Findings Of Fact At all times material hereto, Respondent has been a licensed yacht salesman. At the time of the transaction which is the subject of this proceeding, Respondent was employed by Van Hart Yacht Sales, Inc. Respondent had customers who were interested in purchas-ing a 37' Irwin sailboat. Respondent checked the computer list-ings and found that Northside Marine Sales, a yacht brokerage firm, had a listing for a 1979 37' Irwin known as the "Ark Royal". Respondent telephoned Northside and spoke with a secre- tary. She advised him that the man most familiar with the vessel was not there but that if Respondent sent his customers to Northside, someone would show them the vessel. Respondent's customers, Paul Copeland and Val S. Meeker, went to Northside Marine Sales to look at the boat. When they arrived there, only William Fiermonti was present. Fiermonti was a salesman for new boats at Northside and, accordingly, did not need to be licensed as a yacht broker or salesman, and he was not so licensed. Fiermonti told Copeland and Meeker that he knew nothing about sailboats and could not assist them, but he could let them look at the boat. He then took them to the boat and unlocked it. He told them to lock it when they were finished, and he left them alone to look at the boat. On March 7, 1993, Copeland and Meeker entered into a Purchase Agreement and Deposit Receipt with the owners of the vessel Ark Royal. The contract called for final payment and delivery of the vessel to occur on May 1, 1993. The purchase agreement is a standard form contract on Van Hart Yacht Sales, Inc., letterhead. Paragraph numbered 15 in that contract calls for the seller to pay Van Hart Yacht Sales, Inc., a commission of ten percent of the gross sale price. William Fiermonti witnessed a signature on that contract. On March 23, 1993, Maryland National Bank, the lien holder on the yacht, sent to Fiermonti correspondence stating the bank's agreement to the sale of the vessel. A fax transmittal cover page dated March 24, 1993, reflects that Fiermonti sent something to Respondent with the notation that it was regarding the Ark Royal. On April 6, 1993, Respondent sent a fax trans-mittal to Fiermonti enclosing the "acceptance of vessel form", suggesting a closing date of April 24, 1993, and suggesting that the closing would probably be scheduled at the bank since the bank was holding the title. The closing statement for the transaction was prepared by Respondent on Van Hart Yacht Sales, Inc., stationery. Respon-dent took the closing statement to the closing. He handled the closing and gave Northside a check for its share of the com-mission. Fiermonti had no involvement in the transaction other than witnessing a signature on a document, contacting a bank to obtain a "pay-off" figure, transmitting to Respondent a document by fax, and receiving from Respondent a document by fax. The transmittal and document he received from Respondent, he gave to Robert Skidmore, the owner of Northside Marine Sales and a licensed yacht broker. Fiermonti received no commission as a result of the sale of the Ark Royal and did not expect to receive a commission. He did not attend the closing. Fiermonti did not solicit the listing for the vessel. He did not offer the vessel for sale or sell it. He did not negotiate the contract for sale and had no involvement in the negotiations. In short, Fiermonti did not act as a salesman or broker as to the Ark Royal trans-action. Similarly, Respondent correctly believed that he had located the yacht in question as a result of a listing by a licensed yacht broker. He further believed that he was "co-brokering" the vessel with Robert Skidmore. A complaint was filed against Robert Skidmore and Northside Marine Sales concerning a different matter. While Petitioner's investigator was investigating that matter, he saw the fax transmittal sheets between Fiermonti and Respondent in Northside Marine Sales' records. The investigator contacted Respondent and requested copies of the documents related to the sale of the Ark Royal. Respondent transmitted the documents to the investigator that same day by fax transmittal. The investi-gator never interviewed Fiermonti regarding his role in the Ark Royal transaction. On April 13, 1994, Petitioner issued a Notice to Show Cause against Robert Skidmore, alleging, among other things, that Skidmore had allowed unlicensed salemen to conduct brokered yacht transactions. In August of 1994 Skidmore and Petitioner entered into a Final Consent Order. That Final Consent Order specifi-cally recites that Skidmore desired to resolve the matter without the necessity of further proceedings and that Skidmore did not admit to any wrongdoing or violation of the statutes and rules regulating his conduct. The Findings of Fact section of that Final Consent Order did not include any finding of wrongdoing on Skidmore's part. Rather, the Findings of Fact section finds as facts only that Petitioner issued a Notice to Show Cause alleging statutory violations and then quotes the allegations made in the Notice to Show Cause. In other words, the factual findings include that a Notice to Show Cause was issued, not that the allegations in that Notice to Show Cause were true.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent not guilty of the allegations and dismissing the Notice to Show Cause filed against him. DONE and ENTERED this 24th day of July, 1995, at Tallahassee, Florida. LINDA M. RIGOT, 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 24th day of July, 1995. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed findings of fact numbered 2, 3, 5, and 6 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 1 has been rejected as not constituting findings of fact but rather as constituting a conclusion of law. Petitioner's proposed finding of fact numbered 4 has been rejected since it is not supported by the evidence in this cause. Respondent's first unnumbered paragraph has been rejected as not constituting a finding of fact but rather as constituting a conclusion of law. Respondent's second unnumbered paragraph has been adopted either verbatim or in substance in this Recommended Order. COPIES FURNISHED: Tracy Sumner, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Mr. James Rich c/o Bob Anslow Yacht Sales 400-B North Flagler Drive West Palm Beach, Florida 33401 Henry M. Solares, Director Department of Business and Professional Regulation Division of Florida Land Sales, Condominiums, and Mobile Homes 1940 North Monroe Street Tallahassee, FL 32399-0792 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Whether Petitioner carried his burden of proving his good moral character and entitlement to a yacht salesperson's license under chapter 326, Florida Statutes.
Findings Of Fact Based on the stipulations of the parties, the oral and documentary evidence, and the record as a whole, the following Findings of Fact are made: Stipulated Facts Respondent is the state agency charged with enforcing chapter 326, the Yacht and Ship Brokers Act, and the administrative rules promulgated thereunder. On June 8, 2016, Petitioner submitted to Respondent an application for a yacht salesperson's license. On Petitioner's application, the application question, number 14, relating to criminal history, was answered "yes." Petitioner failed to attach a complete and signed statement of the charges and facts, together with the dates, names, and location of the court in which the proceedings were held or were pending, as required by the application for the yacht salesperson's license. On October 12, 2012, Petitioner entered a plea of guilty to conspiracy to commit bank and wire fraud, a felony, in the United States District Court, Southern District of Florida, Miami Division, in case number 1:1220156CR-UNGARO. On October 12, 2012, Petitioner was adjudicated guilty of conspiracy to commit bank and wire fraud in case number 1:1220156CR-UNGARO. On October 12, 2012, Petitioner was sentenced to 57 months' incarceration in the custody of the United States Bureau of Prisons in case number 1:1220156CR-UNGARO. On October 12, 2012, Petitioner was sentenced to three years of supervised release following incarceration in case number 1:1220156CR-UNGARO. On October 12, 2012, Petitioner was ordered to pay $6,567,496.00 in restitution in case number 1:1220156CR-UNGARO. On April 22, 2016, Petitioner was released from incarceration and placed under supervised release, set to expire on or about April 21, 2019. Petitioner failed to certify to Respondent that Petitioner has never been convicted of a felony in Petitioner's application for a yacht salesperson's license. Petitioner timely received a copy of Respondent's Notice of Intent to Deny License Application on July 19, 2016. Petitioner completed programs in Residential Drug Abuse Treatment Program, the Wellness Program, and the Community Treatment Services Program at Dollan Mental Health Clinic. Petitioner served his time without issue. Petitioner has been sponsored by a South Florida yacht broker who is going to supervise his activity as a yacht salesman. Facts Adduced at the Hearing Pursuant to chapter 326, Respondent has regulatory jurisdiction over yacht and ship licensees and is responsible for the approval or denial of applications for licensure for yacht salespersons and yacht brokers. Petitioner's younger sister, Beatriz Llorente, who is a practicing real estate and criminal defense attorney, testified. She described Petitioner as a "father figure" to her. She testified that Petitioner's conviction for conspiracy to commit bank fraud "devastated" her, because she felt that her reputation was being questioned.1/ When she drove him to federal prison, Petitioner "asked her for forgiveness." She was familiar with his prison experience. As far as she knew, Petitioner had no disciplinary problems in prison and was awarded maximum gain time. Furthermore, his 57-month sentence was reduced to less than two and one-half years. Despite his incarceration and current probation status, she stated that he is very active with his children and shares a great deal of time with them. He told her, "I will work for the rest of my life to regain your trust." His sister is convinced that Petitioner has overcome his faults, and she emphatically stated he is of good character. On cross-examination, she testified that Petitioner had no drug or alcohol problems when he was growing up, but they arose during the years preceding his conviction. An attorney friend of Petitioner's, Francisco Pines, testified. Pines has known Petitioner since 1988. They attended school together. More recently, their families have interacted and spent time together. They participated together in recreational activities, such as boating and fishing, before Petitioner's incarceration for the federal crime. Since Petitioner was released from prison, Pines has had contact with him three or four times. Pines was also asked about Petitioner's character. In his view, Petitioner knows that what he did was wrong and has made changes to get his life in order. Pines testified that Petitioner is very loving, caring and nurturing with his children. The witness has seen a "change for the better." According to him, Petitioner has always demonstrated a strong work ethic, more so now than before the criminal incident. A licensed mental health counselor, Sandra Rico, was also called by Petitioner. Beginning in 2011, she provided mental health therapy and counseling to Petitioner related to his anxiety due to a crisis in his marriage. She determined that he used and abused alcohol to relieve this anxiety. She treated him on and off until 2013. She also emailed him while he was in federal prison to make sure that he was getting continued treatment for his anxiety and alcohol abuse issues. After he was released from prison, Rico counseled him once a month from July 2016 through the fall of 2016. Her current treatment with him is more in the nature of prevention and maintenance, and to help him develop coping skills. She testified that the therapy he received in prison helped him and that Petitioner changed while in prison. As examples, she cited that he is more involved and willing to do more of her treatment assignments and that he now journals his feelings. Rico related that she is surprised by Petitioner's progress and that she believes he is no longer drinking. He is making better choices and being more careful. She opined that he gathers his thoughts more deliberately now, primarily because he wants to impress his children and reach "goals" he has set for himself. In her opinion, he is of good character now. His treatment with her continues "as needed." Lazaro R. Navarro is the chief executive officer at Florida Yachts International and manages approximately ten sales associates. He has known Petitioner's family for over 15 years. When Petitioner was released from federal prison, the family asked Navarro if he would consider employing Petitioner and sponsoring him. He gave Petitioner a job doing "online marketing," which involved managing leads and performing back office work. Navarro characterized Petitioner as a great asset to his company and trustworthy. He has no doubts about Petitioner and his work habits. Petitioner arrives at work early and is usually the last one to leave. Petitioner has exceeded all of his expectations, and is a very dedicated employee. As the employing yacht broker, Navarro supervises Petitioner and ensures that all of his work is done correctly. Although no details were offered, Navarro testified that Petitioner has accepted full responsibility for his criminal conduct and is a great father. Based upon the financial procedures and protocols used at Navarro's yacht company, he testified that Petitioner would not need to handle or accept any cash as a part of his sales responsibilities. Instead, finances and money exchanges are handled and processed by a closing specialist and the chief financial officer.2/ Navarro commented that he would trust Petitioner with money handling, if that occasion arose. Petitioner offered his own testimony. He received a Florida real estate license in February 2005 and worked for his cousin as a real estate salesperson until 2008. He was indicted for conspiracy to commit bank and wire fraud in March 2012. This federal indictment stemmed from activities in 2006 while he worked as a licensed real estate salesperson. He confirmed that he visited with Rico for mental health counseling related to problems with his wife, as well as anxiety related to the government's criminal investigation of him in 2009. Although his prison sentence did not include mandatory alcohol or drug treatment, he followed the advice of a psychiatrist at the prison and voluntarily enrolled in a residential drug and alcohol abuse treatment program. He also participated in a health and nutrition wellness class for nine weeks. He completed both programs successfully. While in prison, he took several foreign language classes, thinking they would be useful for the yachting business. He also participated in a hazmat (hazardous materials) program outside the prison on a naval base. Apparently, a Navy Admiral retained him for the program. Also, while in prison, he was hired on the naval base to provide cleaning and maintenance services at a dormitory. He was allowed to serve a reduced prison sentence-- 32 months of his 57-month sentence, and he was released six months early to go to a halfway house. While there, he became eligible for home confinement. He was released from home confinement in April 2016. Although he is still under supervised release (probation), he is no longer required to make personal visits and can report to his probation officer remotely through the Internet. He is jointly and severally liable for over $6 million in restitution with the other defendants in his criminal case. It was undisputed that he is current with his restitution payments of $151.00 each month. Petitioner is active in his Catholic Church and gave "his testimony" at a recent church retreat. He characterizes his relationship with his children as being one of honesty and emphasized that it is important to have God in his life. When Respondent called requesting additional information for his application, he promptly provided his federal Termination Report and Certificates of Completion. Pet. Exs. 3, 4, and 5. Petitioner expressed a passion for boating and believes he is good at sales. He wants the yacht salesperson's license, in part, so that he can pay off the criminal restitution more quickly. He claims to no longer act impulsively and believes that his children are the most important thing in his life. On June 8, 2016, Petitioner submitted to Respondent an application for a