition for Relief. DONE AND ENTERED this 10th day of November, 1992, in Tallahassee, Leon County, Florida. DON W.DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Fl 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of November, 1992. APPENDIX The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Petitioner's Proposed Findings Rejected to the extent that this proposed finding seeks to establish that management had prior knowledge of a generalized practice of violation of security procedures through the exchange of access badges by employees. Such a finding is not supported by weight of the evidence. Rejected, Petitioner's entry into a restricted area and use of a telephone for non-work related purposes is undisputed. Also, the evidence supports a finding that Petitioner was untruthful when questioned regarding the matter. 3.-4. Rejected, subordinate to Hearing Officer's findings on these matters. Respondent's Proposed Findings 1.-22. Accepted and addressed in major part, although not verbatim. COPIES FURNISHED: Auburn Ford, Jr. 727 Circle Drive Quincy, Florida 32351 Louisa H. Warren, Esquire Department of the Lottery Capitol Complex Tallahassee, Florida 32399-4011 Margaret Jones Clerk Florida Commission On Human Relations 325 John Knox Road Suite 240 / Building F Tallahassee, FL 32399-1925 Dana Baird, Esq. General Counsel Florida Commission on Human Relations 325 John Knox Road Suite 240 / Building F Tallahassee, FL 32399-1925
Findings Of Fact Mr. Clinton Williams won a prize of $3,839.50 on a $1.00 wager in the Lotto game for October 12, 1991. Based upon a letter to the Department of the Lottery from Chriss Walker, the Acting Assistant Secretary for Child Support Enforcement. The Office of the Comptroller found that Mr. Williams owed $3,250 as back due child support. That amount was deducted from his winnings and on November 8, 1991, a state warrant in the amount of $589.50 was delivered to Mr. Williams. The arrearage arose because an error had been made in the child support enforcement division of the State Attorney's Office in Miami. An income deduction order had been entered against Mr. Williams by the family division of the Circuit Court in Dade County Florida on September 27, 1990, but no money was ever deducted from Mr. Williams' pay. When the Department of Health and Rehabilitative Services checked Mr. Williams' record after he submitted the winning ticket, the error was discovered. As a result, in January 1992 the award was modified obligating Mr. Williams to continue to pay $252 per month in child support, and to pay an additional $100 per month to pay back child support due under the September 27, 1990 order. In addition, the order entered by the Circuit Court on January 13, 1992, provides, in paragraph 14: The lottery winnings that are currently being withheld in Tallahassee shall be released to the Petitioner [the child's mother] immediately. Based on the order of the Circuit Court, there is no doubt that Mr. Williams is indebted for back child support. No error occurred in the interception of his lottery winnings to satisfy his obligation for that past-due child support.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petition for Formal Proceeding filed by Mr. Williams be dismissed. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 7th day of May 1992. WILLIAM R. DORSEY, JR. 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 7th day of May 1992. COPIES FURNISHED: Karrin R. Boehm-Alman, Esquire Law Offices of Maurice M. Diliberto 28 West Flagler Street Suite 600 Miami, FL 33130 Bridget L. Ryan, Esquire Office of the Comptroller Suite 1302, The Capitol Tallahassee, FL 32399-0350 Louisa H. Warren, Esquire Department of the Lottery 250 Marriot Drive Tallahassee, FL 32301 Chriss Walker, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, FL 32399-0700 Honorable Gerald Lewis, Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, FL 32399-0350 William G. Reeves, General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, FL 32399-0350
Findings Of Fact The Petitioner won $2,500 in Florida Lottery prize. By Final Judgment of Dissolution of Marriage in the Thirteenth Judicial Circuit, Hillsborough County Family Law Division, Case Number 86-3999, dated June 20, 1986, the Petitioner was ordered to pay $100 weekly for the support of three minor children. By Order on Arrears in the Seventh Judicial Circuit, Putnam County, Case Number 91-6412-FD-57, dated November 7, 1996, the court found the following facts: Respondent was ordered to pay $100.00 per week for the support of his 3 children by the Circuit Court in Hillsborough County. Respondent never made a payment on this obligation. Arrears totaling $33,200.00 accrued until this Court's order in November 1992. This Court reduced the support obligation to $35.00 per week effective November 9, 1992, in view of two of the three children reaching the age of majority. Support was suspended effective July 1, 1996 Based on the calculation of unpaid support which was somewhat offset by Social Security benefits paid to the mother of the children, the court calculated the total arrears as $22,509. The Order on Arrears concludes that the "Department of Revenue may apply funds withheld from the [Petitioner's] lottery winnings in satisfaction" of the unpaid child support.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Office of Comptroller, Department of Banking and Finance, enter a Final Order transferring the Petitioner's lottery prize winnings to the Department of Revenue as partial satisfaction of the Petitioner's unpaid child support obligation. RECOMMENDED this 20th day of December, 1996, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 20th day of December, 1996. COPIES FURNISHED: Honorable Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 Harry Hooper General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350 Ken Hart General Counsel Department of Lottery 250 Marriot Drive Tallahassee, Florida 32301 Dr. Marcia Mann, Secretary Department of Lottery 250 Marriot Drive Tallahassee, Florida 32301 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Linda Lettera General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 John I. Chandler, Pro Se 6216 50th Street Tampa, Florida 33610 Josephine A. Schultz, Esquire Department of Banking and Finance The Fletcher Building, Suite 526 101 East Gaines Street Tallahassee, Florida 32399-0350 Chris Walker, Esquire Department of Revenue Child Support Enforcement Post Office Box 8030 Tallahassee, Florida 32314-8030 Louisa Warren, Esquire Department of Lottery 250 Marriott Drive Tallahassee, Florida 32301
Findings Of Fact Petitioner, Carolyn K. Peterson, entered a drawing held by Respondent, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco (Division), on September 12, 1984, for priority entitlement to apply for one of thirteen new quota alcoholic beverage licenses to be issued for Seminole County. Peterson initially was not successful, having been ranked 15. Later, three applicants selected in the September 12 1984, drawing failed to qualify or file a proper application. By letter dated January 25,1985, the Division notified Peterson that her ranking now entitled her to apply For licensure. The January 25, 1985, letter informed Peterson "you must file a full and com- plete application within 45 days of the date of this letter pur- suant to Rule 7A-2.17, Florida Administrative Rule." The letter also notified Peterson: "Failure to file your complete application within such 45 day period will be deemed a waiver of your right to file for the new quota license." The Division consistently follows Rule 7A-2.17. On February 4, 1985, Peterson and her husband went to the Division's Orlando office to inquire concerning application for licensure. Peterson's husband, who had experience in applying for quota alcoholic beverage licenses, inquired whether it was necessary to jump through the procedural hoop of having a location selected and reflected in the application only to put the resulting license in escrow while seeking a more suitable license location within 180 days. The Division's representative, former employee Carolyn Thompson, responded that applicants no longer had to jump through that procedural hoop but could leave the designation of the location of the license blank on the initial application so long as a suitable location was selected and the application updated within 180 days. Thompson partially typed the application forms for Peterson, duplicated them so that Peterson could file the completed application in duplicate as required, and kept a copy for the Division's files. Thompson also gave Peterson, and kept a copy of, an instruction form for completion of Peterson's application. Thompson did not explicitly tell Peterson or her husband that Peterson could file the completed application after the expiration of the 45 day time limit. The Petersons confused the 45-day deadline for filing a full and complete application with the 180-day deadline for obtaining an appropriate location and zoning approval. As a result, the Petersons misunderstood and believed that the application was not required to be completed and filed within 45 days. After the February 4, 1985 meeting, the Petersons inquired about the process of finding a suitable location with suitable zoning. Meanwhile, they let the 45-day time limit ex- pire without filing a full and complete application.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is RECOMMENDED that Respondent, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, deny the application of Petitioner, Carolyn K. Peterson, for a quota alcoholic beverage license. RECOMMENDED this 9th day of May, 1986, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of May, 1986. COPIES FURNISHED: Ms. Carolyn K. Peterson 797 Pinetree Road Winter Park, Florida 32789 Thomas A. Klein, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Thomas A. Bell, Esquire General Counsel. Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Howard M. Rasmussen, Director Division of Alcoholic Beverages and Tobacco 725 South Bronough Street Tallahassee, Florida 32301 James Kearney, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 APPENDIX To the extent Petitioner's written final argument contains proposed findings of fact, they are rejected as contrary to the greater weight of the evidence and the Findings of Fact. Respondent's proposed findings of fact 1 through 5 are accepted, but 4 is subordinate and 5 is unnecessary.
