Findings Of Fact At all times material to this case, Respondent, Antonio Prado, has been a licensed real estate broker in the State of Florida, license no. 0138312. Respondent, Antonio Prado, is the President and qualifying broker for a real estate company called Bayside International Realty, Inc. Respondent, Bayside International Realty, Inc., has been issued real estate license no. 1001760. The Department is the state agency charged with the responsibility of regulating real estate licensees. On January 13, 1995, an investigator employed by the Department conducted an office inspection and audit of the Respondents' place of business. During the course of the audit, the investigator discovered that the escrow account for the business contained $1,000.00. None of the $1,000.00 was, in fact, "trust funds" owed or belonging to a third party as Respondents have not held "trust funds" since August, 1990. The investigator advised Respondent that he was not allowed to hold personal funds in excess of $200.00 in the company escrow account. Based upon that information, Respondent immediately, on January 13, 1995, removed $800.00 from the escrow account leaving a balance of $200.00. The purpose of holding $1,000.00 in the account related to a Barnett Bank policy which required the minimum balance of $1,000.00 to avoid service charges on the account. Respondent, Antonio Prado, has not been active in the real estate practice for several years and was unaware of changes to the escrow policy dating back to December, 1991, which prohibit more than $200.00 of personal funds in an escrow account. Respondent, Antonio Prado, has been licensed for 19 years and has never been disciplined for any violations of the real estate law.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Florida Real Estate Commission enter a final order determining the Respondent, Antonio Prado, committed only a minor technical violation of Section 425.25(1)(e), Florida Statutes, and, in recognition of Respondent's exemplary record as a broker, which, along with his willing, immediate action to correct the error, demonstrates sound judgment, issue a letter of reprimand and guidance regarding escrow account rules and regulations. All other allegations against these Respondents should be dismissed. DONE AND ENTERED this 15th day of May, 1996, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of May, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-0038 Rulings on the proposed findings of fact submitted by Petitioner: None submitted. Rulings on the proposed findings of fact submitted by Respondent: Paragraphs 1 and 2 are rejected as statements of fact as they are restatement of argument or comment made at the hearing. Paragraphs 3 through 6 are accepted. COPIES FURNISHED: Henry M. Solares Division Director Division of Real Estate Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399 Theodore R. Gay Senior Attorney Department of Business and Professional Regulation Division of Real Estate Rhode Building Phase II 401 Northwest Second Avenue N607 Miami, Florida 33128 Antonio Prado, pro se and as President of Bayside International Realty, Inc. 1390 Brickell Avenue, Suite 230 Miami, Florida 33131
Findings Of Fact The Parties Petitioner, the Division of Real Estate, Department of Business and Professional Regulation, (the "division" or the "department,") created by Section 20.165, Florida Statutes, and, in part, comprised of the Florida Real Estate Commission, provides "[a]ll services concerning [Chapter 475, Florida Statutes], including ... recordkeeping services, examination services, legal services, and investigative services, and those services in Chapter 455 [general provisions in regard to the state's regulation of professions and occupations] necessary to perform the duties of [Chapter 475, Florida Statutes]." Section 475.021, Florida Statutes. Chapter 475, Florida Statutes, is the law which regulates real estate brokers. Respondent, Maria E. Vaca t/a Vaca Realty, is now, and at all times material to this case, has been a real estate broker licensed by the State of Florida. The number of her license, originally issued in June 1, 1981, is 0333239. Her license, current through September 30, 1997, shows the location of her brokerage to be 120 E. Oakland Park Boulevard 105, Fort Lauderdale, Florida, 33334. Books, Accounts and Records to be Available Section 475.5015, Florida Statutes, requires that "[e]ach broker shall keep and make available to the department such books, accounts and records as will enable the department to determine whether such broker is in compliance with the provisions of this chapter." Rule 61J2-14.012(1), Florida Administrative Code, implements Section 475.5015, Florida Statutes. The rule provides: A broker who receives a deposit as previously defined shall preserve and make available to the BPR, or its authorized representative, all deposit slips and statements of account rendered by the depository in which said deposit is placed, together with all agreements between the parties to the transaction. In addition, the broker shall keep an accurate account of each deposit transaction and each separate bank account wherein