yacht and ship salesperson's license. On Petitioner's application, he answered question number 14 "Yes," indicating that he had a criminal history.3/ Applicants who answer "Yes" to question number 14 on the application are directed to attach a complete and signed statement of the charges and facts, together with the dates, names, and location of the court in which the proceedings were held or are pending.4/ However, Petitioner failed to submit this statement. When asked about this omission, Petitioner testified, "I turned back for the next one (question), and I didn't bother looking. It shows part of impulsive behavior." Petitioner thought the information request at the bottom of the page he overlooked was simply a part of the next question.5/ Respondent obtained a Florida Department of Law Enforcement criminal background check on Petitioner, which indicated that, on October 12, 2012, Petitioner pled guilty to conspiracy to commit bank and wire fraud. Resp. Ex. 4. Certified court records obtained by the Division indicated that Petitioner was adjudicated guilty of conspiracy to commit bank and wire fraud in violation of 18 U.S.C. § 1349, a felony, and sentenced to 57 months' incarceration in the custody of the United States Bureau of Prisons with three years of supervised release following incarceration. Petitioner was ordered to pay $6,567,496.00 in restitution.6/ Notably, Petitioner's federal "Judgment In A Criminal Case" included Special Conditions of Supervision. This included a "Related Concern Restriction." Petitioner testified that this provision prohibited him from "touch[ing] funds" while under supervised release. His employer at Florida Yacht International wrote a letter, ultimately filed with the probation office, that Petitioner "would not be dealing with any funds." Resp. Ex. 1, pp. 1-7.7/ Petitioner certified on his application that, in February 2005, he was licensed as a real estate sales associate in the state of Florida, having been issued license number SL3111375. Petitioner testified that, in order to become a real estate sales associate, he completed a pre-licensing course; applied with and was approved to take the state licensing exam by the Department of Business and Professional Regulation; and passed the Florida Real Estate Sales Associate Examination. Petitioner stated that, at the time, he was familiar with the laws regulating the profession of real estate contained in chapter 475, Florida Statutes.8/ Petitioner testified that between 2005 and 2008, he worked as a real estate sales associate for Llorente Realty Group, under a supervising broker, Petitioner's cousin. While employed there as a Florida licensed real estate sales associate, Petitioner engaged in an illegal real estate fraud scheme which lead to his 2012 federal criminal conviction. On several occasions, Petitioner provided up to $150,000.00 of his own funds to make seven or eight improper short-term loans of approximately ten to 15 days each. Petitioner made a profit of approximately eight to ten percent per loan.9/ Petitioner testified that these transactions involved buying houses under an individual's name (the straw buyer) and, after closing, executing a quitclaim deed to transfer title of the property to one of the co-conspirators, to whom Petitioner had made the loan. The property was subsequently transferred to the co-conspirator's family trust, leaving the outstanding mortgage in the name of the straw buyer. When the straw buyer failed to pay the outstanding mortgage, the lender would initiate foreclosure proceedings against the straw buyer who was no longer in possession of the property. This fraudulent scheme was carried out against several lending institutions. After the lenders became aware of the scheme, a criminal investigation was initiated. The government characterized his involvement as a breach of his fiduciary duty. In mid-2009, Petitioner was notified that he was under federal investigation for his involvement in the "straw buyer" scheme. After finding out about the investigation, Petitioner began to have relationship problems with his wife and to abuse alcohol. This prompted him to see Rico, a licensed mental health counselor. On March 8, 2012, Petitioner was indicted on eight counts related to the bank fraud scheme. On October 12, 2012, Petitioner entered a plea of guilty and was adjudicated guilty of conspiracy to commit bank and wire fraud, a felony, in the United States District Court, Southern District of Florida, Miami Division, in case number 1:1220156CR-UNGARO. Resp. Ex. 1. Petitioner was incarcerated at Pensacola Prison Camp beginning March 1, 2013. Petitioner earned eight months' "gain time" off of his sentence. Additionally, while incarcerated, Petitioner completed the RDAP, Residential Drug and Alcohol Treatment Program, which qualified Petitioner for a 12-month reduction in his sentence. Due to these reductions and good behavior, Petitioner served only 32 months of his 57-month sentence in federal prison. During his incarceration, Petitioner also completed a nine-week wellness course on various subjects such as nutrition and exercise and worked at Naval Air Station Pensacola, Corry Station Naval Technical Training Center, and the Pensacola Prison Camp. On October 27, 2015, Petitioner was released to a halfway house and shortly thereafter began working for Navarro at Florida Yacht International as a clerk. On November 10, 2015, Petitioner became eligible for home confinement, and, by April 18, 2016, Petitioner completed TDAPT, a transition recovery program. On April 21, 2016, Petitioner was released from custody, and, on April 22, 2016, he was placed under supervised release, currently set to expire on April 21, 2019. Petitioner testified that he has paid $6,000.00 towards the restitution he owes in the amount of $6,567,496.00. As previously mentioned, this restitution is owed with several co- conspirators who are jointly and severally liable with him. Resp. Ex. 1, p. 5. Petitioner testified that he is up to date on required payments pursuant to the order of restitution. Navarro monitors and supervises Petitioner's work and is ultimately responsible for Petitioner under his own yacht broker license. Petitioner is also currently employed as a part- time driver for Uber. In compliance with the Related Concern Restriction of his criminal conviction, Petitioner has not been placed in a position of trust or responsibility over sums of money at Florida Yachts International. Petitioner stated that upon obtaining a job as a clerk with Florida Yachts International, Navarro was required to certify to Petitioner's supervisors through the halfway house that Petitioner "would not be dealing with any funds," pursuant to the "Related Concern Restriction" of Petitioner's Special Conditions of Supervision.10/ Resp. Ex. 1, p. 4; Resp. Ex. 4, p. 51. Following his release from incarceration, Petitioner continues to see Rico for therapy sessions on a monthly basis. Rico provided a letter of recommendation for Petitioner. As mitigation and in an effort to show his good moral character, Petitioner testified that he is not abusing alcohol anymore, has made substantial efforts to reconnect with his children, and has maintained a close relationship with his sister both before and after his incarceration. Licensed yacht salespersons are not restricted and may work under any licensed yacht broker. They may also switch their registered broker if they wish to work for someone else. Additionally, salespersons become eligible to apply for their own yacht and ship broker license after two years as a salesperson. A representative of Respondent, Chelisa Kirkland, testified for Respondent. A yacht salesperson's license is only required for the sale of used or pre-owned vessels in excess of 32 feet. Vessels less than 32 feet and new vessel sales of any size do not require a license. Kirkland confirmed that Petitioner's probation, or court supervision, does not end until April 2019. Applying the statutory and rule criteria, Respondent denied Petitioner's application for a yacht salesperson's license. More specifically, Respondent was concerned about the nature and seriousness of the federal crime, particularly because Petitioner held a professional real estate license at the time the criminal bank fraud offenses were committed. Additionally, as of the date of the application, Petitioner's government supervision and probation had not been completed, and there was a very significant amount of restitution still owed, in excess of $6,000,000.00. Finally, Respondent felt that there had not been a significant passage of time since the conviction in 2012. As a result of the totality of these circumstances, Kirkland recommended that Petitioner's application be denied. She acknowledged that her recommendation was based solely on the conviction for conspiracy to commit bank and wire fraud. She conceded that Florida law does not impose an "automatic" denial just because Petitioner owes restitution, is still under supervision, or was convicted of a federal crime.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Florida Condominiums, Timeshares, and Mobile Homes, confirm its previous denial and enter a final order denying Petitioner's application for a yacht salesperson's license. DONE AND ENTERED this 13th day of February, 2017, in Tallahassee, Leon County, Florida. S ROBERT L. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of February, 2017.
Findings Of Fact Frederick Hodgdon (Hodgdon) has held Florida real estate broker license 0206805 at all times pertinent to this case. Hodgdon is owner and qualifying broker for Pelican Realty of Marco Island, Inc., (Pelican Realty), through which Hodgdon conducts business and which also is named as a respondent. At all times pertinent, Pelican Realty has held Florida corporate real estate broker license 0223934. July 24 through August 6, 1984, respondents placed the following newspaper advertisement in the Sun-Daze: DO YOU KNOW ... that all Florida real estate brokers are agents for the seller and CANNOT legally propose any lower than listed prices or better terms for the benefit of the buyer? UNLESS ... the broker legally qualifies himself as an agent for the buyer. As a Buyer's Broker Pelican Realty CAN and DOES exactly this and a lot more! Buyers pay no fees or commissions. Call or send for our informative brochure, you will be glad you did. The real estate buyer's best bet for the best price is to have a Buyer's Broker. On February 19, 1986, respondents placed the following newspaper advertisement in the Marco Island Eagle: 1/ BUYER BEWARE! DON'T BUY REAL ESTATE ON MARCO ISLAND. ... before consulting an attorney or carefully reading Paragraph 5) and 7) of the 1985 Revision of the Sales Contract as approved by the Naples Area Board of Realtors and the Marco Island Area Board of Realtors and the Collier County Bar Association contract Revision Committee. The Contract states quote: "The Buyer has inspected the property sold by the Contract and there are no other inspections permitted or required. The property is acceptable in its AS IS condition as of date of this offer. INCREDIBLE! ... What happens to the unwitting Buyer who intends to have termite, structural and seawall inspections AFTER his offer is accepted? He just may have to buy a termite ridden house that needs a new roof and a seawall that is on the verge of collapse. Thats what! ... Taken at face value the Sales contract calls for the buyer to spend several hundred dollars for inspections BEFORE making an offer that may well be turned down. INCREDIBLE! .... Paragraph 7) states quote: "Buyer's decision to buy was based on Buyer's own investigation of the property and not upon any representation, warranty, statement or conduct of the Seller, or broker, or any of Seller's or broker's agents" (Excluding those rare occasions when the seller and his agents remain silent.) INCREDIBLE! ... The above subject sections of Paragraphs 5) and 7) of the 1985 Sales Contract in our opinion may well violate the Realtor's Code of Ethics Article 7) "to treat fairly all parties to the transaction." There is nothing Pelican Realty could say or do to better emphasize the Buyer's need to have an advocate on his side. ... As a Buyer's Broker we recommend striking out any and all terms and conditions of the Sales Contract that are prejudicial to the Buyer's best interests. ... Pelican Realty would appreciate the opportunity to discuss with any interested parties the many advantages of working with a Buyer Broker. Our services are at NO additional expense to the buyer. CALL US FOR FURTHER DETAILS. NOW!! On March 11, 1986, respondents placed the following newspaper advertisement in the Sun-News: CASH BACK FOR THE REAL ESTATE BUYER. THAT'S INCREDIBLE! Pelican Realty GUARANTEES CASH BACK to every buyer on every sale. The bigger the sale, the bigger the cash gift to the buyer. On top of this Pelican Realty (a Buyer's Broker) goes all out to get the lowest possible price for the buyer at NO additional cost to the buyer. Other realtors must get the highest price for the seller. The thousands you SAVE already belong to you. THINK ABOUT IT! Call us for further details NOW! "WE PAY OUR BUYERS TO DO BUSINESS WITH US" There is nothing false or fraudulent about the three advertisements. However, the following statements in the advertisements are deceptive or misleading in form or content: The representation in the July 24 through August 6, 1984, Sun-Daze advertisement that buyers pay no fees or commissions. In form, the buyer perhaps does not pay brokerage fees or commissions. But in substance, the buyer does indirectly pay his broker a brokerage fee or commission when the seller pays fees and commissions out of the proceeds of the sale. The representation in the July 24 through August 6, 1984, Sun-Daze advertisement that a buyer's broker "legally qualifies himself as an agent for the buyer." Although perhaps technically correct, this representation implies separate state regulation and qualification procedures for licensure as a buyer's broker. In fact and in law, any licensed real estate broker can become a buyer's broker simply by entering into an agreement with a buyer to be the buyer's broker. The representation in the March 11, 1986, News-Sun advertisement: "Other realtors must get the highest price for the seller." Read carefully in context, this representation is true--realtors other than those representing a buyer must try to get the highest price for the seller he represents (while being open, honest and fair to the buyer). But, as written, the representation could lead one to believe that the respondents have an ability no other realtors have when, in fact and in law, any realtor or other licensed real estate broker who represents a buyer can try to get the best price for the buyer. Although respondents have offered cash rebates, no client has seen the offer or asked for a rebate. Although respondents have maintained their innocence, they changed the ads to meet the criticism of the Department of Professional Regulation.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that the Florida Real Estate Commission enter a final order (1) reprimanding respondents, Frederick Hodgdon and Pelican Realty of Marco Island, Inc., and (2) fining them $500 each for violations of Section 475.25(1)(c), Florida Statutes (1985). RECOMMENDED this 21st day of July, 1987, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of July, 1987.
The Issue Whether Respondent committed five violations of the Yacht and Ship Brokers' Act, including the following counts: 1) failing to have the license of each salesperson in his employ prominently displayed in his principal place of business; 2) failing to place deposits received from clients pursuant to transactions involving yachts into a broker's trust account; 3) allowing a person licensed only as a salesperson to act as a broker and to use the broker's name to evade the provisions of the Yacht and Ship Brokers' Act; 4) failing to deposit funds into the broker's trust account within three working days of receipt of funds pursuant to a purchase contract by a salesperson licensed under him; 5) allowing a salesperson licensed under him to carry out acts which if committed by the broker would place him in violation of the Yacht and Ship Brokers' Act and the rules thereunder, such as violating the Notary Public Law, failing to exercise due professional care in the performance of brokerage services, and making substantial and intentional misrepresentations with respect to transactions involving yachts, as alleged in the Amended Notice to Show Cause, in violation of the Yacht and Ship Brokers' Act, Chapter 326, Florida Statutes, and if so, what penalty should be assessed.