The Issue Whether the full amount of the lottery prize winnings (remaining after deduction of federal tax withholding) that Petitioner claimed (on behalf of herself and 13 other members of her "Lotto pool") should be used to offset the debt Petitioner owes the Department of Education, Office of Student Financial Assistance.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, including the factual stipulations of the parties,2 the following findings of fact are made: Petitioner is in default on three student loans that OSFA, as guarantor, purchased (upon Petitioner's default) from the lender on December 27, 2001, and continues to hold. As of September 10, 2003, Petitioner owed OSFA $12,503.79 on these defaulted loans. In May of 2003, Petitioner participated in a "Lotto pool" with 13 other individuals. Pool members agreed to contribute equally to the purchase of Florida lottery tickets and to share equally in any winnings. Petitioner was assigned the task of purchasing the tickets on behalf of the pool. One of the tickets Petitioner purchased was a winner (having five of the six selected numbers). The amount of the prize, after making an appropriate deduction for federal income tax withholding, was $3,262.00. On behalf of the pool, Petitioner submitted the winning ticket, with her name on it, to the Florida Department of the Lottery to claim the prize. At the request of the Florida Department of the Lottery, she completed an Internal Revenue Service (IRS) Form 5754. On the form, among other things, she identified the others in the pool with whom she intended to share the proceeds of the prize. On May 27, 2003, Olga Roca, a Program Specialist with OSFA, sent the following letter to the Florida Department of the Lottery: I hereby certify that the above referenced person [Petitioner] has an outstanding defaulted student[] loan. Under terms of § 24.115, F.S, I am requesting that lottery prize money won by that person be transmitted to the Florida Department of Education to be credited toward that debt. The balance due including interest accrued as of 6/11/03 totals $12,389.88. By letter dated June 2, 2003, the Florida Department of the Lottery advised Petitioner that, "[p]ursuant to Section 24.115(4), Florida Statutes, [it had] disbursed [her] winnings according to [Ms. Roca's May 27, 2003, letter]." A month later, on July 2, 2003, OSFA sent Petitioner a letter informing her that it "plan[ned] to apply the total amount of [her] $3,262.00 prize to [her] unpaid claim."3 It is this proposed agency action which is the subject of the instant controversy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that OSFA take the action proposed in its July 2, 2003, letter to Petitioner. DONE AND ENTERED this 13th day of October, 2003, in Tallahassee, Leon County, Florida. S STUART M. LERNER 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 13th day of October, 2003.
The Issue The central issue in this case is whether Respondents are guilty of the violations alleged in the Amended Notice to Show Cause; and, if so, what penalty should be imposed.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, I make the following findings of fact: At all times material to the allegations in the Amended Notice to Show Cause, Respondents, Julio and Lida Diaz, d/b/a Flor-Lidita Restaurant, held alcoholic beverage license number 23-4636. This license was a 2-COP license which authorized the sale of beer and wine for the premises known as Flor-Lidita Restaurant which is located at 4762 N. W. 183rd Street, Miami, Florida. In July, 1986, the FDLE began an investigation concerning an illegal gambling lottery commonly known as "bolita" which was believed to be operating in connection with the Flor-Lidita Restaurant. The investigation undertaken involved a surveillance of the restaurant together with undercover agents who were used to frequent the restaurant for the purposes of observing activities and placing bets with the restaurant personnel. An individual identified as Rafael Rosquete was determined to be a courier who would enter the restaurant, collect the gambling paraphernalia and returns, and deliver the items to a home located in Broward County. On July 9, 1986, a police officer, Hector Zeno, working undercover in connection with the FDLE, entered the Flor-Lidita Restaurant and observed customers writing numbers on bolita slips. Officer Zeno also observed individuals placing bets with the owner, Julio Diaz. In turn, Zeno filled out a bolita slip and placed a $5.00 bet with the owner Julio Diaz. On July 16, 1986, Joyce Dawley and Jacqueline Sirven entered the Flor- Lidita Restaurant and observed customers placing bolita bets with the Respondents, Lida and Julio Diaz. These agents also observed another employee known to them as "Rolando" (later identified as Rolando Nunez) taking bets. Agents Dawley and Sirven placed $5.00 bets with Julio Diaz on this date and received carbon copies of their bolita slips. On July 22, 1986, Zeno returned to the restaurant for the purpose of observing the customers and again placed a $5.00 bet by completing a bolita slip and tendering money to Julio Diaz. During this visit Zeno observed Nunez and Lida Diaz taking money and bolita slips from other customers within the restaurant. On July 23, 1986, Dawley and Sirven returned to the restaurant and again placed two $5.00 bets with Julio Diaz. During this visit the agents observed other individuals inside the licensed premises place bets with Rolando Nunez and Lida Diaz. On July 24, 1986, Dawley and Sirven returned to the Flor-Lidita Restaurant for the purpose of picking up $70.00 in winnings which Agent Dawley was entitled to as a result of the bet she had placed the previous evening. On July 30, 1986, Dawley and Sirven went to the Flor- Lidita Restaurant and again placed two $5.00 bets. This time Lida Diaz took their money and the original bolita slips and gave them carbon copies of their bets. On July 31, 1986, Sirven entered the Flor-Lidita Restaurant for the purpose of receiving $70.00 in winnings based on the prior day's bolita bet. On August 6, 1986, Dawley entered the Flor-Lidita Restaurant, received a bolita pad from Rolando Nunez and placed a $5.00 bet with Nunez in the present of Julio Diaz. On this visit Nunez showed Dawley a ledger which contained a list of dates together with numbers which indicated the winning numbers for the dates in question. On August 11, 1986, Dawley went to the Flor-Lidita Restaurant and observed Lida and Julio Diaz receiving bolita bets from persons within the restaurant. Dawley also observed Rolando Nunez taking bets. Dawley placed a $5.00 bet with Nunez on this date. After receiving a search warrant for the Flor-Lidita Restaurant, special agents of the FDLE entered the licensed premises on August 12, 1986 and searched the restaurant. During the search, agents took possession of various items of gambling paraphernalia which included bolita betting slips, Puerto Rican lottery tickets, blank bolita pads, currency and ledger books. Over $40,000 worth of U.S. currency and gambling paraphernalia was confiscated in connection with the police raid on the restaurant and the house in Broward County. In connection with the search of the licensed premises, Joseph Ogonowski seized an open bottle of scotch whiskey which was behind the counter at the restaurant. The scotch was not listed on the menu as a designated ingredient for any of the food items available for purchase at the restaurant. During the period of surveillance of the Flor-Lidita Restaurant, Rosquete was repeatedly observed by FDLE agents. Rosquete would routinely visit the restaurant, obtain items of gambling paraphernalia including betting slips and U.S. currency, and deliver the proceeds from the restaurant to a residence located in Broward County. The gambling activities conducted on the licensed premises were open, frequent, and included the active participation of the Respondents, Julio and Lida Diaz.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Business Regulation, Division of Alcoholic Beverages and Tobacco enter a Final Order revoking license number 23-4636, series 2-COP, held by Respondents, Julio and Lida Diaz, d/b/a Flor-Lidita Restaurant. DONE and RECOMMENDED this 15th day of July, 1988, in Tallahassee, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-4620 Rulings on Petitioner's proposed findings of fact: Paragraphs 1 and 2 are accepted. With the exception of the last sentence paragraph 3 is accepted. The last sentence is rejected as speculation. Paragraph 4 is accepted. Paragraph 5 is accepted. Paragraphs 6-20 are accepted. With the exception of the last sentence in paragraph 21, which is rejected as speculation, paragraph 21 is accepted. Paragraphs 22-23 are accepted. The last two sentences of paragraph 24 are accepted. The first sentence is rejected as argument or a conclusion of law. Rulings on Respondent's proposed findings of fact: Paragraphs 1-3 are accepted. Paragraphs 4 is rejected as contrary to the weight of the evidence. Mr. Ogonowski was qualified to and did identify the substance seized as scotch whiskey. Paragraph 5 is accepted but is unnecessary to the determinations reached by this Recommended Order. Paragraph 6 is rejected as irrelevant, immaterial and unsupported by the record in this cause having previously ruled the adjudications inadmissible. Paragraph 7 is rejected as unsupported by the record in this cause. COPIES FURNISHED: Katherine A. Emrich, Esquire Assistant General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 Rene Valdes 1830 N. W. 7th Street Miami, Florida 33125 Daniel Bosanko, Director Department of Business Regulation The Johns Building 725 South Bronough Street Tallahassee, Florida 32399-1000