such funds have been deposited. All such books and accounts shall be subject to inspection by the BPR or its authorized representatives at all reasonable times during regular business hours. Attempts at an Audit In March of 1994, the department decided to conduct an audit of Respondent's escrow account. Two of the department's investigators, Monroe Berger and Margaret Hoskins, with fifteen years of experience at the department between them, scheduled a meeting with Ms. Vaca for April 11, 1994, in order to conduct the audit. Ms. Vaca, indicating that her records were in storage, cancelled the meeting. A second meeting was scheduled for April 20, 1994, in order to allow Ms. Vaca to retrieve the records. Ms. Vaca failed to attend the meeting. Instead, she transmitted by facsimile to Investigator Hoskins copies of nine bank statements under the name of "Vaca Realty Trust Account," for what appears to be the period from June 5, 1993 through April 5, 1994. (Generally monthly statements, one of the statements appears to be for the first quarter of 1994, from January 6 through April 5, 1994.) There were no reconciliation statements attached to the bank statements. The bank statements provided were insufficient to conduct an audit of the escrow account. On April 21, 1994, another meeting was scheduled with Ms. Vaca for April 29, 1994. In addition, Investigator Berger sent Ms. Vaca a letter confirming the April 29, 1994, meeting and asking Ms. Vaca to bring with her specific records necessary to allow the audit to be conducted. Investigator Berger wrote: This is to confirm our telephone conversation of 4-21-94. It is unfortunate that some personal problems have caused you to cancel the two previous appointments with Investigator Hoskins. In any event we are looking forward to seeing you on 4-29-94 at 1:00PM, at which time you will provide your office records for the last year. They will include but not be limited to (i) Trust liability reconciliations, (ii) Bank statements with cancelled check vouchers and deposit slips and (iii) files relating to both closed and open transactions. Petitioner's Exhibit No. 2. Ms. Vaca failed to appear for the April 29, 1994, meeting. Again, another meeting was schedule, this one for May 2, 1994. Ms. Vaca failed to appear for the May 2, 1994 meeting. On September 22, 1994, Investigator Berger and his supervisor, Don Piersol, went to Ms. Vaca's office to conduct the audit. Ms. Vaca did not have her escrow account records on hand. She agreed, however, to bring them to a meeting scheduled for October 10, 1994. At the October 10, 1994 meeting, Ms. Vaca provided a check book but she did not provide any trust liability reconciliations or deposit slips for the previous year's transactions. Without these records an audit cannot be conducted. In addition, Ms. Vaca did not provide all files relating to open and closed transactions for the previous year, which also are necessary to conduct an audit. Ms. Vaca remembers missing only one, (perhaps two) of the meetings scheduled by the department and that because of the emergency hospitalization of her father. Certainly, her father's illness excuses abrupt cancellation of a meeting. This record is clear, however; Ms. Vaca repeatedly failed to produce the required records. Production at Hearing At hearing, Ms. Vaca produced six bank statements for what appears to be the period of the first week of September 1993 through May 5, 1994. (Five of these statements match five of the nine statements faxed to the department in April of 1994. Again, the statements are for one month's time, with the exception of the quarterly statement for the first quarter of 1994.) Attached to each of the six bank statements is a Real Estate Trust Account Monthly Statement Reconciliation form including a "Brokers Trust Liability Reconciliation." Had the reconciliation statements been provided earlier, there still would not have been enough records provided for an audit to be conducted. Deposit slips and cancelled check vouchers, records necessary to conduct the audit, have never been provided the department. Nor has Ms. Vaca to date produced all the files of transactions, open or closed, conducted during the year prior to whenever an audit has been attempted. As of the date of hearing, Ms. Vaca continued to fail to appreciate what records should be provided the department, records she was clearly on notice of as deemed necessary to an audit by the department at least since Mr. Berger's letter in April of 1994. This record does not disclose any legitimate reason for Ms. Vaca's repeated failure to produce the requested records. As of the date of hearing, an audit had still not been conducted of Ms. Vaca's escrow accounts because the department has never been given access to the records necessary to conduct the audit.