Findings Of Fact Petitioner is the agency of the State of Florida charged with the responsibility to administer and enforce the Florida Yacht and Ship Brokers' Act, Chapter 326, Florida Statutes. The purpose of the Yacht and Ship Brokers' Act is to protect the consumer. A yacht broker is an individual who, in expectation of compensation, sells used boats in excess of 32-feet in length for other persons. In order to obtain a license to act as a yacht broker, an individual must submit an application, undergo a background check for moral character, submit a surety bond, and demonstrate to the Division that he has a trust account to place funds received in pending yacht transactions. Before being able to independently perform yacht brokering services as a yacht broker, an individual must spend two consecutive years as a yacht salesperson in a mentorship working under a broker. At all times relevant to this action, Respondent held a license with Petitioner to operate as a yacht broker. Respondent continues to be licensed as a yacht broker. In late 1995 and early 1996, Respondent operated his yacht brokerage business, Greg and Associates, from two locations. His main office was located in Rockledge, Florida, and a branch office was located in Sarasota, Florida. No brokers were present at the Sarasota location. Respondent operated the Sarasota branch office from his main office in Rockledge, Florida. He never visited the Sarasota branch office. Respondent viewed his relationship to the Sarasota branch office as an "escrow agent." Bullock, a salesman, had complete autonomy to run the Sarasota branch office. Respondent met Bullock only once, and he never met any of the other salesmen who operated out of the branch office. Respondent had only a commission arrangement with Bullock. Respondent sent checks for all commissions to Bullock, who deposited them in Bullock's company, Friar Tuck, Inc's., Barnett Bank business account. Respondent allowed Bullock to hire the other salesmen, to determine a commission arrangement with the other salesmen, and to disburse commissions to the other salesmen. Respondent did not know the commission arrangement with most of the salesmen in the branch office. On April 16, 1996, Respondent was interviewed in his office about some complaints that had been received concerning the operation of his Sarasota branch office. Among the salesmen working under Respondent's broker's license in his Rockledge office at that time were Darrell Lawson and Mark Salmuller. Respondent did not have the licenses of either of these two salesmen displayed. Both men were listed as active employees by Respondent. At all times relevant to this proceeding, Respondent maintained a broker's trust account, entitled Greg and Associates, d/b/a Yacht Brokerage USA, in the Rockledge branch of the Barnett Bank. At all times relevant to this proceeding, Chester Bullock, a yacht salesperson working for Respondent in Respondent's Sarasota branch office, maintained a business checking account entitled Friar Tuck, Inc., d/b/a Yachtmasters, in a Sarasota branch of the Barnett Bank. Bullock was listed as president of the company and was identified as a signatory on the account. This was not a proper broker's trust account, as Bullock, being a yacht salesman, could not have established such an account. In July 1995, Chester Bullock and Jeff Webb, salesmen in the Sarasota branch office, took an offer and received a $1,000.00 deposit from David and Cynthia Cislo, on a 1979 34-foot Marine Trade Trawler. Respondent's salesmen did not deliver the deposit to Respondent's trust account within three days of its receipt. The funds were deposited in Bullock's business checking account at the Sarasota branch of the Barnett Bank. Sometime later, the money was redeposited in Respondent's trust account. Bullock notarized the vessel bill of sale at the time of the closing, and received a commission on the sale. In November 1995, Bullock took an offer and received a $5,350.00 deposit from a Louisiana client, Charles Cosgrove, on a 1964 38-foot Chris-Craft Commander yacht. Respondent's salesman did not deliver the deposit to Respondent's trust account within three days of its receipt. On November 27, 1995, Bullock and Jeff Webber, Respondent's salespeople, acted as listing broker and salesperson, respectively, on the lease-purchase of the 1964 38-foot Christ Craft Commander by Cosgrove. Respondent never signed the brokerage sales record, which is the closing statement given to the lease-purchaser, Cosgrove, and was never identified as broker of record on any of the sales documents. Instead, the purchase-sale agreement lists Bullock as the broker, and the closing statement lists Bullock as the broker. Bullock acted as the notary public for the lease-purchase agreement. In January 1996, Bullock and Harold Raines, yacht salesmen in the Sarasota branch office, took an offer and received a $1,700.00 deposit from a client, Michael Hill, on a 1973, 53-foot Huckins yacht. The letterhead of the draft purchase and sales agreement, which stated "Yachtmasters" and a phone number for the Sarasota area, further indicated that Hill's offer was made through yacht salesmen at the Sarasota branch office. Respondent's salesmen did not deliver the $1,700.00 deposit to Respondent's trust account within three days of its receipt. Instead of delivering the $1,700.00 deposit to Respondent for deposit in Respondent's Rockledge broker's trust account, the check was delivered to Friar Tuck, Inc's., Sarasota account. Hill's deposit, which was supposed to be held in a trust account, intermingled with the other business funds of Bullock's account. Hill requested and received an oral extension from Bullock on his closing date to purchase the yacht. About a month later, Bullock notified Hill that the yacht was sold to another party. It was only after Hill threatened to sue Respondent, the responsible broker, and after Hill filed a complaint with Petitioner that Respondent refunded Hill his deposit. The Yacht and Ship Brokers' Act does not permit licensed salespeople to perform certain acts. It requires the employing broker to do them. An employing broker, a broker who holds the license of his salesperson, must make all trust account deposits and withdrawals of monies involved in a transaction brokered by the salesman. An employing broker is required to supervise the yacht transactions brokered by his salespeople and to sign closing statements, which itemize all charges and credits of the transaction for the client. Respondent minimized his own involvement in his Sarasota branch office and permitted his salesman, Bullock, to operate it. This enabled Bullock to sign as the broker a closing statement of the sale of a yacht, which is an action that should have been performed only by a broker. During the same time period that Respondent granted Bullock autonomy to supervise the Sarasota branch office, Bullock operated another business from the same location, Sarasota Marine and Maintenance Services, which did boat surveys and cleaned boats. Bullock was the president of Sarasota Marine and Maintenance Services. In early 1996, Wittman, a Colorado resident at that time, telephoned Bullock about the 1988, 34-foot Wellcraft Grandsport in the magazine advertisement placed by Bullock. Bullock sent Wittman a videotape of the yacht. After reviewing the videotape, Wittman did not think that it was the same yacht advertised in the magazine. Bullock admitted that the yacht in the videotape was not the same yacht advertised in the magazine, but claimed that it was a sister ship. Based upon Bullock's assurances that the sister yacht was in good condition and the results of a survey done by Bullock's company stating that the yacht was in good condition, Wittman purchased the yacht. Bullock acted as both the listing broker and the selling broker in the sale of the 1988, 34-foot Wellcraft Grandsport yacht to Boyd Wittman, the purchaser. Notwithstandng the fact that he was representing the seller, Bullock did not obtain the written consent of Wittman, the purchaser. Wittman wanted a registered surveyor to do a survey of the condition of the yacht, because Wittman lived out-of-state and wanted to avoid spending money to fly to Florida to inspect it. Bullock arranged for his own company, Sarasota Marine and Maintenance Services, to perform the survey. The survey was signed by Ernest Shaffer, who was identified as a Certified Marine Surveyor and Consultant with the Society of Accredited Marine Surveyors, the National Association of Marine Surveyors, and the National Marine Investigators. Ernest Shaffer was someone that Bullock hired to wash boats. He was not a certified surveyor, as he was held to be. When the yacht was delivered to Wittman in Colorado, he was shocked by the poor condition of the yacht. The interior, the cockpit, the exterior, the bilge, and the mufflers were all in poor condition. Wittman was expecting a yacht that he could take someone out on a lake with, and it was not in good enough condition. Wittman had to pay another $15,000 to $20,000 to repair the yacht to improve it to good condition. Repairs included replacing all of the interior of the cabin, replacing the port windshield, putting new mufflers in, fixing a transmission leak, fixing the air-conditioning, rebuilding the water pumps so that the engines cooled properly, and replacing the dry-rot wood on the main deck on the cockpit. In sum, Wittman purchased the yacht for $38,000, spent another $15,000 to $20,000 in repairs, and eventually sold it for $37,000. Bullock also quoted to Wittman a fee for shipping the yacht from Florida to Colorado for $1,500. Wittman thought the price was reasonable. When the yacht was finally shipped, it cost Wittman approximately $3,800, which he paid, because he had already bought the yacht and had to finish the transaction. Bullock acted as both the listing broker and the selling broker in the sale of a 1973, 34-foot Nautiline yacht to Ernest C. Shaffer, the purchaser. Bullock arranged for his company, Sarasota Marine and Maintenance Services, to perform the survey. The survey was signed by Ted Williams, who was identified as a Certified Marine Surveyor and Consultant with the Society of Accredited Marine Surveyors (SAMS), the National Association of Marine Surveyors (NAMS), and the National Marine Investigators. Neither Bullock, Ernest Shaffer, nor Ted Williams, his employees who signed the surveys of the yachts described above, was certified with NAMS or SAMS, two marine surveys accreditation associations. In the case of a 1973, 53-foot Huckins yacht, Bullock tried to sell the boat three times and took three simultaneous contacts on the same vessel. He took a contract from Michael Hill, a prospective purchaser, extended the closing date for Hill to March 6, 1996, and simultaneously had contracts for the same boat with the prospective purchasers Sam Bankester and Steven Kenneally, with the closing dates of February 29, 1996, and March 2, 1996, respectively. Ultimately, Steven Kenneally purchased the yacht. The terms of the contracts did not provide for simultaneous contracts on the same vessel. The prospective purchaser who did not come up with the money first lost out on the opportunity to purchase the yacht. In addition, the Hills, the prospective purchasers, had a difficult time obtaining their earnest money back from Bullock. In January of 1996, Raines, Respondent's salesman, showed Chris June, a North Carolina resident, a 1970, 42-foot Trojan Sea Voyager yacht named "Fantasia." June liked the 42- foot Trojan Sea Voyager and entered into a contract to purchase it through Raines and Bullock. Bullock recommended a surveyor, John Pomeroy, in St. Petersburg, Florida, to complete the survey. Pomeroy was, in fact, not certified with NAMS or SAMS. Bullock told June that the boat was in very good condition and that it was a great value. During the survey, June noticed that wood on the yacht was separating in the bow, and asked Bullock and Pomeroy about it. They explained that this was "wet/dry expansion" which occurs in yachts that sit for a long time and can easily be fixed with some screws and caulking. "Wet/dry expansion" causes wood in wooden yachts to start separating, according to Bullock and Pomeroy, due to the wet wood below the waterline and the dry wood above the waterline. The survey disclosed no substantial problems with the yacht. Relying on the statements of Bullock and Pomeroy, June purchased the "Fantasia" for $22,000, with money loaned to him by a relative. A month after purchasing his yacht, June was informed that his boat was sinking while moored at the dock. June had to hire a marine recovery company to recover the yacht, just before it was about to go completely under water. The yacht took on water in an area near the stern that was not well checked-out, where a basketball-sized wad of putty holding the corner together came loose. As the estimate to repair the boat was more than three times what the boat was worth, June sold it to a salvage yard for $2,500. However, the salvage yard defaulted on that payment. June has been making accelerated payments on his loan, and has the loan down to approximately $19,000. He made a claim against Respondent's surety bond and settled the action for a small amount from the bonding company. Respondent attended two all-day workshops hosted by the Petitioner's Section of General Regulation, which cover in detail how to display a license, to display trust accounts, to display broker's duties and responsibilities, and to display branch offices. Respondent was exposed to the statutes and rules which were violated. Respondent took a cavalier attitude towards following the requirements of the Act. On February 15, 1996, Petitioner entered a Final Order against Respondent in Docket No. YS95397, imposing a fine of $1,500 for Respondent's violation of the Act. Respondent used the name "Yachtmasters" for his Sarasota branch office without having a license issued in that name in violation of Florida law. In the case DBPR v. Chester C. Bullock, Docket No. YS97172 (December 11, 1998), the Petitioner charged Chester Bullock, a registered salesman, with five violations: Charge 1 - The Respondent acted as a broker when he was licensed only as a salesman. Charge 2 - The Respondent made substantial and intentional misrepresentations with respect to transactions involving yachts upon which people have relied. Charge 3 - The Respondent violated other laws governing transactions involving yachts, specifically, he violated Chapter 117, Florida Statutes, by notarizing signatures on documents in which he had a financial interest. Charge 4 - The Respondent failed to immediately deliver deposits received from clients for the purchase of yachts to the broker under whom he was licensed as a salesman. Charge 5 - The Respondent failed to exercise due professional care in the performance of brokerage services, such as recommending his own company as a surveyor to a client and representing it as being an accredited surveyor company, when it was not. Bullock was found guilty on all charges and assessed a civil penalty of $45,000 in that case and had his yacht salesperson's license revoked. The Petitioner has proven each of the violations by clear and convincing evidence. Respondent's explanations for his conduct is not credible.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division of Florida Land Sales, Condominiums and Mobile Homes enter a final order which: Finds Respondent guilty of the charges set forth in Counts 1, 2, 3, 4 and 5 of the Amended Notice to Show Cause. Respondent's broker's license is hereby revoked. The Division impose a civil penalty of $40,500, which is $500 for Count 1 and $10,000 each for Count 2, 3, 4, and 5. The Respondent shall immediately cease and desist from any violations of Chapter 326, Florida Statutes, and the administrative rules promulgated thereunder. DONE AND ENTERED this 18th day of June, 1999, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 18th day of June, 1999. COPIES FURNISHED: William Oglo, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-1007 Gregory Linnemeyer 613 Rockledge Drive Rockledge, Florida 32955 Philip Nowick, Director Division of Florida Land Sales, Condominiums, Mobile Homes Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399 William Woodyard, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399