Findings Of Fact On November 28, 1994, a hearing officer of the Seventeenth Judicial Circuit, Circuit Court for Broward County, Florida (Seventeenth Judicial Circuit) conducted an evidentiary hearing on a petition to determine child support filed against Thomas Boganski (Petitioner). By Report dated November 28, 1994, the hearing officer determined, among other things, that Petitioner was liable for a past public assistance obligation in the amount of $8,871, representing monies received by his children from October 1991 through November 1994 and that payments on the child support obligation would be payable through the court. By Order dated December 12, 1994, a circuit judge of the Seventeenth Judicial Circuit ratified and approved the hearing officer's Report; thereby, establishing a child support debt, payable through the court. On June 26, 1995, a hearing officer of the Seventeenth Judicial Circuit conducted an evidentiary hearing on a motion for contempt filed against Petitioner for nonpayment of the child support obligation. By Report dated June 26, 1995, the hearing officer determined, among other things, that Petitioner had a past public assistance obligation and arrears totaling $10,551 as of June 14, 1995. By Order dated July 14, 1995, a circuit judge of the Seventeenth Judicial Circuit ratified and approved the hearing officer's Report. On January 9, 1995, Petitioner presented to the Department of the Lottery (Respondent Lottery) a claim for payment of a lottery ticket which he had purchased. The lottery ticket had a prize value of $2,500. On June 9, 1995, the Department of Revenue (Respondent Revenue) certified to Respondent Lottery that, as of that date, Petitioner had a court- ordered past public assistance debt of $9,500. The $2,500 prize winnings was transmitted to the Department of Banking and Finance, Office of the Comptroller (Respondent Banking and Finance) by Respondent Lottery. Respondent Banking and Finance did not disburse the $2,500 to Petitioner but retained the entire amount. By letter dated May 9, 1995, Respondent Banking and Finance notified Petitioner that the $2,500 prize winnings had been transmitted to it by Respondent Lottery. Furthermore, Respondent Banking and Finance notified Petitioner that the entire $2,500 was going to be applied to his unpaid past public assistance obligation of $9,500.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Banking and Finance, Office of the Comptroller enter a final order providing for payment to the Department of Revenue the lottery prize winnings of $2,500 claimed by Thomas Boganski. DONE AND ENTERED this 27th day of November, 1995, in Tallahassee, Leon County, Florida. ERROL H. POWELL 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 27th day of November, 1995. APPENDIX Respondents' joint proposed findings of fact 1 - 6 have been adopted in substance in this recommended order. COPIES FURNISHED: Thomas Boganski 1519 North 57th Terrace Hollywood, Florida 33021 Stephen S. Godwin Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Chriss Walker, Esquire Child Support Enforcement Department of Revenue P.O. Box 8030 Tallahassee, Florida 32314-8030 Louisa Warren, Esquire Department of the Lottery 250 Marriott Drive Tallahassee, Florida 32399 The Honorable Robert F. Milligan Comptroller State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350
The Issue Petitioner, Carolyn A. Winston, alleges that Respondent, Department of the Lottery, has discriminated against her on account of her race in violation of Section 760.10, F.S. The issue for resolution is whether the violation occurred, and if so, what relief is appropriate.
Findings Of Fact Carolyn A. Winston, a black female, commenced her employment with the Florida Department of Lottery, a newly-created agency, on November 2, 1987. An active participant in Republican and minority organizations, Mrs. Winston was recruited by the agency after she submitted her resume for employment with the Martinez administration to Jeannie Austin, Chairperson of the Florida Republican Party. At the time that she was recruited, Ms. Winston was employed by AT&T and had approximately 9 1/2 years experience with AT&T as a manager/systems analyst. She had a BA degree in business administration/marketing from Rollins College in Winter Park, Florida. After an interview in Tallahassee, Carolyn Winston was hired by Michele Hayes, Director of Sales and Marketing, to be the Regional Manager for the Orlando Regional Office of the Lottery. Her salary, $41,300.00, was the maximum for the class. During the summer and fall of 1987, the Lottery was in the process of hiring approximately 700 employees. January 12, 1988 was targeted as the first date of sale of tickets and all sales staff were to be hired by November 16, 1987. Ms. Winston and the five other regional managers from offices in Orlando, Tallahassee, Jacksonville, St. Petersburg, Ft. Lauderdale, and Miami, reported directly to regional coordinators in the agency's Tallahassee headquarters. The general duties of the regional managers were to plan, organize and direct the sales activity of regional sales staff and district managers; to implement and interpret agency policies and procedures; and to protect the integrity of the Lottery. Two district managers reported to Carolyn Winston: Deborah Burkett (Orlando District) and Mike Steiber (Melbourne District). They had been hired prior to Ms. Winston and were engaged in hiring their sales staff in early November. In other regions, where district managers were not in place, the regional manager hired sales staff until the district managers could take over. There was no formal training established for regional or district managers when Ms. Winston was hired. She reported to work on her first day, November 2, 1987, in Tallahassee, where she met Dick Lepanen, the Regional Manager for Tallahassee, and Pam Allen, Regional Coordinator. She was given a limited briefing on her duties and a handbook describing the Lottery history and organization. Formal training for all regional and district managers, including Ms. Winston, was conducted in a three-day session in Tallahassee in November 10, 11 and 12, and again on November 30, 1987. The managers were given notebooks containing operational information and guidelines for performance of their duties. Ms. Winston was concerned about hiring qualified minorities for new positions with the Lottery and was able to assist her district directors, through the organizations with which she was connected, to locate applicants. In at least one instance Mike Steiber hired such an applicant after contacting Ms. Winston with his difficulty in recruiting through the local job services office. At the hearing Ms. Winston expressed pride at having the most qualified Lottery employees and more minorities than any other region. Despite the urgent need to train new employees and to meet the start up deadline, Ms. Winston's management concerns were related to form, rather than substance. She told the district managers that she wanted to conduct regional training and spent several hours of that training in Orlando explaining her background and management style and introducing staff and having them explain their backgrounds and styles. She then insisted that they all go to lunch together, with the result that substantive training was delayed until mid- afternoon. The sales representatives from the Melbourne office expressed concern to their manager, Dick Steiber, and requested additional training that evening back in their Melbourne office. On another occasion, in December 1987, Ms. Winston sent a memo to the district managers, without prior discussion, placing her own clerical assistant in charge of all clerical operations for the region and districts and stating that the regional manager would be conducting "skip level" meetings with subordinate district staff. On the afternoon before the first delivery of lottery tickets was due in the Melbourne district, Ms. Winston directed Mike Steiber to send his lead storekeeper to Orlando the next morning to observe how the Orlando tickets were laid out. He agreed this would be a good idea, but suggested that she come later as she needed to handle the ticket delivery. Ms. Winston insisted that she come as directed. Shortly thereafter, Mike Steiber requested a personal meeting with Ms. Winston to discuss his concerns. She gave him an 8:00 a.m. appointment in Orlando. Mr. Steiber travelled from Melbourne but Ms. Winston did not appear; she called her office about 30 minutes later to say that she would be unable to meet. The meeting was rescheduled for the next day and the same thing happened. After the third day and third unsuccessful trip to Orlando, the meeting was delayed indefinitely. In response to concerns expressed by Pam Allen, Regional Coordinator and Mrs. Winston's immediate supervisor, and by Deborah Burkett and Mike Steiber, Michelle Hayes asked Ms. Winston to come to Tallahassee to meet for a performance review. Feeling uncomfortable, Ms. Winston called