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Commission suspend the license of Maria E. Vaca t/a Vaca Realty for six months and that at the end of the suspension Ms. Vaca be placed on probation for as long as it takes to attend and complete a seven-hour course in management of escrow accounts. In addition, probation should be conditioned upon production of the records the Department needed to conduct the audit attempted in 1994. DONE AND ENTERED this 27th day of September, 1996, in Tallahassee, Leon County, Florida. DAVID M. MALONEY, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of September, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-2347 1. Paragraphs 1 through 16, insofar as material, are adopted, with the exception of the statement in paragraph 8 that respondent sent by facsimile "six copies of her escrow account bank statements to Investigator Hoskins." (e.s.) Respondent sent copies of nine bank statements by facsimile. COPIES FURNISHED: Henry M. Solares Division Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32801-1900 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Daniel Villazon, Esquire Division of Real Estate Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32801-1900 Ms. Maria E. Vaca 1731 Southeast 13th Street Fort Lauderdale, Florida 33316
The Issue The issue in this case is whether the real estate license issued to the Respondent, James P. Hudson, should be revoked or otherwise disciplined based upon the acts alleged in the Administrative Complaint.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I make the following findings of fact: At all pertinent times, Respondent, James P. Hudson, was a licensed real estate broker in the State of Florida having been issued license No. 0148841 in accordance with Chapter 475, Florida Statutes. Respondent has been operating as a broker from an office at 413 South Federal Highway, Boynton Beach, Florida 33435. Respondent maintains an escrow account No. 018200602689 at Sun Bank in Boynton Beach, Florida into which he deposits trusts funds received in his capacity as a real estate broker. Sometime in the early part of September 1989, Petitioner initiated a random audit of Respondent's business. Prior to the audit, Petitioner's investigator advised the Respondent that he would need to produce all the records related to his escrow account. An investigator for Petitioner visited Respondent's office on or about September 18, 1989 to conduct an audit of Respondent's escrow accounts. Based upon the investigator's review of the records, five different transactions were identified as allegedly involving delays or mishandling of escrow funds by Respondent. Those transactions are the basis for several of the allegations in the Administrative Complaint. Each transaction is addressed separately below. The first transaction involved a contract for the sale and purchase of real property between Fitz as buyer and Kerstin as seller (the "Fitz Contract"). Included in Respondent's files on this transaction was a copy of a contract for sale and purchase that was dated and signed by the buyer on September 6, 1989 and dated and signed by the seller on September 9, 1989. The buyer in the Fitz Contract gave Respondent a check for $1000 as a deposit to be held in escrow in connection with the transaction. The Respondent's written receipt for that check is dated September 7, 1989. The evidence established that this initial deposit check was delivered to Respondent on Thursday evening, September 7, 1989. Respondent was out of town on Friday, September 8 and returned on Monday evening, September 11. The check was deposited on the afternoon of September 12 and is reflected in the bank records as a deposit on September 13. The sellers (the Kerstins) signed the contract on September 9, 1989. However, in executing the contract, they crossed out the $900,000 sales price submitted by the buyer and increased the price to $1,400,000. In other words, the sellers made a counteroffer with respect to this contract. The initial deposit was timely returned to the sellers when the counteroffer was rejected. Petitioner's investigator erroneously assumed that Respondent did not timely collect the additional deposit required under this contract. While Petitioner's investigator considered this signed contract in Respondent's files to be a binding agreement on the parties, it is clear that the change in sales price was only initialed by the sellers and, therefore, there was no enforceable agreement. The parties to the Fitz Contract subsequently executed another written contract. This second agreement provided for a sales price of $1,100,000. That contract was executed by the buyer on September 20, 1989 and by the sellers on September 24, 1989. This second contract called for a $49,000.00 deposit upon acceptance. The buyers gave Respondent a check dated September 25, 1989 in the amount of $49,000.00. That check was deposited by Respondent in his escrow account on the afternoon of September 26, 1989. The $49,000 deposit is reflected in the bank records as being deposited on September 27, 1989. Under the circumstances, there was no undue delay by Respondent in collecting or depositing the funds into escrow. The second transaction identified by Petitioner's investigator involved a contract for the sale and purchase of real property between Campanis as buyer and Hoffman as seller. The buyer in this transaction gave Respondent a check dated September 6, 1990 to be held as a deposit for this contract. A photocopy of the check