The Issue Whether Petitioner owes sales and use tax (plus penalties and interest) to the Department of Revenue (Department), as alleged in the Department's November 1, 1999, Notice of Decision.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the Stipulations of Fact set forth in the parties' Joint Pre-Hearing Stipulation: 1/ Mr. Wiviott is a very successful, "hands-on" entrepreneur who presently owns approximately five or six businesses. Since 1958, when he and his brother opened a carpet store in Milwaukee, Mr. Wiviott has owned approximately 30 different businesses (including nine restaurants and a yacht service business), many of which he has sold "for literally millions of dollars of profit." Approximately two-thirds of the businesses that he has owned he has "started from scratch." There have been instances where Mr. Wiviott has invested in businesses that were in industries in which, at the time of his investment, he had no prior experience. In these instances, he overcame his lack of experience by being "extremely industrious" and doing "research." When Mr. Wiviott has needed to consider a "feminine viewpoint" in making a business decision, he has used Mrs. Wiviott, his wife of 43 years, as a "sounding board." For the past 35 years, William Becker has been Mr. Wiviott's accountant. In 1991 or 1992, Mr. Wiviott purchased two "brand new" boats as business investments. The boats were sold to Mr. Wiviott together as a package. Mr. Wiviott paid a total of $1.1 million for the two boats. The larger of the boats was a 63-foot sport fisherman. Although unfinished, it was seaworthy. Mr. Wiviott named this boat the "Choice One." Mr. Wiviott named the other boat, a 56-foot sport fisherman, the "Choice Too." Mr. Wiviott accepted delivery of the Choice One and Choice Too in the Bahamas. He did not pay any sales tax on his purchase of the boats. After accepting delivery, Mr. Wiviott brought the boats to Fort Lauderdale. In 1993, Mr. Wiviott explored the possibility of entering (for the first time) the yacht charter business. He spoke to various people involved in the industry, including two charter brokers (Bob Offer and Bob Saxon) and a charter yacht owner (Bernie Little). He also had discussions with Mr. Becker. Together, he and Mr. Becker made cost and revenue projections. He ultimately made a "value judgment" to go into the business. Mr. Wiviott retained the services of Mr. Offer to help him find a suitable yacht for the business. One of the yachts that Mr. Offer showed Mr. Wiviott was the Fifty-One, a Washington State-built, Fort Lauderdale- based "mega" yacht owned by an Italian national, Dr. Moretti. The Fifty-One's interior design made it particularly well suited for chartering. It had four levels, including a sky deck/lounge equipped with a complete kitchen (to complement the galley located on the bottom level). There were five staterooms that could comfortably accommodate ten charter guests. Each of the regular staterooms had its own head. The master stateroom had "his and her" heads. There was also a stateroom for the captain, as well as quarters for six other crew members (the number needed to properly service a charter party). The Fifty-One had not been well maintained during the time it had been owned by Dr. Moretti. Although Dr. Moretti had made the Fifty-One available for charter, the yacht had a poor reputation among charter brokers and, as a result, it just "sat at the dock," unchartered, while under Dr. Moretti's ownership. In October of 1993, Mr. Wiviott offered to purchase the Fifty-One from Dr. Moretti for $5.1 million, subject to a satisfactory marine survey and sea trial. Dr. Moretti initially rejected the offer, but subsequently agreed to sell the Fifty- One at Mr. Wiviott's offering price (which was considerably less than the $9 million that Dr. Moretti had paid for the Fifty-One a year and a half earlier). Before the deal was consummated, Mr. Wiviott contracted with a marine survey company, Patton Marine, Inc. (Patton), to perform a thorough inspection of the Fifty-One. Patton performed an extensive pre-purchase survey of the Fifty-One, which included various sea trials and other tests (conducted in Fort Lauderdale and off the Fort Lauderdale coast). The survey revealed that the Fifty-One had various "deficiencies." Most of these "deficiencies" were "small items" and were remedied before the sale was finalized. The most serious of the remaining "deficiencies" was the excessive amount of interior vibration. Notwithstanding the known "deficiencies" that remained, Mr. Wiviott thought that, at $5.1 million, the Fifty- One was a good buy. At worst, he believed, he "could make a pretty good profit" by reselling the Fifty-One. Mr. Wiviott retained Robb Maass, whom Mr. Wiviott was told was the "top marine attorney in the [Fort Lauderdale] area," to assist him in forming a Florida corporation which would purchase the Fifty-One and operate a yacht charter business. With Mr. Maass' assistance, B. W. Marine, Inc. (Petitioner) was organized under the laws of the State of Florida, effective January 20, 1994, with Mr. Wiviott as its sole officer, director, and shareholder. Petitioner's principal corporate address was, at the time of incorporation, and has remained, 757 Southeast 17th Street, #389, Fort Lauderdale, Florida 33316. On January 28, 1994, shortly after Petitioner's incorporation, Petitioner closed on the purchase of the Fifty- One. No Florida or other state sales tax was paid on the purchase. The newly purchased yacht (which had been registered in the Cayman Islands by the previous owner, Dr. Moretti) was immediately registered with the United States Coast Guard, and it thereafter began to fly an American flag. Based upon on Mr. Maass’ advice, Petitioner also took steps to obtain a "certificate of documentation with appropriate endorsement for employment in the coastwise trade" for the Fifty-One. It was not until the following year, however, that the United States Congress (passing a bill introduced by Florida Congressman E. Clay Shaw, Jr.) authorized the Secretary of Transportation to issue such a "certificate of documentation." 2/ After taking delivery of the yacht in the Bahamas, Petitioner imported the Fifty-One into Florida. It did so because Mr. Wiviott wanted the Fifty-One to be marketed in the south Florida area and to have access to the exceptional yacht repair and maintenance facilities that were available there. The South Florida area is where the "mega" yacht charter brokers (who, in most instances, effectively "make[] the decision [as to] which boat a charter client is going to use") are concentrated and where the reputation (or, as Mr. Wiviott put it in his hearing testimony, the "aura" or illusion") of a "mega" yacht is established (in part, by the owner, captain, and crew "pander[ing]" to the broker community during showings of the yacht). It is therefore important for a "mega" yacht available for charter to have a presence in the south Florida area so that it can seen by, and shown to, the "mega" charter brokers who are concentrated there. Although most "mega" yachts are marketed in Florida, "the chartering experience [generally occurs] elsewhere," in such places as New England (in the summer) and the Caribbean and Mediterranean (in the winter). Aware of this, Mr. Wiviott, at the time that the Fifty-One was imported into Florida, had no expectation that that the Fifty-One would be used exclusively for charters in Florida waters. Mr. Wiviott wanted the Fifty-One to be imported into Florida without Petitioner having to pay any use tax. Mr. Maass advised Mr. Wiviott that Petitioner would not have to pay Florida use tax if it registered with the Department as a "dealer" and used the Fifty-One "only . . . for bare boat charter[s]." Mr. Maass cautioned Mr. Wiviott that "[t]here could be no personal recreational use, no personal use aboard the boat whatsoever." Before importing the Fifty-One into Florida, Petitioner registered with the Department as a "dealer" that would be engaging in "bare boat" charter operations in Florida. Mark Newcomer was the first captain of the Fifty-One under Petitioner's ownership. Mr. Wiviott considered Captain Newcomer to be, not a "charter captain," but a "yard captain," that is, a captain "who specializes in repairs, maintenance and upgrades of yachts." Captain Newcomer was hired by Petitioner "to take delivery [of the Fifty-One] and to oversee the renovation and retrofit[ting] of the yacht." He was responsible for ensuring that the Fifty-One was brought up to American Bureau of Shipping (ABS) standards. Obtaining certification that the Fifty-One met ABS standards was an "essential part" of any campaign to effectively "market[] the boat" for charter. Mr. Wiviott did not have any intention of continuing Captain Newcomer's employment with Petitioner following completion of "the renovation and retrofit[ting] of the yacht." Captain Newcomer brought the Fifty-One into Florida on or about February 1 or 2, 1994, and docked it at a Fort Lauderdale marina (either Pier 66 Marina or the Bahia Mar Marina). On February 3, 1994, Captain Newcomer moved the Fifty- One to the Bradford Marine Shipyard (Bradford Marine), a Department-registered Fort Lauderdale repair facility able to service boats up to 150 feet in length. The Fifty-One underwent repairs and improvements at Bradford Marine until February 12, 1994, by which time the work that had to be done with it out of the water had been completed. At Bradford Marine, Petitioner had to pay a 20 to 30 percent "surcharge on all outside vendors that c[a]me in." On February 13, 1994, Captain Newcomer moved the Fifty-One to the Bahia Mar Marina (Bahia Mar), a more cost- effective location, to do (with the help of others) the remaining repair and improvement work on the yacht (which could be done with the yacht in the water). Because Captain Newcomer was "very good friends" with the dockmaster at the Bahia Mar, he and those he supervised were allowed to perform work on the Fifty-One (involving the use of noise-generating power tools) that would have otherwise been prohibited. The Fifty-One remained at the Bahia Mar until March 14, 1994, undergoing repairs and improvements. On March 15, 1994, Captain Newcomer, accompanied by Mr. and Mrs. Wiviott (and with less than a full crew), took the Fifty-One on a cruise to the Jockey Club, a "private club" that was part of a "condominium complex resort" located in Miami. He did so pursuant to the instructions of Mr. Wiviott, with whom he spoke to on a daily basis regarding the repair and improvement work that was being done on the Fifty-One under his (Captain Newcomer's) supervision. Mr. Wiviott wanted "to take the boat out to stretch it out [and to] see the progress that Captain Newcomer was making." Furthermore, Mr. Wiviott thought that it was important for Petitioner's charter business for the Fifty- One "to be seen." Near the Jockey Club, the Fifty-One ran aground "in the mud," where it "sat . . . for about eight hours until the tide came back in." After the Fifty-One arrived at the Jockey Club, divers "g[o]t under the boat and clean[ed] the prop[eller]s [and] clean[ed] the drivetrain." The Fifty-One remained docked at the Jockey Club for three days. On March 17, 1994, the Fifty-One returned to the Bahia Mar to undergo further repairs and improvements. By mid-April of 1994, the work necessary to bring the Fifty-One up to ABS standards had been completed. Petitioner therefore applied for, and on April 19, 1994, was issued, an ABS "Class Certificate." The Fort Lauderdale Charter Broker's Boat Show (1994 Boat Show) was held at Pier 66 Marina (Pier 66) from April 14, 1994 to April 20, 1994. The Fifty-One was one of the boats entered in the 1994 Boat Show, and it remained at Pier 66 for the entire show. Mr. Wiviott was aboard throughout the event to show the boat to charter brokers and others. Captain Newcomer helped Mr. Wiviott show the boat. Food and drinks were served. Fresh flowers adorned the boat. The crew wore their dress uniforms. After the end of each day's session, Mr. Wiviott stayed aboard the Fifty-One overnight in lieu of spending company money to rent a hotel room. Following the 1994 Boat Show, from April 20, 1994 until April 28, 1994, the Fifty-one was taken on a "shakedown" cruise to Key West and back to Fort Lauderdale, during which it was run at various speeds and systems were "overloaded" to determine whether they worked properly. At the time of the cruise, the Fifty-One was not equipped with all of the staff and other accoutrements necessary to provide the "five star service" that those who charter "mega" yachts pay to receive. During the cruise, the boat docked at the Ocean Reef Club, an exclusive private resort community in Key Largo; the Galleon Marina, a public facility in Key West; Fisher Island; and the Jockey Club. There were a "few breakdowns" during the cruise, including a "crane breakdown" at the Ocean Reef Club. With the help of vendors, the necessary repairs were made. Aboard during the cruise, in addition to Captain Newcomer and a partial crew, was Mr. and Mrs. Wiviott; Mr. Wiviott's brother, Howard Wiviott; Howard's wife; Mr. Becker, whose firm provided Petitioner with accounting services (primarily through the efforts of Stacey Torchon, one of its accountants); and Mr. Becker's wife. There was no marine surveyor, no representative of a registered repair facility, and no "mega" yacht charter broker aboard during the cruise. 