Lt. Governor Bobby Brantley and told him she was being harassed. He replied that she should go to the meeting and consider it an opportunity to tell her story. Nonetheless, she sought legal counsel and brought an attorney with her to the meeting. Discussion of Ms. Winston's performance included failing to meet with the district managers to resolve problems at the regional level, presenting conflicting instructions, holding correspondence, lack of interest in learning agency operations, abbreviated work hours, and failing to leave forwarding phone numbers with support staff when absent during the workday. Ms. Winston considered the issues raised at the meeting to be lies generated by Deborah Burkett, and she responded to the meeting with a 6-page memorandum to Michele Hayes dated January 27, 1988. She also addressed a letter to the Lt. Governor the same day, enclosing her memorandum and stating, in part: * * * The lies can never be forgiven, but can be corrected. I suggest you remove the liar from my organization, District Manager Deborah Burkett, via termination not just for me; [sic] but for the good of the Orlando Region and encourage my Director to support the chain of command. * * * (Petitioner's Ex. #6) Copies were sent to Gov. Martinez, Jeannie Austin and Luther Smith, Esquire. Carolyn Winston viewed the meeting with her supervisor as an effort to get rid of her. She felt that both of her district managers were going over her head to get direction from Tallahassee or to report on her activity. Friction between Ms. Winston and Ms. Burkett severely affected morale in the office, and the employees felt uncomfortable at being required to take sides. Ms. Burkett had an aggressive management style, but was considered by her supervisors in Tallahassee to be very competent and knowledgeable about her job. Because she preceded Ms. Winston and had commenced hiring the staff on her own, some employees in the Orlando office perceived split loyalties. This was defined, in part, by race, as the black employees tended to "side" with Ms. Winston. Sometime in March 1988, Ms. Winston wrote to Secretary Paul requesting that Deborah Burkett be terminated for insubordination, stating that Ms. Burkett did not "respect the chain of command" and was unwilling to cooperate. (Respondent's Ex. #2) The request was denied, and Ms. Winston was offered a lateral transfer to a position in Tallahassee at no loss of pay. She declined. At Secretary Paul's request, Dick Lepanen, who was promoted to Lottery Sales and Distribution Manager, and the Lottery Personnel Director, Sandra Koon, visited the Orlando office on April 7, 1988 to counsel the two managers. Both Ms. Winston and Ms. Burkett appeared at the meeting with notebooks full of documents to support charges or rebuttals of each other's management problems. The meeting became a contest on each issue. Ms. Koon and Mr. Lepanen told the women that they needed to work together and that a unified management team concept had to be presented to the subordinate staff. The meeting ended on a positive note of resolution to make the Orlando region the best in the state. Ms. Koon's assessment of the problem was that both women were good managers and wanted to take control of the office. Still, friction continued, and a decision was made to transfer Deborah Burkett to a district manager position in Ft. Myers. Dick Lepanen telephoned Carolyn Winston to inform her of the decision on May 6, 1988, with a follow-up confidential memorandum. He asked her to not discuss the matter with anyone, to allow Ms. Burkett a chance to talk with her staff, and he said he had already informed Jody Spicola, the regional manager who would be Ms. Burkett's new supervisor. Jody Spicola called Ms. Winston on another matter the same day. Ms. Winston took the opportunity to discuss Ms. Burkett's work habits in unflattering and inflammatory terms, causing Mr. Spicola to call Mr. Lepanen to say that he was reconsidering his position on accepting Ms. Burkett in his region. Dick Lepanen called Ms. Winston and asked if she discussed Deborah Burkett with Jody Spicola. She denied it, and continued to do so until Sandra Koon, Dick Lepanen and Jody Spicola arrived in the Orlando office several days later to confront her directly. On May 16, 1988, Dick Lepanen issued Ms. Winston a written reprimand for insubordination, an infraction described in the Lottery personnel policies and procedures manual. Basis for the reprimand was her violation of the confidential information direction and her false denial. Ms. Winston refused to sign the reprimand, countering with a two-page memorandum dated June 2, 1988, stating that she was being discriminated against, that Deborah Burkett's character was no secret and that Ms. Burkett had lied for months. In the February 11-17, 1988, edition of the Daytona Times, a weekly newspaper addressing black readers, an article appeared with the headline, "Lottery Snubs Blacks". The article included a quote from Carolyn Winston, identified as regional director of the Lottery office, stating that "...minority participation in Lottery sales is 'not as good as it should be'", and urging that potential vendors write to the retailer application department at the Lottery office in Tallahassee. (Petitioner's Ex. #10) Secretary Paul addressed the regional managers and regional coordinators in a meeting on February 24, 1988, and made it clear that no one was to speak to the press about such matters except her and that further occurrences could result in termination. Ms. Winston apologized to Secretary Paul, through Michele Hayes, and gave a copy of Michele Hayes' brief written reminder on unauthorized press comments to her district managers with this handwritten notation: Please refer all press calls to Ed George. Any unauthorized comments to the press may well result in termination. Yes, she was serious. Will speak more on this at Wed's March 9th regional meeting. Carolyn (Respondent's Ex. #4) Ms. Winston took maternity leave from June through August 1988, but stayed in touch with the office. Mike Steiber was placed temporarily in her position, and later Jody Spicola was temporarily assigned to the Orlando region. Ms. Burkett's position was not filled, so the regional manager handled the Orlando district directly. On December 14, 1988, Carolyn Winston received her annual performance evaluation from Dick Lepanen. Based on his personal observation of her responses to him and how she handled issues that he referred to her, he evaluated her as "exceeds at least one standard", on a scale that includes "below standards", "achieves standards", "exceeds at least one standard", "exceeds most standards", and "sustained superior performance". He evaluated all of the managers in the same manner, that is, based on individual characteristics rather than on ability to meet sales quotas or on management style. Ms. Winston responded with a memorandum on her future goals and performance improvement plan which she asked to have appended to her evaluation. These goals included beginning her MBA, enrolling in workshops and seminars for advanced writers, and joining Toastmasters, as well as other general statements as to achieving "overall business objectives". (Respondent's Ex. #43) In December 1988, in a meeting in Tallahassee, Carolyn Winston reported to Sandra Koon and Dick Lepanen that there was discrimination in the Orlando regional office in the form of sexual harassment and anti-semitic remarks made about employees. The person allegedly primarily responsible for the discrimination was Ron Broadway, the warehouse manager. Ms. Winston was told that the behavior would not be tolerated by the department. She was given a video on sexual harassment to show at her normal weekly staff meeting and she was advised to have a frank discussion with the employees to let them know that sexual harassment was a serious concern. She was also counselled to meet individually with Mr. Broadway to assure that he understood that his comments and behavior would not be tolerated. Ms. Winston showed the video and followed up on the counselling, but the sequence of events is confused by a series of memoranda authored by Ms. Winston and referring to actions she took to investigate the complaints and to meet with the offending employee. Throughout those memoranda she refers to "anti-semitic and sexual harassment remarks", yet attached to her memorandum dated December 20, 1988, to Dick Lepanen is a 3-page outline of statements made by employees, identified by initials as "A" through "F", who alleged hearing Ron Broadway make explicit and highly offensive racial remarks at work, at softball practice and while setting up a lottery display at a civic event. These remarks included the term, "nigger", and derogatory comments about a black employee's baby. (Respondent's Ex. #44) Two memoranda from Carolyn Winston to Ron Broadway dated December 20, 1988, refer to an oral counselling session on December 12, 1988, regarding "anti- semitic and sexual harassment remarks". (Respondent's Ex. #5 and #6) Curiously, a memo dated January 31, 1989, from Carolyn Winston to Dick Lepanen, states: On January 30, 1989, I discussed and issued a copy of the December 20, 1988 memorandum entitled "Anti-Semitic and Sexual Harassment Remarks" to the employee Ron Broadway. Hopefully the matter has been resolved. Thank you for your