presented to Petitioner's investigator included a handwritten note that states "hold until Friday 9/8/89." The evidence did not establish who wrote this note. The evidence established that the check was received by one of Respondent's sales associates on September 7 and left on the Respondent's desk on September 8. Respondent is the only company employee authorized to deposit checks or otherwise handle transactions involving the escrow account. As indicated above, Respondent was out of town from September 8 through the evening of September 11. The check was deposited on the afternoon of September 12 and is reflected in the bank records as being credited to the escrow account on September 13. Under the circumstances, the Respondent was not delinquent in depositing these funds. The third transaction involved a contract for the purchase and sale of real property between White as buyer and Adkins as seller (the "White Contract.") The White Contract was executed by the buyer on July 26, 1989 and by one of the sellers on July 27 and by the other seller on Friday, July 28. The contract called for an initial deposit of $500.00 with an additional deposit of $1,700 upon acceptance. The initial deposit check was dated July 26, 1989. That deposit check was attached to the contract executed by the purchaser and presented to a cooperating real estate agent who was to present the proposed contract to the seller. The executed contract was not returned to Respondent until sometime during the weekend of July 29 and 30. The initial deposit check along with the additional deposit were then deposited into Respondent's escrow account on Monday, July 31, 1989. Under the circumstances, the evidence established that there was no undue delay in depositing the escrow money. The next transaction identified by Petitioner's investigator involved a contract for sale and purchase of real property between Milera as buyer and Twillie as seller (the "Milera Contract.") The Milera Contract provided for an additional deposit due upon acceptance. The contract was accepted by Twillie on August 23, 1989. The parties to the contract agreed that the time for making the additional deposit would be extended for two days. The check for the additional deposit was dated and received by Respondent on Friday, August 25, 1989. The check was deposited into Respondent's escrow account on Tuesday, August 29, 1989. Under the circumstances, there was no undue delay in depositing the escrow money. The final transaction involved a contract with the sale and purchase of real property between Gerrety as buyer and the estate of John Walsh as seller (the "Gerrety Contract.") The Gerrety Contract was executed by the purchaser on August 10, 1989. The deposit check was given to one of the Respondent's associates on that Thursday evening. The deposit check was not delivered to Respondent until after business hours on Friday, August 11. The check was deposited into Respondent's escrow account on Monday, August 14. Under the circumstances, there was no undue delay in depositing the escrow money on this transaction. During the audit, Petitioner's investigator determined that Respondent was holding deposits on two separate rental properties in his escrow account. At the time of the audit, Petitioner's investigator was not provided with any leases or other documentation regarding these transactions even though Respondent was supposed to produce records for all sums in the escrow account. Respondent contends that he did not realize he was supposed to produce his rental files, was never specifically asked to produce these files and did not know that Petitioner was questioning these transactions until he received the Administrative Complaint in this action. While there was apparently some miscommunication at the time of the audit, adequate documentation for these rental deposits was produced at the hearing. Therefore, Petitioner's allegation that Respondent did not maintain adequate documentation regarding these deposits is without merit. Petitioner has also charged that Respondent did not produce all of the deposit slips in connection with the escrow account and did not produce any evidence of reconciliation of the escrow account. The evidence at the hearing established that all deposit slips are available even though they were not all kept with the bank statements. Moreover, the evidence failed to substantiate the allegation that Respondent did not reconcile his escrow account. Thus, these charges were not substantiated. At the time of the audit, Respondent advised Petitioner's investigator that the escrow account included some commission money that had not yet been removed. In the past, Respondent would sometimes collect his commissions at the close of a transaction from the funds held in escrow. (Respondent no longer collects commissions in this manner.) In auditing Respondent's escrow account, Petitioner's investigator determined that there was an overage of approximately $8,178.17 in the account. Within thirty days of the completion of the audit, Respondent removed $7,500 of the overage which represented his commission on two previously closed transactions. While Respondent