3/ Mr. Becker and his wife did not remain aboard for the entire cruise. They disembarked in Key Largo on April 23, 1994. During the time that he was aboard, Mr. Becker spoke to Captain Newcomer and the crew about the financial and accounting procedures that needed to be followed in conducting Petitioner's charter operations, information that Mr. Becker could have provided by telephone from his California office. (Stacey Torchon, who was "more involved [than Mr. Becker] in the day-to-day operations" of Petitioner, never met personally with any Fifty-One crew member; rather, she communicated with the crew by telephone.) While they were aboard, Mr. Becker and the other guests Mr. Wiviott had invited to take part in the cruise (referred to, collectively, hereinafter as the "Invited Guests") ate, relaxed, and enjoyed the hospitality and ambiance. The Invited Guests' presence on the Fifty-One during the "shakedown" cruise was not solely for the purpose of furthering Petitioner's charter business. Mr. Wiviott was motivated by personal reasons in inviting them aboard. The assertion (made by Petitioner in its Proposed Recommended Order) that one of the purposes of the "shakedown" cruise was to determine, through the feedback given by the Invited Guests, "whether the Petitioner was delivering the chartering experience in terms of comfort, ambiance and service that people willing to spen[d] $50,000 per week would expect" simply does not ring true. Mr. Wiviott knew full well that the Fifty-One, with a "yard captain" at the helm and less than a full crew, was not equipped to provide such service. He did not need to take the "Fifty-One" on a lengthy cruise with family and friends to find this out. Had Mr. Wiviott really wanted to learn if the Fifty-One offered a "chartering experience" for which someone would be willing to pay $50,000.00, he would have asked "mega" yacht charter brokers, not family and friends, to come aboard the Fifty-One for a cruise and give him their feedback. On April 28, 1994, following the "shakedown" cruise, the Fifty-One returned to the Bahia Mar, where, in the ensuing days, defects discovered during the "shakedown" cruise were remedied. By May 7, 1994, the Fifty-One was ready for charter. The Fifty-One, at that time, was not the only vessel in Petitioner's fleet. Shortly after acquiring the Fifty-One, Petitioner had purchased (in Florida) the Choice One and Choice Too 4/ from Mr. Wiviott. Petitioner paid Mr. Wiviott $1,138,804.28 for the Choice One. Inasmuch as the purchase was made under Petitioner's sales tax exemption certificate (that Petitioner had obtained from the Department based upon its representation that it intended to use the Fifty-One exclusively for "bare boat" charter operations in Florida), no Florida sales tax was paid. At the time of the purchase, Mr. Wiviott envisioned that Petitioner would use the Choice One as a "chase boat" for the Fifty-One (from which charterers and guests could fish). The Choice One, however, was never used by Petitioner for this purpose because it turned out that it was not feasible to do so. The Choice One wound up sitting at the dock in Fort Lauderdale, leaving only "to be stretched" or moved to another docking facility by its captain (initially Steven Ernst and then later Carl Roberts). Before its sale by Petitioner in 1995, the Choice One was chartered on only one occasion, during which time it remained at the dock in Fort Lauderdale (positioned so that those aboard could view a passing "boat parade"). The Fifty-One was chartered on a more frequent basis. Of the 15 charters of the Fifty-One during the Audit Period, however, only two (the Gerardo Cabrera and Jean Foss charters) were in Florida waters. The Gerardo Cabrera charter was the first charter of the Fifty-One following the completion of the "renovation and retrofit[ting] of the yacht." It started in Fort Lauderdale on May 18, 1994, and ended in Fort Lauderdale on May 21, 1994. The captain of the Fifty-One for the Gerardo Cabrera charter was Jon Cheney, who had replaced Captain Newcomer on May 7, 1994. The charter agreement between Petitioner (as the "Owner") and Mr. Cabrera (as the "Charterer") was dated May 13, 1994, and read, in pertinent part, as follows: In consideration of the covenants hereinafter contained, the Owner agrees to let and the Charter[er] agrees to hire the Yacht from noon on the 18th of May 1994 to noon on the 21st of May 1994 for the total sum of $18,000.00 + expenses + 6% FSST ($1,080 Dollars) of which amount $18,000 + $1,080 + $5,000 (ADVANCE toward expenses) for a total of $24,080 shall be paid on the signing of this Agreement . . . . The Owner agrees to deliver the Yacht at Bahia Mar Yachting Centre, Ft. Laud. on the 18th day of May 1994 in full commission and working order, outfitted as a yacht of her size, type and accommodations, with full equipment, inclusive of that required by law, and fully furnished, including galley and dining utensils and blankets; staunch, clean and in good condition throughout and ready for service; and agrees to allow demurrage pro rata to the Charterer for any delay in delivery. . . . The owner's insurance policy does not cover Charterer's protection and indemnity during the term of the Charter. . . . * * * The Charterer agrees to accept the yacht delivered as hereinbefore provided and to pay all running expenses during the term of the charter. The Charterer, his agents and employees have no right or power to permit or suffer the creation of any maritime liens against the yacht, except the crew's wages and salvage. The Charterer agrees to indemnify the Owner for any charges or losses in connection therewith, including reasonable attorney's fees. * * * The Charter[er] agrees to redeliver the yacht . . . to the Owner at Bahia Mar Yachting Centre, Ft. Lauderdale, FL . . . . The Charter[er] agrees that the yacht shall be employed exclusively as a pleasure vessel for the sole and proper use of himself, his family, guests and servants during the term of this charter and shall not transport merchandise or carry passengers for pay, or engage in any trade nor in any way violate the Revenue Laws of the United States, or any other Government within the jurisdiction of which the yacht may be at any time, and shall comply with law in all other respects. * * * 11. It is mutually agreed that full authority regarding the operation and management of the yacht is hereby transferred to the Charter[er] for the term thereof. In the event, however, that the Charterer wishes to utilize the services of a Captain and/or crew members in connection with the operation and management of the yacht, whether said Captain and/or crew members are furnished by the Owner or by the Charterer, it is agreed that said Captain and/or Crew members are agents and employees of the Charterer and not of the Owner. In the further event that local United States Coast Guard or other regulations require the Owner exclusively to provide a Captain and/or crew, or the Owner wishes to provide his own Captain and/or crew, the Owner agrees to provide a Captain who is competent not only in coastwise piloting but in deep sea navigation, and to provide a proper crew. The Captain shall in no way be the agent of the Owner, except that he shall handle clearance and the normal running of the yacht subject to the limitations of this charter party. The Captain shall receive orders from the Charterer as to ports to be called at and the general course of the voyage, but the Captain shall be responsible for the safe navigation of the yacht, and the Charterer shall abide by his judgment as to sailing, weather, anchorages, and pertinent matters. The Charterer assumes total control and liability as if the Charterer were the owner of the yacht during the term of the charter. . . . This agreement, by "industry standard," is "considered a 'bare boat' charter agreement." On May 13, 1994, Mr. Cabrera (as "Employer") also entered into a separate "Yacht Employment Agreement" with Captain Cheney (as "Yacht Captain"). It provided as follows: WHEREAS, Charterer has under charter the yacht FIFTY ONE pursuant to his bare boat charter party agreement wherein it is Employer's obligation to furnish the said yacht with a competent master and crew; and WHEREAS, Yacht Captain is a competent master, having over two years' experience in the coastal and inland waters of FLORIDA and THE BAHAMAS and is able to furnish a crew for the management and navigation of the said yacht; and WHEREAS, the parties desire to reduce their agreement to written term; NOW THEREFORE in consideration of the premises and of the agreements hereinafter contained, it is agreed as follows: Employer hereby hires yacht Captain as the Master of the said yacht to act as such Master as long as the yacht is under charter to Employer. Yacht Captain agrees to furnish 6 crew men to assist in operating and navigating the said yacht. The Captain and crew, if any, shall be properly uniformed. The crew to comprise the following: [left blank] Yacht Captain shall be paid for his services and the services of his crew a total sum of TEN DOLLARS AND OTHER GOOD AND VALUABLE CONSIDERATION and Employer shall furnish the Yacht Captain and his crew, quarters and food, during the term of this Agreement. The term of this Agreement shall commence on the 18th day of MAY 1994, or at such time that the yacht shall be ready to sail pursuant to the bare boat charter party agreement with the Owner and shall terminate on the 21st day of MAY, 1994, unless sooner terminated by the termination of the yacht party agreement for any reason whatsoever. In the event that the yacht charter party agreement is sooner terminated, the Master and crew will receive a pro-rated share of the agreed compensation for their services. After collecting from Mr. Cabrera all the monies Mr. Cabrera owed under both the charter agreement and the "Yacht Employment Agreement," Rikki Davis (the broker representing Mr. Cabrera) handed these monies over to Mr. Offer (the broker representing Petitioner). (It is commonplace in the "mega" yacht chartering industry "to have the amount paid for the use of the vessel under [a] bare boat charter agreement and amount for the captain and crew paid together by the charterer as a lump sum."). Mr. Offer, in turn, forwarded the monies he was given by Ms. Davis to Petitioner. The Gerardo Cabrera charter was the only charter that took place before the captain and crew of the Fifty-One became employees of Papa's Yacht Services, Inc. (Papa's), Petitioner's sister corporation, which, like Petitioner, was incorporated in Florida and has maintained a Florida corporate address from its inception. Papa's was formed solely for the purpose of enabling Petitioner to be in "compliance [with] the bare boat charter concept." Papa's dealings with Petitioner was Papa's sole source of revenue. Petitioner paid Papa's a "management fee" for providing a captain and crew for the Fifty-One. Although the Fifty-One's captain and crew had become Papa's employees, Petitioner continued to pay for their health insurance and provide them with free room and board on the Fifty-One at all times during the Audit Period, except when the Fifty-One was under charter and the charterers provided the captain and crew with room and board. Having a full-time captain and crew aboard a "mega" yacht available for charter, even when the yacht is not under charter, is essential to conduct successful charter operations. The captain and crew must be available, on the vessel, to host the "mega" yacht charter brokers who come aboard between charters (sometimes with little or no advance notice) and to perform those everyday tasks necessary to maintain the vessel. To attract and keep qualified onboard personnel, it is necessary to provide them with, as part of their compensation package, free room and board on the "mega" yacht. Doing so is the "standard in the industry." The Fifty-One was chartered by Jean Foss from December 27, 1995 to January 3, 1996, approximately a year and a half after Papa's had become the employer of the Fifty-One's captain and crew. Ms. Foss cruised to the Bahamas during the charter. The charter originated and concluded in Fort Lauderdale. "[T]he only reason [the Fifty-One] was in Florida [for the charter was] because [Ms. Foss] wouldn't fly to the Bahamas." The charter agreement between Petitioner (as the "Owner") and Mr. Foss (as the "Charterer") was similar to the charter agreement into which Mr. Cabrera and Petitioner had entered. It was dated August 15, 1995, and read, in pertinent part, as follows: TERM, HIRE & PAYMENTS: In consideration of the covenants hereinafter contained, the OWNER agrees to let and the CHARTERER agrees to hire the Yacht for the term from 12 noon . . . on the 27th day of December, 1995 to 12 noon . . . on the 3rd day January, 1996 for the total sum of $44,800 + All Expenses of which amount $22,400.00 shall be paid on the signing of this AGREEMENT and the balance thereof as follows: remaining 50% deposit (US$22,400.00) and Florida State Sales Tax of 6% US$2,668 for a total sum of $25,088.00 due by 24 November, 1995. DELIVERY. The OWNER agrees to deliver the yacht to CHARTERER at Fort Lauderdale, Florida at 12 noon . . . on the 27th day of December, 1995, in full commission and in proper working order, outfitted as a yacht of her size, type, and accommodations, with safety equipment required by law, and fully furnished, including gallery and dining utensils and blankets; staunch, clean and in good condition throughout and ready for service, and agrees to allow demurrage pro rata to the CHARTERER for any delay in delivery. . . . * * * 5. RUNNING EXPENSES. The Charterer agrees to accept the yacht as delivered as hereinbefore provided and to pay all shipboard expenses during the term of the charter period. * * * 8. RE-DELIVERY and INDEMNIFICATION. The CHARTERER agrees to redeliver the yacht, her equipment, and furnishings, free and clear and of any indebtedness for CHARTERER's account at the expiration of this charter, to the OWNER at Fort Lauderdale, Florida at 12:00 noon on the 3rd day of January, 1996 in as good condition as when delivery was taken, ordinary wear and tear and any loss or damage for which the OWNER is covered by his own insurance, and CHARTERER's insurance (if any) set forth in Paragraph 3 of this AGREEMENT, excepted. . . . * * * 10. RESTRICTED USE. The CHARTERER agrees that the yacht shall be employed exclusively as a pleasure vessel for the sole and proper use of himself, his family, passengers and servants, during the term of this charter, and shall not transport merchandise, or carry passengers for hire, or engage in any trade, nor any way violate the Revenue Laws of the United States, or any other Government within the jurisdiction of which the yacht may be at any time, and shall comply with the laws in all other respects. * * * 12. CHARTERER'S AUTHORITY OVER CREW. It is mutually agreed that full authority regarding the operation and management of the yacht is hereby transferred to the CHARTERER for the term thereof. In the event, however, that the CHARTERER wished to utilize the services of a captain and/or crew members in connection with the operation and management of the yacht, whether said captain and/or crew members are furnished by the OWNER or by the CHARTERER, it is agreed that said captain and/or crew members are agents and employees of the CHARTERER and not of the OWNER. In the further event that local United States Coast Guard or other regulations require the OWNER exclusively to provide a captain and/or crew, or the OWNER agrees to provide a proper captain who is competent not only to coastwise piloting, but in deep sea navigation, and to provide crew, the captain shall in no way be the agent of the OWNER, except that he shall handle clearance and the normal running of the yacht subject to ports to be called at, and the general course of the voyage. The captain shall be responsible for the safe navigation of the yacht, and the CHARTERER shall abide by his judgment as to sailing, weather, anchorages, and pertinent matters. The captain and crew shall be selected by the CHARTERER with the approval of the OWNER or the OWNER's Agent. CHARTERER is aware that he has a choice of captains. CHARTERER has full right to terminate the captain and/or crew; however, replacements shall be hired as under Paragraph 12 of this AGREEMENT. . . . Ms. Foss also entered into a "Yacht Services Agreement." The agreement, dated August 16, 1995, was with Papa's, which agreed to provide a seven person crew for the Fifty-One for the charter period (December 27, 1995, through January 3, 1996). Ms. Foss, in turn, agreed to pay Papa's $11,200.00 for such crew services and, in addition, to provide the captain (Arthur "Butch" Vogelsang) and crew with food and quarters aboard the Fifty-One during the charter period. Petitioner collected and remitted to the Department the sales tax owed by Mr. Cabrera and Ms. Foss on their rentals of the Fifty-One. No Florida sales tax was due on any of the other 13 charters of the Fifty-One during the Audit Period because they all took place outside Florida. In the case of 11 of these 13 other charters, like in the Jean Foss charter, the charterer entered into a charter agreement with Petitioner for the rental of the Fifty-One, as