assistance. (Respondent's Ex. #7) A copy was sent to Sandra Koon. At some point Ms. Koon and Mr. Lepanen determined that the charges involved racial comments, not anti-semitic comments or sexual harassment. They interviewed employees in the Orlando office and Ron Broadway. Something regarding the issue was placed in Mr. Broadway's personnel file, although not the memoranda Ms. Winston had prepared, and he was transferred to the Gainesville office in May 1989. Ms. Winston filed her first complaint of discrimination in May 1989, alleging that she was discriminated against in retaliation for reporting a white manager's "ethnic and sexual" remarks. Also in May 1989, Sandra Koon was involved in investigatory allegations made by three employees who had filed EEOC suits against the Department when their work stations were moved to the back of the office. The Tallahassee office had received complaints in writing, and by telephone, of rude treatment of Lottery participants by the Orlando regional office, by employees sitting near the public counter and answering the telephone. Dick Lepanen directed these employees be moved from public contact after Ms. Winston was given an opportunity to resolve the problem with no success. Her assistant had investigated the complaints, but they continued. These EEOC complaints were settled in July 1989, with a fact-finding conference at which the Department agreed that nothing would be placed in the employee's files, they would be considered for promotional opportunities and they would receive training in dealing with customers and other members of the public. After the initial start-up of the Lottery in early 1988, employees began to learn their jobs and to perform more efficiently. By spring 1989, after the Department's administrative operating expenses were reduced by the Legislature, Secretary Paul decided to streamline the agency, particularly as it related to sales. Part of the decision involved reducing the number of regions from six to three, creating a northern, central and southern region. The decision as to which of the six regional managers would be retained was based first on length of service in the class, and second on overall performance appraisals. Two regional managers were hired in 1988 and they were clearly eliminated. One regional manager, Jody Spicola, was hired October 21, 1987, and he was clearly retained. The remaining three managers, Carolyn Winston, Carlos Ribero and Edith Manning, were all hired effective November 2, 1987. Both Edith Manning and Carlos Ribero had annual performance appraisals in December 1988 of "exceeds most standards", one step above that of Ms. Winston. In the reorganization, therefore, Ms. Winston was demoted to district manager of the Orlando office, reporting to Jody Spicola in the Tampa regional office. Because her salary exceeded the maximum for the new class, she received a reduction in pay of approximately $3,000.00. Even with the reduction, her salary exceeded that of the two other regional managers who were demoted, as they had been hired at a lower level. Edith Manning, a regional manager who was retained, had been hired at $28,000.00. In the July 13-19, 1989 issue of the Daytona Times, Ms. Winston's photograph appeared on the front page with an article and headline, "Black Lottery Manager Claims Racial Bias". The article outlined Ms. Winston's allegations against the department with regard to herself, personally, but also included this statement: * * * One major issue raised by Winston, supported by other Blacks and minorities who play the lottery, had to do with the disproportionate ratio of Blacks winning the lottery when compared to the high rate of participation by Blacks, Hispanics and other minorities. * * * (Respondent's Ex. #9) On July 18, 19 and 20, 1989, a three-part interview with Ms. Winston aired on Channel 6 Television in Orlando, on the evening news. The interview contained several statements that a person's color was the most important consideration of the Lottery and that the agency was racially biased. On July 24, 1989, Ms. Winston was placed on administrative leave with pay in order to remove her from the office while the department assessed the impact of the publicity. She filed a second complaint with the Human Relations Commission. Additional newspaper articles appeared in the Daytona Times and in the Orlando Sentinel with the racial bias allegations and the fact that Ms. Winston was placed on leave. In a letter dated September 1, 1989, Michele Hayes notified Carolyn Winston that she was terminated effective 5:00 p.m. the same date, for the following reasons: Disruptive behavior displayed during the course of your employment which resulted in low employee morale and had an adverse impact on the operations of the Orlando office; Unsatisfactory work performance as a leader and manager of the Florida Lottery; and Disloyalty in general to the Florida Lottery and executive level management. (Respondent's Ex. #31) Ms. Winston filed her third complaint with the Human Relations Commission after her termination. Art Mobley, a black male was hired to replace Ms. Winston on December 1, 1989. He had originally been hired by Deborah Burkett, in November 1987, as a sales representative in the Orlando office. After several months he was promoted to an on-line coordinator in the on-line games unit in Tallahassee. When Ms. Winston's position was advertised he successfully applied and moved back to Orlando.
Recommendation Based on the foregoing, it is hereby, RECOMMENDED: That Carolyn Winston's petitions in these three consolidated cases be dismissed. DONE AND RECOMMENDED this 23rd day of May, 1991, in Tallahassee, Leon County, Florida. MARY CLARK 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 23rd day of May, 1991. APPENDIX TO RECOMMENDED ORDER The following constitute specific rulings on the findings of fact proposed by the parties. Neither party complied with the requirement of Section 22I-6.031(3), F.A.C., that proposed findings of fact be supported by citations to the record. This has made the task of accepting or rejecting proposed findings virtually impossible. Petitioner's Proposed Findings Adopted in paragraphs 1 and 3. Adopted in part in paragraph 5, otherwise rejected as unsupported by competent evidence. 3 - 5. Adopted in paragraph 5. Adopted in paragraph 6. Rejected as irrelevant or contrary to the weight of evidence, except for reference to the racial epithet, which is adopted in summary in paragraph 22. 8 - 10. Rejected as irrelevant or contrary to the weight of evidence. Adopted in part in paragraph 11; the "insubordination" conclusion is unsupported by the record. Rejected as statements of Ms. Winston's position rather than findings of fact. That she felt discrimination does not prove the fact of discrimination. 13 - 15. Rejected as summary of testimony rather than findings of fact. 16 - 17. Adopted in paragraph 17. 18 - 19. Adopted in paragraph 20, except for the conclusion that the process deviated from "formal evaluation standards." 20. Rejected as contrary to the weight of evidence. 21 - 22. Adopted in substance in paragraphs 21 and 22. 23 - 28. Rejected as summary of testimony rather than findings of fact. 29 - 36. Rejected as contrary to the evidence. 37. Rejected as irrelevant. 38 - 40. Rejected as contrary to the evidence. Respondent's Proposed Findings Adopted in paragraphs 1 and 5. Adopted in paragraphs 5 and 26. Adopted in paragraph 5. Adopted in paragraph 6. Adopted in paragraph 4. Adopted in paragraph 5. Adopted in paragraphs 8 - 10. Adopted in paragraphs 11 and 12. Adopted in paragraph 18. 10 - 11. Adopted in paragraphs 13 and 15. Adopted in paragraphs 16-17. Rejected as unnecessary. Adopted in substance in paragraph 20. Adopted in paragraph 21. Adopted in paragraphs 22 and 23, except that the memorandum was removed from Mr. Broadway's file and was replaced by another. Adopted in part in paragraph 23; otherwise rejected as immaterial. Adopted in substance in paragraph 24. 19 - 20. Adopted in part in paragraph 23; otherwise rejected as unnecessary. Adopted in summary in paragraph 24. [no numbered paragraph 22.] 23. Adopted in paragraphs 25 and 26. 24. Rejected as unnecessary. 25 - 26. Adopted in part in paragraph 27. 27. Adopted in paragraph 28. 28. Adopted in part in paragraph 29. 29. Rejected as unnecessary. 30. Adopted in paragraph 31. 31 - 32. Adopted in paragraphs 28 and 29. 33 - 40. Rejected as argument, or unnecessary. COPIES FURNISHED: Anthony Gomes, Esquire Authorized Representative c/o Carolyn A. Winston 515 Polaris Loop #101 Casselberry, FL 32707 Louisa H. Warren, Esquire Senior Attorney Florida Lottery Capitol Complex Tallahassee, FL 32399-4011 Dr. Marcia Mann, Secretary Department of Lottery 250 Marriot Drive Tallahassee, FL 32301 General Counsel Department of Lottery 250 Marriot Drive Tallahassee, FL 32301 Dana Baird, General Counsel Fla. Commission on Human Relations 325 John Knox Road Bldg. F, Suite 240 Tallahassee, FL 32399-1570
The Issue The issues to be resolved in this proceeding concern whether the Emergency Rule 53ER99-48, Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority, whether it was promulgated pursuant to a true emergency and whether certain agency statements contained in letters promulgated by the agency constitute an unadopted rule, in purported violation of Section 120.54(1)(a), Florida Statutes.