believed that the remaining amount of the overage was also his commission money, he refrained from removing any more money until completion of a year-end audit by his accountant. Respondent's records reflected a slight difference in the amount of the overage than the amount calculated by Petitioner during the audit. Respondent wanted to be absolutely certain that only the proper amount was removed from the escrow account. At the conclusion of the audit on September 18, 1989, Respondent signed an office inspection report form prepared by Petitioner which contained the following pre-printed statement: ...I certify that to the best of my knowledge all records pertaining to my sales escrow/trust account(s) and my rental property management account(s) have been provided to the investigator. The above violations are brought to my attention this date and thoroughly explained. I will take corrective action within thirty days and furnish photo/sketches of corrections and documents on the same... There is some confusion as to what additional documentation Respondent was expected to provide following the completion of the September, 1989 audit. Respondent did not believe he was required to provide any additional evidence to Petitioner or its investigator and no further documentation was provided by Respondent until Petitioner's investigator returned to his office in January of 1990. Petitioner's investigator returned to Respondent's office on January 17, 1990. At that time, $7500.00 of the overage had been removed from the escrow account. The remaining amount of the overage was removed later in January. It does not appear that Respondent provided Petitioner's investigator with copies of the rental agreements or the second contract in the Kerstin transaction during the January visit by Petitioner's investigator. Respondent contends that this information was never specifically requested. It is clear that communication between Respondent and Petitioner's investigator had deteriorated from bad to worse by the time of this January visit. There is no indication that Respondent ever used the escrow account for improper purposes or withdrew money from the escrow account for his own personal or business use. The Florida Real Estate Commission adopted new record keeping requirements regarding escrow accounts in July of 1989. The new rules require a written monthly reconciliation of a broker's escrow account. At the time of the audit, Respondent was not keeping the minimum written statement comparing broker's total liability with the reconciled bank balance of all trust accounts as required by the new rules. Even after the audit in September, Respondent did not keep the written reconciliations in the format required by the new rules. Respondent was reconciling the account on his computer.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Petitioner enter a Final Order finding Respondent not guilty of the allegations contained in Counts I and II of the Administrative Complaint, finding Respondent guilty of Counts III and IV and reprimanding him for minor and techinical violations of those counts and imposing a fine of $100.00. RECOMMENDED in Tallahassee, Leon County, Florida, this 31st day of December, 1991. J. STEPHEN MENTON 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 31st day of December, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-3589 Both parties have submitted Proposed Recommended Orders. The following constitutes my rulings on each of the parties' proposed findings of fact. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Addressed in the preliminary statement. Adopted in substance in Findings of Fact 1. Adopted in pertinenet part in Findings of Fact 3. Rejected as irrelevant. Rejected as irrelevant. Adopted in substance in Findings of Fact 4. 7. Subordinate to Findings of Fact 5. 8. Subordinate to Findings of Fact 6. 9. Subordinate to Findings of Fact 7 and 8. 10. Subordinate to Findings of Fact 6. 11. Subordinate to Findings of Fact 6. 12. Subordinate to Findings of Fact 8 and 9. 13. Subordinate to Findings of Fact 8 and 9. 14. Subordinate to Findings of Fact 8 and 9. 15. Subordinate 23. to Findings of Fact 8, 9 and Subordinate to Findings of Fact 23. This subject is also addressed in paragraph 9 of the conclusions of law. Adopted in substance in Findings of Fact 10. Adopted in substance in Findings of Fact 10. 19. Subordinate to Findings of Fact 11. 20. Subordinate to Findings of Fact 13. 21. Subordinate to Findings of Fact 13. 22. Subordinate to Findings of Fact 13. 23. Subordinate to Findings of Fact 14. 24. Subordinate to Findings of Fact 14. 25. Subordinate to Findings of Fact 15. 26. Subordinate to Findings of Fact 15. Subordinate to Findings of Fact 16. Subordinate to Findings of Fact 17. Rejected as not established by competent susbstantial evidence. The subject matter is addressed in Findigns of Fact 17. Adopted in substance in Findings of Fact 19 and 20. Rejected as not established by competent substantial evidence. The subject matter is addressed to some degree in Findings of Fact 21. Subordinate to Findings of Fact 21 and 22. Subordinate to Findings of Fact 21 and 25. Adopted in substance in Findings of Fact 20. Rejected as irrelevant. Subordinate to Findings of Fact 21. Subordinate to Findings of Fact 21. The Respondent's Proposed Findings of Fact The Respondent's proposed findings of fact are not numbered. The numbers below refer to the numerical sections contained in the findings of fact section of Respondent's Proposed Recommended Order. Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. The first two sentences are adopted in substance in Findings of Fact 6-9. The second two sentences are rejected as irrelevant. This subject matter is addressed in some degree in Findings of Fact 21. The last sentence is rejected as constituting argument rather than a finding of fact. The first two sentencess are subordinate to Findings of Fact 10. The next two sentences are adopted in substance in Findings of Fact 11. The last sentence is rejected as constituting argument rather than a finding of fact. The first two sentence are adopted in substance in Findings of Fact 13. The third sentence is rejected as constituting argument rather than a finding of fact. The first three sentences are adopted in substance in Findings of Fact 14. The last sentence is rejected as constituting argument rather than a finding of fact. The first two sentences are adopted in substance in Findings of Fact 15. The last sentence is rejected as constituting argument rather than a finding of fact. Adopted in substance in Findings of Fact 16. The first sentence is adopted in substance in Findings of Fact 17. The second sentence is rejected as vague. Subordinate to Findings of Fact 17 and 25. The first three sentences are adopted in substance in Findings of Fact 18, 19 and 22. The fourth sentence is rejected as not established by competent substantial evidence. This subject matter is addressed in part in Findings of Fact 19. The fifth and sixth sentences are rejected as constituting argument rather than a finding of fact. Subordinate to Findings of Fact 25. COPIES FURNISHED: Janine B. Myrick, Esquire Senior Attorney Department of Professional Regulation Division of Real Estate 400 West Robinson Street P. O. Box 1900 Orlando, Florida 32802 James P. Hudson 413 South Federal Highway Boynton Beach, Florida 33435 Darlene F. Keller Executive Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street P. O. Box 1900 Orlando, Florida 32802 Kenneth E. Easley, Esquire General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792
The Issue The issue in this case is whether Respondent, Lee H. Davis, committed the offenses alleged in an Administrative Complaint issued against him on August 16, 1999.
Findings Of Fact Petitioner, the Department of Business and Professional Regulation, Division of Real Estate (hereinafter referred to as the "Division"), is an agency of the State of Florida. The Division is charged with the responsibility for, among other things, regulating the practice of persons holding real estate brokers' and real estate salespersons' licenses in Florida. Section 20.165, and Chapters 455 and 475, Florida Statutes. Respondent, Lee H. Davis, is and was at all times relevant to this matter licensed as a real estate broker in Florida, issued License Number 0186063. The last license issued was as an involuntary inactive broker, c/o 815 New Waterford Drive, No. 204, Naples, Florida 34104. On or about August 24, 1995, Respondent executed a form 400.5 and submitted it to the Division to register as a salesperson with Sentry Realty and Property Management, Inc. ("Sentry"). At all times relevant to these proceedings, Respondent was registered with the Division as employed by Sentry. On or about September 7, 1995, Respondent facilitated a contract for sale and purchase (the "contract") between Robert Trindle as buyer and John Petracelli as seller/builder for property described as Hallandale Park, Plat Book 12, Page 37, Block 37, Lots 6,7,8, a/k/a approximately 2801 North East 214 Street, North Miami Beach, Florida. Mr. Trindle testified that he intended to purchase a townhouse to be built by Mr. Petracelli as part of a project to include 40 to 50 townhouses. The contract provided that a $3,900 deposit was to be held by "Lee H. Davis Escrow Agent." Mr. Trindle gave Respondent two checks totaling $3,900, as the earnest money deposit on the purchase price of $130,000. The first check, dated October 9, 1995, was for $1,000. The second check, dated November 3, 1995, was for $2,900. The checks were made out to "Lee H. Davis-- Escrow." Also noted on the checks was "Davena Group Inc.," which Mr. Trindle understood to be Respondent's real estate company. Each check was negotiated by Respondent within a week of its receipt. At the time of this transaction, Respondent's registered broker was John Brouillette of Sentry. Respondent did not place the escrow deposit with Mr. Brouillette, who testified that he knew nothing of the transaction at the time it occurred and never saw the contract. Respondent represented to Mr. Trindle that he would maintain the escrow deposit as broker during this transaction. Mr. Trindle did not give Respondent permission to transfer the escrow deposit to the builder/seller, Mr. Petracelli. Correspondence from Respondent indicated that he did turn the escrow deposit over to Mr. Petracelli, without informing Mr. Trindle. Mr. Petracelli never built the promised townhouses. Rather, he left the country, absconding with Mr. Trindle's escrow deposit along with monies provided by other purchasers and/or investors in the project. Mr. Trindle attempted to contact Respondent regarding the status of his escrow deposit, but was unable to reach him prior to the filing of his complaint with the Division. As of the date of the hearing, the earnest money deposit had not been returned to Mr. Trindle.