well as a separate agreement with Papa's for employment of a captain and crew for a fee (that "represent[ed] the actual cost [to Papa's] of the crew"). Typically, the total amount due under both agreements was sent to Petitioner, and Mr. Becker's firm (which also provided accounting services to Papa's) "moved the [portion of the] funds" due Papa's to Papa's bank account. Two charterers during the Audit Period (Mutual of Omaha Marketing Company and Prince Faisal Aziz of Saudi Arabia) refused Mr. Wiviott's request that they enter into two separate agreements, one (with Petitioner) for the rental of the Fifty- One and another (with Papa's) for employment of a captain and crew. Instead, they insisted on signing a single document, a Mediterranean Yacht Brokers Agreement (or MYBA Agreement), wherein Petitioner agreed to provide both the Fifty-One and a captain and crew. Not wanting to lose the business, Mr. Wiviott, on behalf of Petitioner, entered into these MYBA Agreements, notwithstanding that he had been instructed by Mr. Maass "not [to] take MYBA contracts." The MYBA Agreement between Petitioner (as "Owner") and Mutual of Omaha Marketing Company (as "Charterer") was dated December 16, 1995, and provided that: the "charter period" would begin 12:00 noon on March 3, 1996, and end 12:00 noon on March 17, 1996; the "cruising area" would be the Caribbean; the "port of delivery" would be Guadeloupe; the "port of re- delivery" would be Grenada; the crew would consist of a captain and six other crew members; the charter fee would be $48,000.00 per week for a total (for 2 weeks) of $96,000.00; the "Advance Provisioning Allowance" would be $48,000.00; and the "delivery/re-delivery fee" would be $6,857.00. In addition, it contained the following "clauses," among others: CLAUSE 1 AGREEMENT TO LET AND HIRE The OWNER agrees to let the Yacht to the Charterer and not to enter into any other Agreement . . . for the Charter of the Yacht for the [s]ame period. The CHARTERER agrees to hire the Yacht and shall pay the Charter Fee, the Security Deposit, the Advance Provisioning Allowance and any other agreed charges in cleared funds, on or before the dates and to the Account specified in this Agreement. * * * CLAUSE 6 CREW The OWNER shall provide a suitably qualified Captain acceptable to the insurers of the Yacht and a suitably experienced Crew, properly uniformed, fed and insured. The OWNER shall ensure that no member of the Crew shall carry or use any illegal drugs on board the Yacht or keep any firearms on board (other than those declared on the manifest) and shall ensure that the Captain and Crew comply with the laws and regulations of any country into whose waters the yacht shall enter during the course of this Agreement. The MYBA Agreement between Petitioner (as "Owner") and Prince Aziz (as "Charterer") was dated March 19, 1996, and provided that: the "charter period" would begin 12:00 noon on April 2, 1996, and end 12:00 noon on April 9, 1996; the "cruising area" would be the Caribbean; St. Maarten would be the "port of delivery" and "the port of re-delivery"; the crew would consist of a captain and six other crew members; the charter fee would be $50,000.00; and the "Advance Provisioning Allowance" would be $10,000.00. It contained the following additional provisions, among others: 30. AGREEMENT TO LET The OWNER shall let the yacht for the charter period and agrees not to enter into any other agreement for the charter of the yacht for the same period, and agrees not to sell the yacht before completion of the charter period, unless otherwise agreed by the Charterer. * * * 32. CREW The Owner shall provide a properly qualified Captain approved by the insurers of the yacht and a properly qualified crew, uniformed and insured. . . . Upon the advice of Mr. Maass, Petitioner assigned to Papa's its MYBA Agreements with Mutual of Omaha Marketing Company and Prince Aziz. It also entered into "Bareboat Charter Agreements" with Papa's for the rental of the Fifty-One for the same periods covered by the MYBA Agreements (notwithstanding that the MYBA Agreements expressly prohibited Petitioner from doing so). According to what Mr. Maass told Mr. Wiviott, by Petitioner taking such action, "the MYBA contract[s] could be accepted without violating the requirement that [Petitioner] engage only in bare boat chartering." The written assignment of the MYBA Agreement with Mutual of Omaha Marketing Company was dated December 16, 1995, the same date as the MYBA Agreement, and read, in pertinent part, as follows: BW Marine owns the vessel "Fifty-One," a 125 foot motoryacht, bearing official number 1020419 (the "Vessel"); BW Marine entered into a Yacht Charter Party Agreement dated December 16, 199[5] (the "Charter") between BW Marine and Mutual of Omaha Marketing Company (Charterer"); BW Marine desires to assign to Papa's Yacht Services, and Papa's Yacht Services agrees to accept, all BW Marine's right, title, and interest in and to the Charter; NOW THEREFORE, in consideration of the premises, the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: Assignment BW Marine assigns to Papa's Yacht Services all its right, title, and interest in and to the Charter. Papa's Yacht Services accepts the assignment and assumes all obligations of BW Marine under the Charter. Payment For administrative convenience, Charterer shall pay BW Marine the charter hire under the Charter. BW Marine, in turn, shall remit the surplus of these funds over the lease amount due from Papa's Yacht Services to BW Marine under that certain Bare Boat Charter Agreement between the parties of even date herewith. . . . Mutual of Omaha Marketing Company was not a signatory to this written assignment (and no other document offered into evidence reflects that Mutual of Omaha Marketing Company consented to the assignment). 5/ The written assignment of the MYBA Agreement with Prince Aziz was dated March 19, 1996, the same date as the MYBA Agreement. It was identical to the December 16, 1995, written assignment of the MYBA Agreement with Mutual of Omaha Marketing Company (with the exception of the dates contained therein). Prince Aziz was not a signatory to this written assignment (and no other document offered into evidence reflects that Prince Aziz consented to the assignment). The first "Bareboat Charter Agreement" between Petitioner (as "Owner") and Papa's (as "Charterer") was dated December 16, 1995, and provided, in pertinent part, as follows: Owner owns the vessel "Fifty-One," a 125 foot motorcoach bearing official number 1020419 (the "Vessel"); and Charterer desires to charter the Vessel from Owner and Owner is willing to make the Vessel available to Charterer for such purpose, subject to the terms and conditions contained herein. NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: Term Owner agrees to let and Charterer to hire, the Vessel for a term commencing March 3, 1996, and ending March 17, 1996. Payment Charterer shall pay Owner charter hire of One Hundred Two Thousand Eight Hundred Fifty Seven Dollars ($102,857.00), plus state sales tax, if applicable. Control The Vessel is chartered on a bare boat or demise basis. Owner hereby transfers to Charterer full authority regarding the operation and management of the Vessel for the charter term. Charterer is solely responsible for retaining a master and crew. Guest Limitation When the Vessel is underway, the number of persons on board the Vessel, other than the master and crew, shall be limited to the Charterer (or the Charterer's representative, if Charterer is a corporation) and twelve (12) guests. * * * Delivery Owner agrees to deliver the Vessel at Guadeloupe. Redelivery Charterer shall redeliver the Vessel to Owner at Granada at the end of the charter term, in as good condition as when delivery was taken, ordinary wear and tear excepted. . . . * * * 9. Expenses Charterer shall pay all running expenses during the term of the charter. Charterer shall pay for routine maintenance and repair of the Vessel during the charter term. * * * 12. Non-Assignment Charterer agrees not to assign this Agreement or subcharter the Vessel without the consent of the Owner in writing, which Owner may withhold in Owner's sole discretion. . . . The second "Bareboat Charter Agreement" between Petitioner and Papa's was dated March 19, 1996, and was identical to the first "Bareboat Charter Agreement" between them (with the exception of the charter period, charter cost, and delivery/redelivery locations). The evidence is insufficient to support a finding that Papa's ever entered into a sub-charter agreement with either Mutual of Omaha Marketing Company or Prince Aziz. Both Mutual of Omaha Marketing Company and Prince Aziz paid Petitioner the entire charter fee prescribed under their respective MYBA Agreements. They did not make any payments to Papa's. Petitioner paid Papa’s a “management fee” for providing the captain and crew during these charters. On one of the 15 charters during the Audit Period, Mr. Wiviott was aboard the Fifty-One as a guest of the charterer, the Choice Meat Co., Inc., a company that he and his son, Greg Wiviott, owned. Choice Meat Co., Inc., paid the "going charter rate" for the rental, but no broker's commission because "there was no broker to pay." There were occasions during the Audit Period, when the Fifty-One was not under charter, that Mr. Wiviott, members of his family (including his wife; children; grandchildren; his bother, Howard; and Howard's wife), and his friends used the Fifty-One outside Florida for non-business-related, personal purposes, sometimes for "one or two weeks at a time." For instance, in June of 1994 (after the Gerardo Cabrera charter and before the next charter, which began on July 21, 1994), when the Fifty-One was in New England, the Wiviott family was aboard for approximately "a couple of weeks." At the end of that summer, just before the Fifty-One returned from New England to Fort Lauderdale, the family again used the Fifty-One, this time "for a week or so." In November of 1994, around the Thanksgiving holiday, the Fifty-One traveled to the Caribbean so that the family could use it there for recreational purposes. The Fifty-One remained in the Caribbean for ten to 14 days with the family aboard. After the Wiviott children and grandchildren got off, the Fifty- One went on to the Virgin Islands, where Mr. and Mrs. Wiviott's friends came aboard and were entertained by the Wiviotts. In January of 1995, some time "shortly after the 1st," when the Fifty-One was in St. Maarten (where it was based for the winter), the Wiviott family once again spent time aboard the Fifty-One. The foregoing instances of out-of-state, non-charter, non-business-related use of the Fifty-One by the Wiviott family occurred when Captain Cheney was in command of the vessel. The Wiviott family continued to make such use of the Fifty-One during the time Captain Elario was captain. When Captain Elario took over the Fifty-One in St. Lucia (from Paul Canvaghn, who had been captain for only a day or two), Mr. and Mrs. Wiviott were aboard the vessel. They remained on board for approximately a week as the Fifty-One cruised the Caribbean. During that week, Mrs. Wiviott swam, laid in the sun, relaxed, and ate meals prepared by the Fifty- One's chef. She did not perform any tasks designed to further Petitioner's charter business. Subsequently, while Captain Elario was still captain, Mr. and Mrs. Wiviott took a non-charter, non-business-related trip on the Fifty-One to the Bahamas. Also during the time Captain Elario was captain, when the Fifty-One was in Hilton Head, South Carolina, Mr. Wiviott's brother, Howard, and Howard's wife, came aboard, and they remained on the yacht as it traveled to Norfolk, Virginia. Howard and his wife did not perform any tasks designed to further Petitioner's charter business while aboard the Fifty- One. Mr. and Mrs. Wiviott's daughter, along with her two young children, stayed overnight on the Fifty-One when, while under Captain Elario's supervision, it was docked at the Capital Marina in Washington, D.C. During the daughter's and children's stay, there was a party celebrating the youngest child's birthday. Indicative of the amount of time that Mr. and Mrs. Wiviott spent aboard the Fifty-One were the clothing and other personal items that (as a convenience) they stored (in a locker) on the Fifty-One (so that they would not have to bring these items with them each time they boarded the vessel). (These items were moved from the locker to another area on the Fifty- One, when necessary, to accommodate charterers using the stateroom in which the locker was located). Whenever the Fifty-One returned to Florida, it underwent needed repairs and maintenance. It also cruised the waters of the south Florida area, docking at various facilities. It did so not only "to be stretched," but to gain additional exposure among "mega" yacht charter brokers. In addition, while in Florida, the Fifty-One was stocked with supplies and provisions (including rack of lamb, veal, lobster tails, baked goods, gourmet foods, specialty items, wines, bath and beauty products, and party supplies) to be available for use by those on board when the Fifty-One was outside Florida, including not only charterers (such as Mutual of Omaha Marketing Company and Prince Aziz) and their guests, but also Mr. Wiviott, his family, and friends (when they were on board the Fifty-One for non-business-related, personal purposes). The Fifty-One, while in Florida, was also provided with fuel for charter, as well as non-charter, non-business related, trips outside Florida. Petitioner's charter business proved to be unprofitable. Expenses far exceeded revenues. (Petitioner, however, was able to sell the Fifty-One for more than the purchase price it had paid, receiving approximately $5.7 million, excluding commissions, for the Fifty-One in February of 2000.) By letter dated October 11, 1996, the Department informed Petitioner that it was going to audit Petitioner's "books and records" for the Audit Period. Petitioner was selected for audit because it had reported only a relatively small amount of taxable charter revenue on the Florida sales and use tax returns it filed during the Audit Period. The Department's "audit findings" were that the Fifty-One "was purchased for [a] dual purpose, for leasing and to be used by the shareholder" and therefore "the vessel and other purchases [made by Petitioner during the Audit Period under its sales tax exemption certificate, including its purchase of the Choice One] are taxable at the cost price." Based upon these audit findings, the Department issued a Notice of Intent to Make Audit Changes, in which it advised Petitioner that Petitioner owed $430,047.95 in sales and use taxes, $215,023.97 in penalties, and $169,672.70 in interest through July 18, 1997, for a total of $814,744.62, "plus additional interest of $141.39 per day . . . from 07/18/97 through the date [of] payment." By letter dated April 22, 1998, Petitioner protested the Department's proposed assessment. On November 1, 1999, the Department issued its Notice of Decision sustaining the proposed assessment and announcing that, as of October 6, 1999, Petitioner owed the Department $929,270.52, with "interest continu[ing] to accrue at $141.39 per day until the postmarked date of payment." Petitioner subsequently filed a Petition for Chapter 120 Administrative Hearing on the Department's proposed action.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order sustaining its assessment against Petitioner in its entirety. DONE AND ENTERED this 26th day of October, 2001, in Tallahassee, Leon County, Florida. 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 26th day of October, 2001.