Findings Of Fact The Petitioner is a corporation incorporated in the Commonwealth of Virginia as a "not-for-profit" corporation. It is registered to do business in the State of Florida. NALP is an association of six member companies. It became organized following the passage of a change to the Internal Revenue Service (IRS) tax code enacted on October 21, 1998. That provision, I.R.C. Section 451(h), the so called "transitional rule" provided that if state lotteries offered to "cash-out" previous prize winners on a limited basis, then the tax payer would not be subject to the so called "constructive receipt doctrine." NALP's members purchase large lottery payment streams in every state that has a lottery, including Florida. The winners assign their right to the annual payments in return for a lesser amount than their payments would total over, in Florida, the twenty-year time span for pay-outs, in return for receiving the immediate cash lump-sum. In Florida this is accomplished pursuant to Section 24.1153, Florida Statutes (1999). One of NALP's main purposes is to protect the interests of its member companies through monitoring and participating in the formulation of federal legislation as well in rulemaking before various state agencies including the Florida department, as well as to provide educational materials and functions for members and for the various state lottery agencies. Each of the member companies owns at least one Florida Lottery prize and in the aggregate they own dozens of Florida large lottery prize payment streams worth over fifty million dollars. The Respondent is the Florida Department of The Lottery (Respondent or Department). It is a state agency authorized under Chapter 24, Florida Statutes, to organize, regulate and administer the operation of the state lottery and to properly account for, deposit in trust and invest lottery ticket sale proceeds and to pay related prizes from funds received from ticket sales and through investments of such lottery department revenues, all pursuant to Chapter 24, Florida Statutes, and related rules. Petitioner's Standing: The Petitioner has standing to pursue its challenge to the rule and agency statements in this case. Each of its members owns Florida lottery prizes. That is, by operation of assignment under Section 24.1153, Florida Statutes, they have assumed the interests of the actual lottery prize winners who have assigned their prizes to the members of NALP by assignment agreements enacted pursuant to the terms of this statute. The prize winners (winning ticket holders) received discounted amounts, lump-sum settlements, in lieu of prizes paid in equal annual installments over twenty years. Therefore, each of the companies who are members of NALP and hold assignment rights to the lottery prizes, are eligible for the lottery's one-time, cash-out opportunity under the subject Emergency Rule 53ER99-48, Florida Administrative Code. The Emergency Rule applies by its own terms to the Petitioner's members, as they are assignees of the prizes involved. Through the Emergency Rule as well, the Department, in effect, is competing for the same clientele, that is, past lottery prize winners who won the lottery during the relevant time period, and the same cash flow from the prize winners' annual payments as are all of the Petitioner's members by virtue of the above-referenced assignment statute. The only real difference is that the Department, by the terms of the rule, does not have to comply with the extensive "Consumer Protection" provisions of the statute which include court proceedings, explicit disclosures of purchase price and discount rate and the ultimate mandate of court orders on proposed assignments, all of which is required by Section 24.1153, Florida Statutes, of private assignment companies. In short, the Petitioner has established a sufficient substantial interest "injury and fact" which occurs within the zone of interest carved out by the lottery prize payment, revenue investment and trust fund management scheme established by Chapter 24, Florida Statutes. Emergency Rule 53ER99-48 and Agency statements Purported To be Rules. Prior to October of 1998, all large lottery prize winners could receive their prize only in equal annual installments over a period of twenty years. They were not given the choice of an immediate lump-sum, cash settlement. This was because, under the federal tax law prevailing at the time, the ability to make a choice of receiving a lump-sum prize award or payments over time automatically triggered the "constructive receipt doctrine" which thereupon allowed the Internal Revenue Service (IRS) to assume the taxpayer had constructive receipt over the entire prize money and therefore, owed income tax on the entire prize in one year. However, assignments of prize payment streams to private investment companies for a cash lump-sum settlement in return were allowed through the aegis of state circuit court orders without violating the constructive receipt doctrine. Section 24.1153, Florida Statutes (1999), was enacted to provide for such assignments to third-party, private investment companies with court approval. On October 21, 1998, Congress passed an amendment to Section 451(h) of the I.R.C., henceforth called the "transitional rule." This amendment provided that if state lotteries offered, on a limited basis, to "cash-out" past prize winners, the taxpayer would not be subject to the constructive receipt doctrine for IRS tax purposes. This federal tax exception provision is only effective for a limited period of time, however, from July 1, 1999 through December 31, 2000. This change in the federal tax law does not itself authorize the Department to do anything, rather it only changes the tax consequences to individual tax payers who are lottery winners. When change in the tax code allowing state lotteries to cash-out past winners became known, Mr. Shapiro, General Counsel for a NALP member company, met with attorneys for the Florida Department in 1998 to discuss the Florida Lottery's intentions following passage of Section 451(h) (the amendment in question). In November of 1998, the Department began its examination of the federal transition rule in order to determine whether it would adopt a rule regarding cash-outs of past prize winners. There is no federal or state requirement that the Department adopt such a rule. There is no testimony of any need created by changing market conditions to adopt such a rule. The NALP sent information regarding the transition rule including memoranda and legal analysis to all the state lotteries in January of 1999. Many months elapsed during which time the Department was apparently contemplating whether or not to adopt a rule accommodating the above-referenced federal tax law change. On September 13 and September 28, 1999, letters were issued by the Department which offered a cash-out option and announced a methodology available to all previous large lottery prize winners as an alternative to the normal twenty-year, equal annual installment method of payment of prizes. These letters were sent to all eligible winners and predated the issuance of the Emergency Rule adopted by the Department and under consideration in this case. Even though the Emergency Rule was adopted after the mailing of the letters, the Department still takes the position that it relied on the letters as supplemental to the terms of the offers contained in the Emergency Rule itself. Thereafter, and almost one year after it first considered adopting a rule to accommodate the advent of the federal transitional rule, and almost a month after the first cash-out option letter went to previous lottery winners, the Department, on October 8, 1999, published its Emergency Rule 53ER99-48, entitled "Florida Lottery Prize Payment Option Election." That rule provides in pertinent part as follows: From October 1, 1999 through November 30, 1999, the Florida Lottery is providing a one-time opportunity for eligible prize winners to elect to voluntarily cash out their remaining annual installment payments and receive a single lump-sum cash payment. In order to be eligible for this opportunity, the prize winner must have won a Florida Lottery prize before October 22, 1998, which is payable over a period of at least ten years, and the prize winner must not have assigned the prize to another person or entity pursuant to Section 24.1153, Florida Statutes (1999). * * * All prize winners who elect to cash out will be paid in one lump-sum cash payment and the payment shall be calculated as follows: For all prizes, other than WIN FOR LIFE prizes, the lump-sum payment amount will be the accreted value of the Lottery's investment (original cost plus accrued interest) as determined on a date certain (the "trade date"), unless the market value of the investment is less than the accreted value determined on the trade date. In that case, the market value of the investment will be paid. If a prize winner elects to cash out, the Lottery's investment will be liquidated. . . . According to department witnesses, the delays in adopting the subject Emergency Rule were attributable to changes in the executive administration of the state due to the 1998 election of the Governor and concomitant changes in the person of the Secretary of the Lottery as well as changes in the prize payment process for new lottery winners (as opposed to past lottery winners), embodied in Rule 53-28.007, Florida Administrative Code (not here under challenge). The Department conceded that it did not make the promulgation of the Emergency Rule its highest priority and took almost a year, from October 21, 1998 to October 8, 1999, for adoption of the rule even as an Emergency Rule. No market conditions were described in the evidence which would have prevented the adoption of a regular rule proposed in the normal fashion rather than an Emergency Rule. No evidence propounded by the Department explains why regular rulemaking would not have been practicable in this matter and in dealing with the subject matter of the Emergency Rule. No reason stated by the Department at hearing will support a factual finding of any emergency existing which required the promulgation of the prize payment option election as an Emergency Rule rather than in a regularly proposed and enacted rule proposed in accordance with Section 