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner finding that Respondent has violated Subsections 475.25(1)(b), 475.25(1)(d)1, 475.25(1)(e), 475.25(1)(k), and 475.42(1)(d), Florida Statutes, as alleged in the Administrative Complaint issued against Respondent, and that Respondent's real estate license be revoked. DONE AND ENTERED this 13th day of March, 2001, in Tallahassee, Leon County, Florida. ___________________________________ LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of March, 2001. COPIES FURNISHED: Sunia Y. Marsh, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Suite N-308A Orlando, Florida 32801-1772 Lee H. Davis 815 New Waterford Drive, No. 204 Naples, Florida 34104 Herbert S. Fecker, Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact The Department is the agency charged with the responsibility to prosecute violations of Chapter 475, Florida Statutes, allegedly committed by real estate brokers who are licensed in Florida. At all times material to these proceedings, Respondent Anglickis was a licensed real estate broker, having been issued licensed number 00001869 through the Division of Real Estate. Respondent American was a corporation registered as a real estate broker, having been issued license number 0169478. Both licenses were issued to the following address: 102 East Leeland Heights Boulevard, Lehigh Acres, Florida 33936. Respondent Anglickis was the qualifying broker for Respondent American, and held the office of president within the corporation. On April 19, 1989, the Respondents' accounting records were reviewed in a random, routine audit conducted by an investigator with the Division of Real Estate as part of the agency's regulatory functions. During the audit, the investigator determined that Sun Bank Account No. 013684, which was maintained by the Respondents in order to hold funds entrusted to them in pending real estate transactions, contained an overage of $9,639.83. According to the real estate company's records that were presented to the investigator, these funds were not being held for the benefit of any parties to any pending real estate transactions. At hearing, the Respondents' presented evidence to show that the funds in question in this particular trust account had been deposited as part of a number of pending real estate transactions involving installment lot sales from May 1986 through December 1986. During this time period, Respondent Anglickis was handling the bookkeeping matters within the company. He undertook this responsibility until he was able to find a replacement for the previous bookkeeper, who left on short notice. All the disbursements of funds were made on behalf of the buyers and sellers in the installment lot sales transactions except for the commissions belonging to the Respondent American. These funds were left in the trust account by Respondent Anglickis. When the new bookkeeper was hired, she reconciled the accounts every month from the time she came to the real estate company. The $9,639.83 was carried forward every month, and was never discussed again once the bookkeeper learned the money belonged to Respondent American early in her employment. This resulted in the isolation of these funds in the pending sales escrow account even though the sales had been completed and the files were considered as closed files within the office. By the time the evidence was presented at the administrative hearing, the Respondents had gone through the closed accounts involved in the installment lot sales during the period in question during 1986. The overage was shown to be the amount due to Respondent American for commission from these sales. These funds were then removed from the pending sales escrow account. Interest Bearing Sales Escrow Account In addition to the sales escrow/trust account at Sun Bank, the Respondents maintained an interest bearing account for the same purpose at the First Federal Savings and Loan Association of Fort Myers, Account No. 101222355. Unless a real estate client specifically allowed the Respondents to place the funds involved in a pending sale into an interest bearing account, they were required to place the funds in a non-interest bearing escrow account. In order for the Respondents to receive the interest on the money, full disclosure in writing had to be presented to the client, and written consent had to be obtained and documented. During the review of the Respondents' files and records relating to funds within the interest bearing sales account during the audit, the investigator was unable to locate the necessary disclosure