Findings Of Fact Respondent Heidt Neil "Cap" Fendig, Jr., and his corporate alter ego, Go Fish, Inc., do business under the name Golden Isles Charter Company. Aside from operating the marina he leases on St. Simons Island, Georgia, Mr. Fendig hires out as a captain (for $175 a day), arranges charters, and acts as a yacht broker in Georgia. When Kirby J. Bourgeois acquired the Westwind, a 55-foot "Ocean Super Sportfisherman," the man to whom the boat had previously belonged recommended respondent to Mr. Bourgeois, an Oklahoman who knew little about boats, as somebody who could assist him. When Messrs. Fendig and Bourgeois met on October 5 or 6, 1990, respondent agreed to register the Westwind in the name of a corporation (Mandela Corp.) Mr. Bourgeois specified, and to equip the boat in accordance with Coast Guard requirements. Later he took Mr. Bourgeois out on "training trips." For each of these services, respondent prepared invoices which Mr. Bourgeois paid in due course. Around Thanksgiving of 1990, Mr. Fendig acted as the Westwind's captain on a cruise Mr. Bourgeois took to the Bahamas. They left the boat docked in Marsh Harbor. In January of 1991, Mr. Bourgeois told Mr. Fendig on the telephone that he wanted to sell the Westwind. At that time, if not before, Mr. Fendig mailed Mr. Bourgeois a packet of information about selling boats, which included a form yacht brokerage agreement. Instead of signing the yacht brokerage agreement, Mr. Bourgeois decided to show the Westwind at the Third Annual Brokerage Yacht Show in Miami Beach, one of the alternatives Mr. Fendig had suggested. Mr. Fendig, who had once inquired of petitioner DBR about obtaining a Florida yacht broker's license, and been told he was ineligible because he lived and worked out of state, advised Mr. Bourgeois that he was not licensed in Florida and could not act as a yacht broker in Florida. From conversations he had with petitioner's employees at the time he discussed obtaining a Florida license, Mr. Fendig understood that Florida law permitted him to accompany and assist yacht owners in the sale or purchase of yachts in Florida so long as he did not buy or sell as an owner's agent. Mr. Fendig agreed to bring the Westwind over from Marsh Harbor for the show, which began on February 14, 1991, a Thursday. On January 23 or 24, 1991, respondent sent Mr. Bourgeois a facsimile transmission, described as confirmation of a telephone conversation, in which he wrote: "As per your instructions, I will transport the boat to the Miami show and look for your arrival in Miami at [sic] sometime during the show." Petitioner's Exhibit No. 4. Although Mr. Bourgeois had informed respondent "that he would not be able to be there the first day" (T.24), Mr. Fendig arrived before the show began. He also filled out a form application and a contract for exhibit space, Petitioner's Exhibit No. 3, which, together with the application fee, had reached Yachting Provisions, Inc. in Ft. Lauderdale, on February 1, 1991. Mr. Bourgeois, whose name did not appear on the application and contract, later reimbursed him the fee. Reportedly delayed by a snowstorm, Mr. Bourgeois did not reach Miami before Saturday evening. Until Mr. Bourgeois arrived, Mr. Fendig stayed with the boat, moored at slip 221 on Collins Avenue. Available to anybody who visited the Westwind while he was on board were copies of his business card, which included the words "YACHT SALES-YACHT MANAGEMENT." Petitioner's Exhibit No. 6. Also available to show goers (including those to whom respondent never spoke) were one page fliers describing the Westwind and concluding: "Asking $350,000 Looking for serious offers contact H. N. "Cap" Fendig, Golden Isles Yacht Sales & Charter Co. 912 638-7717 St. Simons Island, Ga." Petitioner's Exhibit No. 5. Respondent had asked his brother to make up this flier. Like other paid captains, respondent told anybody who inquired the owner's asking price. When, on the first day of the boat show, investigators in petitioner's employ posed as potential buyers, Mr. Fendig told them they would have to speak to the owner, who would be arriving later in the show. He told "everybody that, if they wanted to make an offer, the owner was coming and they could drop by later in the show and . . . talk to him." T. 36. While at the boat show, Mr. Fendig slept on the boat, which was an economic benefit for him, at the same time it afforded the vessel a measure of security, which was an economic benefit for the owner. Mr. Bourgeois paid him for bringing the boat to Miami Beach, but not for the time he spent there. He had wanted to go to the boat show for his own purposes, in any event. The yacht show closed on Monday without the Westwind's changing hands. Mr. Bourgeois still owned the Westwind on March 11, 1991, when he signed a yacht brokerage agreement with respondent Fendig. Petitioner's Exhibit No. 7. Before that time Mr. Fendig had no agreement for or expectation of any compensation on account either of the Westwind's sale or of his efforts to accomplish a sale (other than bringing the boat to Miami, for which he received a fixed amount.)
Recommendation It is, accordingly recommended that petitioner dismiss the notice to show cause. RECOMMENDED this 5th day of December, 1991, in Tallahassee, Florida. ROBERT T. BENTON, II 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 5th day of December, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-3108 Petitioner's proposed findings of facts Nos. 1, 2, 3, 4, 5, 8, 9, 11, 12, 13, and 14 have been adopted, in substance, insofar as material. With respect to petitioner's proposed finding of fact No. 6, he was off and on the boat during the last two days. Before Mr. Bourgeois' arrival, it had been necessary to stay with the boat for security reasons. With respect to petitioner's proposed finding of fact No. 7, the proof did not show that anybody asked the owner's name, address or phone number. Respondent testified he did not distribute this information because it "wasn't necessary, because the owner was going to be there." T.36. With respect to petitioner's proposed finding of fact No. 10, the taking of evidence had closed and respondent was making legal argument. With respect to petitioner's proposed finding of fact No. 15, respondent (who appeared pro se) answered a speculative question about what "could" happen. COPIES FURNISHED: Thomas Bell, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32399-1007 H. N. "Cap" Fendig 205 Marina Drive St. Simons Island, GA 31522 Henry M. Solares, Director Florida Land Sales, Condominiums and Mobile Homes 725 South Bronough Street Tallahassee, FL 32399-1000 Donald D. Conn, General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32399-1000
Findings Of Fact Petitioner is a Swiss national, who resides in Jamaica. His business in Jamaica involves water sports and vacation tours, primarily for European tourists. Petitioner attended a boat show in Fort Lauderdale, Florida, in order to locate a suitable boat for entertainment and tour purposes for use by his business in Jamaica. There, he saw The Lady, a vessel being brokered by Anchorline Yacht and Ship Brokerage, Inc., of St. Petersburg, Florida. On February 28, 1980, Petitioner purchased The Lady from Anchorline for $120,000. Prior to that date, a survey was conducted by Wilkinson Company, marine surveyors, and repairs indicated by that survey were completed at South Pasadena Marina, Inc. At the time that Petitioner purchased The Lady from Anchorline, he advised the broker that he was taking the vessel out of the country. Accordingly, the broker required Petitioner to sign an affidavit that Petitioner had read the provisions of Section 212.05, Florida Statutes, and no tax was collected on the sale and purchase of The Lady. As The Lady was journeying from St. Petersburg across the State of Florida to West Palm Beach in order to reach Jamaica, she started taking on water. She was taken to Lantana Boatyard, where another marine survey was conducted. That survey concluded that The Lady was not seaworthy and, therefore, could not be taken to Jamaica at that time. As one of the required repairs, her engines needed to be overhauled by Cummins in Miami. Accordingly, after the repairs to be made at the Lantana Boatyard were completed, The Lady was taken to the Keystone Point Marina in North Miami, Florida, so that the work on her Cummins engines could be undertaken. During this time, Petitioner attempted to register The Lady in Jamaica; however, the Jamaican Government refused to license or register the vessel since she was not in Jamaica but was still physically located within the State of Florida. As a result of discussion between Petitioner and a Mr. Mathews at Anchorline, on September 18, 1980, the Petitioner made application for a Florida boat Certificate of Title at a tag agency. He reported the purchase price as ten dollars and, accordingly, paid forty cents tax on the transaction. Cummins started the repair work necessary on The Lady's engines while she had been docked at the Keystone Point Marina. On occasion, Petitioner has stayed overnight on The Lady for security purposes. He has had a telephone attached to the vessel for his personal use while on board. On January 7, 1981, Respondent Department of Revenue issued a Warrant for Collection of Delinquent Sales and Use Tax against the Petitioner in the total amount of $9,967.37, representing the follows: Tax $4,799.60 Penalty 4,799.60 Interest 350.17 Filing Fee 18.00 $9,967.37 On January 19, 1981, Petitioner made payment to Respondent Department of Revenue in the amount of $5,167.77, which payment was made under protest and which payment represents the amount of tax, interest, and filing fees, but does not include the amount of penalty. Pursuant to its warrant, the Department of Revenue has chained The Lady to the dock at the Keystone Point Marina. Accordingly, the work being performed by Cummins on her engines has not been completed, and no sea trial can be conducted. As stipulated by the parties, since the Petitioner purchased The Lady, she has been under repair and has never left Florida waters.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is therefore, RECOMMENDED THAT: A final order be entered denying Petitioner's claim for a refund, finding the Petitioner liable for a sales tax equal to four percent of the purchase price, together with interest and filing fees, but finding the penalty assessed against Petitioner to be erroneous and therefore invalid. DONE AND ENTERED this 8th day of October 1981 in Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of October 1981. COPIES FURNISHED: Michael Lechtman, Esquire 801 N.E. 167th Street, Suite 301 North Miami Beach, Florida 33162 John Browdy, III, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32301 Mr. Randy Miller Executive Director Department of Revenue 102 Carlton Building Tallahassee, Florida 32301 The Honorable Gerald A. Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32301
Findings Of Fact Notices to Show Cause were issued by the Department against Roy D. Mathew, and William Gannaway on April 9, 1976. (See: Agency Exhibits 1 and 2). The final hearing was scheduled by notice dated May 12, 1976. (See: Agency Exhibit 3). Roy D. Mathew, d/b/a Anchorline Yacht Brokerage holds Yacht and Ship Broker License No. 12433, issued by the Department on December 18, 1975. (See: Agency Exhibit 5). Mathew has at all material times held a yacht and ship broker license issued by the Department. William G. Gannaway holds Yacht and Ship Salesman License No. 12657, issued by the Department on December 18, 1975. (See: Agency Exhibit 4). Gannaway has at all material times held a yacht and ship salesman license issued by the Department. Gannaway has at all material times served as a yacht and ship salesman for Roy D. Mathew and Anchorline Yacht Brokerage. Prior to July, 1975, R. A. McKenzie, the owner of a yacht called The Anokone, decided to sell the yacht. The yacht was housed at Anchorline Yacht Brokerage in St. Petersburg, Florida, and McKenzie agreed to pay Anchorline a commission for selling the yacht. On or about July 8, 1975, Jean C. Noll, a resident of Jacksonville, Florida, saw the yacht, and believed that it was the sort of vessel that she and her husband had been looking for. She entered into a purchase agreement with the understanding that her husband, the Reverend Joseph E. Noll, Jr., would have the opportunity to make a personal inspection. William G. Gannaway represented Anchorline Yacht Brokerage in the transaction, and received a deposit from Mrs. Noll. (See: Agency Exhibit 6). On or about July 15, 1975 Reverend Noll came to St. Petersburg from Jacksonville and inspected the yacht. Gannaway at that time advised Reverend Noll that the starboard engine on the yacht was broken down and would require extensive repairs. Reverend Noll liked the yacht, and hired the Wilkinson Company to conduct a survey of the yacht. Dean Greger conducted the survey on behalf of the Wilkinson Company. A very thorough inspection was performed by Greger. He made 24 recommendations respecting & repairs, some of which were significant, and some of which were minor. He was not able to conduct a sea test of the vessel because of the broken down engine. His report was issued on July 22, 1975. (See: Agency Exhibit 7). McKenzie was somewhat disturbed about the large number of discrepancies, and he offered the following alternatives to the Nolls: He would sell the boat "as is" for $15,000; he would sell the boat "as is" with a new starboard engine installed for $17,000; or he would sell the boat for $19,500 with a new engine, with him making all additional repairs up to $1,000 and with all remaining repairs being split evenly three ways between the Nolls, McKenzie, and Anchorline. The Nolls accepted the latter option, and a contract reflecting it was signed. (See: Agency Exhibit 28). All work was to be performed at Whistlers Yacht Service, Inc., which was located adjacent to Anchorline. Shortly after July 22, 1975, it became apparent that a new replacement starboard engine could not be obtained, because the engine was no longer in production. Gannaway advised the Nolls that Whistlers indicated to him that they could replace the "shortblock" of the engine, rebuild the engine, and that they would stand by their work. Gannaway told the Nolls that he thought the rebuilt engine would carry a one year guarantee. Reverend Noll believed that the guarantee would be for no more than 90 days, and he agreed to a rebuilt engine rather than a new engine. Extensive work was performed by Whistlers Marina, and more than $2,100 was paid to Whistlers to perform the repairs. (See: Agency Exhibits 14, 22, 23, 24, 25). Dean Greger conducted a supplemental survey, including a sea test of the vessel on or about August 14, 1975. Fourteen of the 24 discrepancies noted in the original report were found to have been satisfactorily corrected. It was noted that the generator, the depth sounder, the auto pilot, the signal horn, the marine air conditioning, and the docking lights were not performing properly. (See: Agency Exhibit 8). The Nolls were aware of these problems when they closed the transaction and purchased the yacht on approximately August 20, 1975. The closing took place at a Federal Credit Union in Jacksonville. No representative of Anchorline was present at the closing. Following the closing the Nolls took possession of the yacht, and renamed it "Escape Hatch II". The Nolls were advised by several persons, including personnel at Whistlers Yacht Basin, and personnel at Anchorline, that they should familiarize themselves with the vessel in the immediate area prior to their taking any long excursions. The Nolls nonetheless left St. Petersburg in early September to return to Jacksonville. On this return trip the Nolls experienced many mechanical difficulties. Major repairs needed to be performed on the vessel in Ft. Myers (See: Agency Exhibit II), and minor repairs were performed in Stuart and Melbourne (See: Agency Exhibits 12 and 13). Upon return to Jacksonville major repairs were required and are continuing to be performed. (See: Agency Exhibits 16, 17, and 27). It is apparent that the starboard engine was not properly repaired, and that considerable dry rot remained on the vessel. The Nolls are presently engaged in litigation respecting their liabilities in connection with the vessel. Whistlers disclaimed any liability for making repairs, but Mrs. Coe, the general manager at Whistlers testified that she would have performed any repairs within 90 days if the vessel had been returned to the yacht basin. Mr. Gannaway and Mr. Mathew had sound reason to believe that there were no discrepancies respecting the operability of the yacht other than those set out in the marine surveys. Mathew and Gannaway had sound reason to believe that all of the repairs required to rectify these discrepancies had been performed at Whistlers. There was no evidence offered to show that either Gannaway or Mathew intentionally misstated any facts to the Nolls, or that they knew or should have known that any statements they made to the Nolls were false. There was no evidence to establish that Mathew had any personal knowledge of any of the dealings or discussions between Gannaway and the Nolls.