120.53, Florida Statutes. In fact, the Internal Revenue Code transition rule option which gave rise to the purported Emergency Rule is valid through December 31, 2000, almost thirteen months after actual promulgation of the Emergency Rule. Any urgency perceived by the Department at this point was not shown to be anything other than a sense of urgency in the perceived need to adopt the past prize winner cash pay-out "Emergency Rule" caused by the Department's own delay since October 21, 1998, in promulgating a rule on the subject, emergency or otherwise. While this delay might be for legitimate, understandable reasons, the fact remains that the delay was the Departments' own responsibility and does not militate in favor of a finding that there is any emergency necessitating the adoption of an emergency rule because of changes in market conditions or for other reasons. Once a large lottery drawing produces a winner or winners and a monetary prize, the Department transfers the prize funds to the State Board of Administration (SBA) for investment pursuant to Section 24.120(2), Florida Statutes, and in accordance with a Trust Agreement executed between the Department and the SBA. The Department and the SBA hold those past funds in trust pursuant to Section 24.120(2), Florida Statutes, for the benefit of that Lottery prize winner so that the winner will be assured of receiving the prize payments in equal amounts over a twenty-year period. Under the statutorily required payments system, when a prize is awarded, the Department and the SBA calculate the amount of money needed to purchase U.S. Treasury Securities (Treasury Strips) which will generate enough funds to meet the prize payment requirements for each year of the pay-out period. The investment is then done in a manner designed to preserve capital and to ensure the integrity of the lottery disbursement system by eliminating risk of payment of funds when due and to produce annual sums of money over the required term of investments. Once the prize monies are in the Section 24.120(2), Florida Statutes, trust fund, the prize is deemed awarded and paid by the Department. Thereafter, the annual payments to the lottery winner are a matter of privity between that winner and the trust fund. Section 24.120(2), Florida Statutes, was enacted at a time when only annual payments were statutorily authorized. Section 24.120, Florida Statutes, has not been amended since new lottery winners (post October 1998) were given the choice of annual payments or a lump-sum payment pursuant to Rule 53-28.007, Florida Administrative Code. Moreover, money for those lump-sum prize payments pursuant to that rule do not get deposited into the Section 24.120(2), Florida Statutes, trust fund, but are always deposited in the trust fund called the Administrative Trust Fund pursuant to Section 24.120(1), Florida Statutes. They are not deposited in the Section 24.120(2), Florida Statutes, trust because that trust was designed by the Legislature to provide investment instruments securing only equal annual installment prize payments. The Emergency Rule 53ER99-48 does not actually effectuate payment of a prize. Rather, it has the effect of changing Lottery prizes already first awarded and already transferred to the Section 24.120(2), Florida Statutes, trust fund. Winners of large Lottery prizes prior to October 1998, were entitled to equal annual prize payments over a twenty-year period. The Department's Emergency Rule has the effect of changing that prize to allow a single cash payment of the funds produced from the sale of the investment held and designed by the Legislature to fund only the annual prize payments. The Department thereby would instruct the SBA to liquidate the "Treasury Strips" held in trust for the benefit of the Lottery prize winner and designed to secure payment of equal annual installments to the prize winner over twenty-years, in order to fund the lump-sum payment provided for under the Emergency Rule at issue. The Emergency Rule allows the Department to sell the trust investment which supports the twenty-year pay-out of a prize, on a "trade date" before the required term of the investments lapses. The "trade date", while it might presumably be the date of sale of the trust investment which supported installment payments of the prize in question, is not clearly defined in the rule as to what the trade date is or how it is determined. The Department would then pay the prize winner the lesser of the "market value" or the "accreted value." This lump- sum amount is not the same as the total amount of the installments the prize winner would be entitled to over the entire twenty-year period calculated as the winner's entitlement when the prize is initially awarded. The lump-sum also does not represent the liquidated value of the investment held in trust for the winner. If the accreted value is less than the market value on the trade date then the lottery winner would only get the accreted value and the Department would get the balance, presumably the difference between accreted value and market value. Thus, through this Emergency Rule the Department proposes to sell the investments before the required term lapses and potentially pay the winner only a portion of that money, thus retaining additional proceeds for the Lottery. The Emergency Rule does not specify how the Department would determine what the winner's share would be under the lump-sum arrangement, nor how much the Department would keep after payment of the lump-sum amount when the supporting investments in the trust are liquidated for a given prize winner. In this connection the Emergency Rule does not clearly define certain critical terms necessary for a lay person to be able to understand the cash-out offer from the Department. The terms include "accreted value", "original cost" and "accrued interest." Accreted value is described as being the difference in the sum of the original cost of the investment and the accrued interest earned thereon. How one determines "original cost" and "accrued interest" is not specified in the rule, however. While financial experts might easily determine how to define those terms and determine the relevant sums attributable to them, the rule is vague in these particulars in terms of adequately defining how these critical terms relate to the amount a lottery prize winner could expect from a lump-sum pay-out and in providing such a prize winner a clear understanding of how the lump-sum is calculated. Thus the rule has not been shown to be engendered by a true emergency and, in the particulars referenced last above, it is vague. Agency statements Defined As A Rule: On September 13 and 28, 1999, the Department issued letters to previous lottery prize winners setting forth the terms and conditions concerning the formulae and method in which the pricing, timing and other terms and conditions of cash pay-outs would be determined. Those letters pre-dated the promulgation of the subject Emergency Rule. Several of the Petitioner's member companies received the cash-out offer letters similar to those attached to the Petitioner's petition. The letter stated, in pertinent part: If you elect to cash out, however, you will receive a single, smaller lump-sum payment. This amount will be the accreted value of the Lottery's investment (original cost plus accrued interest) as determined on a date certain (the "trade date"), unless the market value of the investment is less than the accreted value determined on the trade date. In that case, you will receive the market value of the investment. . . . The Department's letters thus contain a formula for determining the amount of the cash-out offer. That formula is not disclosed or contained in the Emergency Rule, even though it purports to apply to all previous lottery winners eligible under the rule. Be that as it may, the Respondent has asserted in its Proposed Final Order that the Petitioner's challenge to the letters as agency statements amounting to a rule is now moot with the enactment of the subject Emergency Rule. This appears to amount to a recession by the Department from reliance on the statements and content of those letters in defining and implementing its cash pay-out program for previous Lottery winners. Nevertheless, in the context of resolving all issues raised by the Petitioner, the question of those letters having the quality of an unpromulgated rule will be addressed below. The Department has cited Sections 24.105(10)(j), 24.115(1) and 24.109(1), Florida Statutes, as the source of its rule-making authority. Section 24.105(10)(j), Florida Statutes, provides the Department with authority to adopt rules concerning the manner of payment of prizes to holders of winning tickets and such other matters necessary or desirable for the efficient or economical operation of the lottery or for the convenience of the public. See also Section 24.105(10)(e), Florida Statutes. Section 24.105(10)(j), Florida Statutes, however, does not specifically authorize cash pay-outs to previous lottery winners already determined to be eligible to receive payment as holders of winning tickets and who have already received awards of payments in equal annual installments pursuant to Section 24.120(2), Florida Statutes. Section 24.115(1), Florida Statutes, authorizes the Department to adopt rules "to effect payment of . . . prizes." However, the payment of prizes to the relevant past winners was effected when the Department made its initial one-year payment to the pertinent prize winners and then paid the remaining cash represented by the winning tickets to the SBA in the trust established by the Legislature for the lottery winners, for investment in securities supportive of equal annual installment payments to the winners pursuant to the trust arrangement established in Section 24.120(2), Florida Statutes. Section 24.109(1), Florida Statutes, while it authorizes the Department to adopt emergency rules in general when such emergency rulemaking power " . . . is necessary for the preservation of the rights and welfare of the people in order to provide additional funds to benefit the public . . . " does not specifically authorize any particular emergency rule subject matter, including cash pay-outs to prior Lottery winners already determined eligible to receive prize payments in equal annual