Findings Of Fact The claim imposed by the Department of Revenue stems from an audit conducted by Mr. George Thomas Lloyd, Jr., an employee of the Department of Revenue. Mr. Lloyd examined the books of the corporation and the receipts for items purchased and compiled a ledger of particular items which, in Mr. Lloyd's opinion, were not parts of the ship and upon which a use tax was due. At the hearing on this case this ledger was introduced as Joint Exhibit No. 1. It is a composite exhibit consisting of 157 pages. This ledger reflects purchases in the amount of $1,953,426.13 upon which the Department of Revenue claims tax is due. The total tax claimed by the Department of Revenue is $72,630.19 for taxes, penalties, and interest through February 16, 1976. The Petitioner is a Norwegian corporation with principal offices located in Oslo, Norway, and an office in Miami at Biscayne Boulevard. Petitioner owns three cruise vessels of Norwegian ownership and registration which sail out of the port of Miami, Florida to ports in the Caribbean. These cruises last several days. The parties have agreed that the Petitioner is in the exclusive business of transporting passengers and goods in foreign commerce. Mr. Lloyd, who conducted the audit above mentioned, testified that he prepared Joint Exhibit No. 1 by evaluating the items described in the corporation's records and used his own independent judgment in a determination as to whether those items were, or were not, parts of a vessel. If he determined they in fact were not parts of the vessel, he concluded that a use tax was owed to the State on the purchase price of those items. Mr. Lloyd stated that his determination as to whether a particular item was indeed a part of a ship was based on his independent judgment which was largely a question of whether the item was physically attached to the vessel. The individual items are far too numerous to describe in any detail herein, but they range from napkins, stirrers, postage meters, paper products, grinding wheels, coffee pots, towels, party favors, games, sandpaper, repairs to a shotgun, movie rentals, hardware items, batteries, flowers, bug spray. The items in question were delivered to Petitioner's warehouse on Dodge Island, Miami, Florida for lading on board one of Petitioner's three cruise vessels. The cruise vessels tie up next to the warehouse where the goods are stored and from time to time these goods are brought aboard each of the vessels. The items in question are all used aboard each vessel during the vessels' passenger cruises. The only time the cruise vessels spend within the territorial limits of Florida are for a period of time on Saturday of each week for the purpose of embarking and disembarking passengers for each weekly cruise. These articles, somewhat above described, are all used in connection with the ship's operation which is the conduct of weekly pleasure cruises from Miami to the Caribbean. The question of whether a particular item is a part of a vessel is one of definition and common sense. The auditor, Mr. Lloyd, appeared to accept a definition similar to what one would use in determining whether or not an item was a fixture in regard to realty. However, there are all types of vessels and it appears to this Hearing Officer that what may be a part of one type of vessel would have no function on another. There is really no relationship between what may be considered a part of real estate and what may be considered a part of a ship. There also appears to be no logic behind a definition which limits "parts of a ship" to those items which are physically attached to the vessel. Most would agree that pumps are parts of a ship; even though they may not be attached and can be easily removed, they are necessary in keeping a vessel afloat. Similarly, a compass and other navigational equipment may be removed, but that would hardly make them any less a part of a ship. As the Petitioner points out in its Memorandum, the most logical approach to a finding as what is truly a part of a vessel must ultimately hinge on the nature of the vessel, and a broad definition of seaworthiness. What are clearly parts of some ships have no purpose on others. A cargo freighter would need hoists and cranes which are not required on a tug. Each type of vessel uses equipment suited to that ship's purpose and type of cargo. While a tanker may be in the business of transporting oil, a very specialized cargo, a cruise ship is in business of transporting people and catering to their needs and entertainment. Therefore the equipment of a cruise ship would appear more frivolous to those accustomed to ships transporting basic raw materials. Both vessels, however, are in the shipping business. Since the parts of a ship must be defined as those items which serve a useful purpose to the operation of the ship, the decision then depends not on the nature of the item, but of the vessel. An oil tanker might conceivably have equipment or parts which are so specialized that they could serve no other useful purpose except aboard that type of vessel. The cruise ships in question in this case, however, use equipment which are apparently commonplace and equally useful on land as on sea. What items may properly be considered parts of a cruise ship depend on how those items relate to the operation of the vessel. While the equipment of an oil tanker would hardly be expected to be directed toward mirth; likewise, it is unreasonable for the equipment of a cruise ship to be limited to the bare necessities of a spartan voyage. As the testimony on behalf of Petitioner indicated, all the items listed on Joint Exhibit No. 1 do serve a purpose aboard the vessel and all items were purchased for use aboard the company's three vessels. It is therefore concluded that all the items listed on that schedule are in fact parts of the vessels owned by the Petitioner. The Petitioner has raised several other issues in its defense to tax assessment of the Department of Revenue. Among other things the Petitioner claims that the items in question are not stored for use in Florida. The facts above indicated that the items were purchased by the corporation and no sales or use tax has yet been paid upon them. The items are stored at the Dodge Island Warehouse owned by the Petitioner and are from time to time placed aboard vessels operated by the Petitioner corporation. From the facts presented at this hearing, the ships only spend several hours in the port of Miami each Saturday of every week. The items, therefore, are principally used while the vessels in question are on the high seas or in foreign ports. Except for this period of time on each Saturday when the vessels are in port, these items are used while the vessels are in engaged in foreign commerce.
Recommendation For reasons that the items in question are parts of the vessels and that they are used and consumed outside the state of Florida the tax assessed by the Department of Revenue should be disallowed. ENTERED this 20th day of October, 1976, in Tallahassee, Florida. KENNETH G. OERTEL, Director Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Daniel G. LaPorte, Esquire 150 Southeast Second Avenue Miami, Florida 33131 E. Wilson Crump II, Esquire Assistant Attorney General Department of Legal Affairs Tax Division, Northwood Mall Tallahassee, Florida 32303 Ed Straughn, Executive Director Department of Revenue Carlton Building Tallahassee, Florida 32304 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF REVENUE KLOSTERS REDERI A/S, d/b/a NORWEGIAN CARIBBEAN LINES, Petitioner, vs. CASE NO. 76-428 DEPARTMENT OF REVENUE OF THE STATE OF FLORIDA, Respondent. /
Findings Of Fact Petitioner is the agency of the State of Florida charged with the responsibility to administer and to enforce the Florida Yacht and Ship Broker's Act, Chapter 326, Florida Statutes. At times prior to June 21, 1991, Respondent Bongiovi was licensed by Petitioner as a yacht broker. Respondent Bongiovi did not hold any license as a yacht broker at any time after June 21, 1991. Respondent AJB Yachts was not licensed as a yacht broker at any time pertinent to this proceeding. Respondent Bongiovi does business as AJB Yachts or AJB Yacht Sales, Inc. There was no evidence that AJB Yacht Sales, Inc., is legally incorporated. On various dates in September and October 1994, Respondent Bongiovi placed two separate advertisements in the classified ads section of the Fort Lauderdale, Florida, Sun-Sentinel newspaper. The first of these ads offered for sale a 41' Hatteras yacht for the sum of $150,000. The second of these advertisements offered for sale a 43" Portofino yacht for the sum of $125,000. Both advertisements contained the Respondent's telephone number, 305-942-7425. On or about May 28, 1993, Respondent, acting as a yacht broker, represented Charles Robbins in the purchase of a 66' Pacemaker yacht named the Sea Cow. The owner of the yacht, Dennis Gaultney, was represented by Mauch Yacht Sales, Inc., the listing broker. As part of the offer made by Mr. Robbins, he gave to Respondent Bongiovi a check in the amount of $33,000 as earnest money. Respondent Bongiovi deposited this money in a bank account at First Union National Bank of Florida, Pompano Beach branch on June 1, 1993. This account is entitled "AJB Yacht Sales, Inc., Escrow Account." Respondent Bongiovi was the sole signatory on this account. Respondent Bongiovi immediately began making withdrawals from this account that were not related to the Robbins transaction. 1/ As of June 10, 1993, the balance in this account was $29,575.54. As of June 21, 1993, the balance was $23,570.83. As of June 30, 1993, the balance was $21,554.04. Negotiations for the sale of the Sea Cow continued between the purchaser and the owner until July 20, 1993. The final version of the owner's proposal was a response to the last proposal made by Mr. Robbins and contained several changes to the last offer made by Mr. Robbins, including a change in the price of the vessel and an extension of the closing date to July 22, 1993. These changes were initialed by the owner of the boat, but they were not initialed by Mr. Robbins. Mr. Robbins never received a signed copy of the final proposal from the owner of the Sea Cow. A survey to evaluate the condition of the vessel was conducted and a copy of the inspection report faxed to Respondent Bongiovi by Jan Mauch of Mauch Yacht Sales on June 9, 1993. The transmittal note that accompanied the fax stated the following: "Here is the 'Schedule A' 2/ to go with the contract. After Charlie sees the survey, have him sign this and Acceptance of Vessel on contract and fax back both to me and I'll have Denny sign." Included in the inspection report was the following information: ". . . an engine inspection did not include a detailed mechanical inspection or test of components. A complete engine survey by a qualified mechanic is recommended in all cases." Mr. Robbins thereafter requested that Respondent Bongiovi arrange for an inspection of the vessel's engines before he accepted the vessel. Mr. Robbins never received an inspection report for the engines, he did not obtain his own financing for the vessel, and he never tendered the balance of the purchase price. The transaction involving Mr. Robbins did not timely close because the inspection of the engines were not completed. Because there was a delay in closing the transaction, the owner sold the yacht to another buyer. Neither Mr. Gaultney nor Mauch Yacht Sales demanded a portion of the $33,000 earnest money deposit. Mr. Robbins demanded the return of his money from the Respondent after he learned that the Sea Cow had been sold to another purchaser. Respondent Bongiovi refused to return the deposit and asserted the position that he was entitled to keep all of the deposit as liquidated damages because the transaction had not closed. Respondent Bongiovi relies on Paragraphs 3 and 4 of the form agreement for his contention that he was entitled to retain the $33,000 deposit as liquidated damages. Those provisions are as follows: The purchase of the vessel is subject to survey - seatrial - capt (sic) - inspection showing condition subject to purchasers (sic) sole judgment and approval to be conducted as soon as practicable after execution of this agreement at the option and expense of the PURCHASER. The PURCHASER shall give written acceptance or rejection of the Vessel by June 10, 1993, and if written notification is not received by the BROKER (A.J.B. Yacht Sales) on or before said date, it shall be construed as acceptance of the Vessel by PURCHASER. In the event, after written or construed acceptance of the Vessel, the PURCHASER fails to pay the balance of the purchase price and execute all papers necessary to be executed by him for the completion of his purchase, pursuant to the terms of this contract, on or before July 10, 1993, the sum this date paid shall be retained by A.J.B. Yacht Sales as liquidated and agreed damage and the parties shall be relieved of all obligations under this contract. In paragraph 2 of the agreement executed by Mr. Robbins on May 28, 1993, there was a provision that the offer submitted by Mr. Robbins was withdrawn if not accepted by June 5, 1993. There was no evidence that there was a final and complete agreement sufficient to bind the parties by June 5, 1993, or at any time thereafter. The agreement executed by Mr. Robbins on May 28, 1993, also contained the following provision: In the event that this sale is not consummated by reasons of unsatisfactory survey . . . the deposit shall be returned, providing all expenses incurred by the PURCHASER against the Vessel have been paid, and this agreement shall be null and void. Mr. Robbins verbally notified Respondent Bongiovi that he would require additional testing on the engine before accepting the vessel. Mr. Robbins did not receive the results of those additional tests and learned soon thereafter that the vessel had been sold to another purchaser. Following the failure and refusal of the Respondents to return the deposit, Mr. Robbins sued the Respondents in the Circuit Court in and for Broward County, Florida, pursuant to the provisions of Sections 772.11 and 812.014, Florida Statutes. Based on the evidence presented, the Circuit Judge in that civil proceeding entered a final judgement for treble damages ($99,000) in favor of Mr. Robbins and against the Respondents based, in part, on the following: . . . On the evidence presented, the Court finds: * * * Plaintiff (Mr. Robbins) gave Defendants (Mr. Bongiovi and his corporation) a check in the amount of $33,000.00 on May 28, 1993, to be held in escrow as a deposit pending accep- tance by the owner of a vessel for the purchase of said motor vessel. Said $33,000.00 was deposited into a bank account owned and/or controlled by Defendants. The owner of the vessel failed to accept Plaintiff's offer within the time provided in the written contract attached to the Amended Complaint; and, therefore, Plaintiff was entitled to return of his $33,000.00 deposit. Plaintiff demanded return of said $33,000.00 deposit, but Defendants failed and refused to return same, which sum has been due with interest since June 5, 1993. Defendants breached the Purchase Agree- ment on June 5, 1993, by failing and refusing to return Plaintiff's deposit of $33,000.00 when the offer to purchase the vessel was not accepted by the owner by that date. Defendants had a fiduciary responsibility to Plaintiff as escrow agents under the Purchase Agreement, and they breached their fiduciary responsibility by failing and refusing to return the $33,000.00 deposit when the offer to purchase the vessel was not accepted by the owner by June 5, 1993. . . .
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner enter a final order in this proceeding that adopts the findings of fact and conclusions of law and which imposes an administrative fine jointly and severally against the Respondents in the amount of $10,000 for the violations of Count I and imposes an additional administrative fine jointly and severally against the Respondents in the amount of $10,000 for the violation of Count II. DONE AND ENTERED this 29th day of December, 1995, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of December, 1995.