installments pursuant to Section 24.120(2), Florida Statutes. The Department, pursuant to Section 24.104(2), Florida Statutes, and Section 24.121(2), Florida Statutes, has a mandate "to maximize revenues consistent with the dignity of the state and the welfare of its citizens" in order to provide, among other things, improvement of the Educational Enhancement Trust Fund each year. The Department has not shown any specific authority to adopt a rule which changes a prize previously awarded, even though it might create new revenues as a result of the difference between lump-sum awarded to a past winner and the accreted value of the investment supportive of the prize, or the market value as the case may be. There is no specific authority to have such funds previously invested to support annual installment payments of prize money being diverted from the trust fund set up by the Legislature by Section 24.120(2), Florida Statutes, instead of, for instance, the "Administrative Trust Fund," constituted under Section 24.120(1), Florida Statutes. These findings in conjunction with the reasons given in the Conclusions of Law below show that the Department exceeded its rulemaking authority in enacting the Emergency Rule and the agency statements at issue. Enlargement Modification or Contravention of the Implemented Law: Section 24.120(2), Florida Statutes (1999), provides for a payment of prizes on a deferred basis and for the safe investment of the prize monies set aside in the trust fund under that section for payment of deferred prize payments. That section also provides for production of equal annual sums of money over the required term of the investment (twenty years). The Emergency Rule and the agency statements at issue depart from the terms of the trust relationship set up by the Legislature through Section 24.120(2), Florida Statutes, by changing the prize awarded to allow the early liquidation of prize monies invested on behalf of the prize winners in the trust fund constituted under that section. Such a change in the prize awarded and manner of award is not authorized by the terms of that statute. The Emergency Rule and agency statements thus enlarge, modify and contravene Section 24.120(2), Florida Statutes, by departing from the terms of the trust created by the Florida Legislature designed to ensure a safe investment of lottery monies so as to produce annual prize payments over twenty years. The Emergency Rule, by allowing a liquidation of trust investments before the statutorily required term and by allowing the trustee of the Section 24.120(2), Florida Statutes, trust (the Department) to intentionally profit from liquidation of the trust investments and concomitant change in the prize awarded departs from the conditions of the Section 24.120(2), Florida Statutes, trust, and the purposes for which it was established. In the enactment of this rule, the Department stands in the position of a trustee varying the terms of a trust in terms of the benefits to be afforded the beneficiary of that trust and the method of calculation and payment. While the beneficiary (the prize winner) in the trust analogy might agree with that course of action, the settlor has not assented to variance from the terms of the trust arrangement. The Florida Legislature is in a position analogous to the settlor of the trust created pursuant to Section 24.120(2), Florida Statutes. Since that law, implemented purportedly by the Emergency Rule and agency statements, does not itself provide authority for the change in the award of prizes and methods of paying prizes embodied in the rule and in the agency statements, it would appear that the settlor, the Legislature, must first assent to the new arrangement (ipso facto by an amendment to the statute). Moreover, it should be pointed out that the new arrangement contemplated by the Emergency Rule would be accomplished without any disclosure to a lottery winner of the discount rate or dollar amount that the state would retain, in the sense that the terms in the rule of "trade date," "market value," "original cost" plus accrued interest or "accreted value" are not adequately defined on the face of the rule. They are thus amenable to varying interpretations, leading potentially to ad hoc policy decisions by the agency or necessitating further illumination by the agency through an additional rule enactment, thus rendering the rule, in the sense of the employment of these terms and any disclosure to the lottery winner, vague. There are various "consumer protection" standards set forth in Section 24.1153, Florida Statutes (1999), which are directed to the third-party assignment arrangement whereby lottery winners may assign their right to the annual installment payments of their prizes to third-party entities and thus obtain from those entities a discounted, lump-sum payment of a prize. Those standards or restrictions include oversight by a circuit court and include the necessity of approval of the assignments and lump-sum payments through third-party entities by an appropriate circuit court order. They also include a provision allowing the prize winner a three-day cancellation period opportunity. The Emergency Rule and agency statements at issue in this case modify, contravene or depart from the provisions of that law because the Department in the so-called emergency cash pay-out provision in the subject rule is not required to adhere to the "consumer protection restrictions" mandated by Section 24.1153, Florida Statutes (1999). Although the end result of what the Department proposes by the Emergency Rule achieves a lump-sum, cash payment to the lottery winner, unlike the arrangement to be set up by the Emergency Rule, the "cash-out" assignment arrangement authorized by Section 24.1152, Florida Statutes, was mandated by the Legislature. The Emergency Rule is potentially arbitrary and capricious (meaning not adequately supported by facts or enacted without adequate support as to reason or rationale) 1/ The impetus for the Emergency Rule, as found above was a change in the Internal Revenue Code concerning the "constructive receipt doctrine". The relevant I.R.C. provision Section 451(h), contains the "qualified prize option" test. The Emergency Rule purports to meet that test but does not. A qualified prize option must contain three things: (1) A clear statement that it is only an offer; (2) A statement of the offer methodology; and (3) A disclosure of the discount rate that makes equivalent the present value of the prize previously awarded and the Department's new offer (lump-sum pay-out). The Emergency Rule does not adequately disclose the methodology of the offer since critical terms enabling a lay prize winner to understand the offer are not clearly defined, as referenced in the Findings of Fact above. The Emergency Rule does not require, on its face, any disclosure of the discount or amount of the prize valued as of an identified date. In its Executive Summary regarding its decision to adopt the Emergency Rule, the Department stated that it would meet the requirements of Section 451(h), by providing full and clear disclosure "as described in the Federal Tax Conference Report on Section 451(h)." The rule has the potential of being arbitrary and capricious in its operation since it does not in fact meet the qualified prize option test in the I.R.C. provision by clearly disclosing the discount rate or the methodology used in arriving at the offer, even though it purports to disclose those matters. Agency statements As Rules: The agency statements, the letters mailed to each prior prize winner contain financial information specific to each individual prize winner but they also contain general formulae to be applied by the Department to all eligible winners in cashing out prizes under the Emergency Rule. Thus the letters expand the cash-out procedure by providing cash-out formulae and other critical conditions beyond those which are stated and disclosed in the rule itself. This is necessary information for the prize winners to make decisions on accepting the Department offers but was not adopted as a rule and is not contained in the Emergency Rule. It is meant by the Department to apply to the entire universe of eligible prior prize winners.
The Issue The issue in this case is whether the Department of Revenue should intercept and apply Petitioner’s lottery prize to reduce an outstanding arrearage for child support.
Findings Of Fact On January 25, 2002, Molina signed a Florida Lottery Winner Claim Form and transmitted it to DOL to redeem a lottery prize in excess of $600. Thereafter, shouldering its legal responsibility, DOR notified DOL that Molina was in arrears on a child support obligation that DOR was enforcing. On or around January 30, 2002, DOR notified Molina of its intent to intercept his lottery prize and apply it to satisfy or reduce an unpaid child support debt. Molina’s child support obligation is payable to the Central Depository of the Clerk of the Miami-Dade County Circuit Court pursuant to an order issued by a judge of that circuit on March 28, 1996. Molina owes in excess of $20,000 in unpaid child support.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED (if this has not been done already) that the Department of the Lottery transmit Molina’s lottery prize to the Department of Revenue. It is further RECOMMENDED that the Department of Revenue enter a final order directing that Molina’s lottery prize be applied to satisfy or reduce the accrued arrearage on his child support obligation and providing that the balance of the prize, if any, be paid to Molina. DONE AND ENTERED this 15th day of August, 2002, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 15th day of August, 2002. COPIES FURNISHED: Pablo Y. Molina 10815 Northwest 50th Street Apartment 303 Miami, Florida 33178 Chriss Walker, Esquire Child Support Enforcement Department of Revenue Post Office Box 8030 Tallahassee, Florida 32314-8030 Louisa Warren, Esquire Department of Lottery 250 Marriott Drive Tallahassee, Florida 32301 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 J. Bruce Hoffmann, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 David Griffin, Secretary Department of Lottery 250 Marriott Drive Tallahassee, Florida 32301 Ken Hart, General Counsel Department of Lottery 250 Marriott Drive Tallahassee, Florida 32301