forms for three clients whose funds were placed in the interest bearing account. When the investigator informed Respondent Anglickis of the real estate company's failure to comply with the disclosure requirements on the three pending contracts, the Respondent Anglickis indulged in a verbal tirade. It appeared from the evidence that this tantrum was unsuccessfully staged in order to either dominate or intimidate the young female investigator. During his harangue, the Respondent Anglickis said he would have his friend Harry Powell sign and backdate the required disclosure that was missing from Mr. Powell's file. The Respondent planned to then conveniently "find" the document misfiled in another file. Once he proposed this course of misconduct, the Respondent taunted the investigator concerning her inability to do anything about it if he chose to solve the problem in this manner. On her return visit to the offices on May 3, 1989, the investigator was presented with a copy of the required disclosure form for Harry Powell. The Respondent Anglickis informed the investigator that the agreement had been misfiled and was located in another file belonging to Mr. Powell. Mr. Harry Powell signed the disclosure statement during the actual sales transaction, as set forth on the form. In spite of his ongoing business relationship with Respondent Anglickis, he never backdated this disclosure, nor was he asked to do so by anyone at anytime. Charles Tucker, the real estate salesman with Respondent American who handled Mr. Powell's real estate purchase, had the client sign the disclosure statement during the sales transaction. This is a required sales procedure within the company. The bookkeeper located the disclosure in another closed file belonging to Mr. Powell within the real estate company. Mr. Powell purchased distressed properties within Lehigh Acres on a routine basis and had a number of closed files within the office. One of the other disclosure forms for a different client was sent to the title insurance company along with other documents. It was returned to Respondent American after the audit and was placed in the proper location. This form had been timely signed by the clients and allowed the Respondents to place the funds in the interest bearing account. The third and final missing disclosure form was in the possession of the real estate salesman who had it signed by the client before the escrow funds were placed in the interest bearing account. While the sales personnel are required to maintain a duplicate file, the office file in this case had not yet received the disclosure form from the salesman when the audit occurred. The Respondent Anglickis did not participate in any misconduct in order to advance the scheme he had proposed to the investigator during his tantrum. The Department's decision to prosecute the Respondents in this proceeding was proper due to the way in which the Respondent Anglickis' proposed scheme to circumvent the findings of the audit coincided with the later presentation of the missing disclosure statements.
Recommendation Based upon the foregoing, it is recommended that Respondent Anglickis and Respondent American be found not guilty of Counts I-VII as set forth in the Administrative Complaint, and that the charges be dismissed. RECOMMENDED this 26th day of June, 1990, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of June, 1990. APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-5414 Petitioner's Proposed Findings of Fact are addressed as follows: Accepted. See HO #1. Accepted. See HO #2. Accepted. See HO #2. Accepted. See HO #2. Accepted. See HO #3. Accept that during the audit, the records pur- portedly revealed an overage in the escrow account. See HO #4. The bookkeeper's statements are rejected as uncorroborated hearsay. Accepted. See HO #8 - #10. Accepted. See HO #11 and #12. Accepted. See HO #13. However, the investigator is not the ultimate trier of fact and did not have all of the evidence presented to the Hearing Officer which refuted that the proposed misconduct by Respondent Anglickis had occurred. See HO #19. Respondent's Proposed Findings of Fact are addressed as follows: Accepted. See HO #15 - #18. Accepted. See HO #4 - #7. COPIES FURNISHED: Steven W. Johnson, Esquire DPR - Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Robert P. Henderson, Esquire 1619 Jackson Street Post Office Box 1906 Fort Myers, Florida 33902 Kenneth E. Easley, Esquire General Counsel Department of Professional Regulation 1940 North Monroe, Suite 60 Tallahassee, Florida 32399-0792 Darlene F. Keller, Executive Director DPR - Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 =================================================================
The Issue Whether Respondent, a licensed real estate broker, committed the violations alleged in the Administrative Complaint and, if so, the penalties that should be imposed.
Findings Of Fact Petitioner is a licensing and regulatory agency of the State of Florida charged with the responsibility and duty to prosecute administrative complaints pursuant to Chapters 455 and 475, Florida Statutes, and Chapter 61J2, Florida Administrative Code. At all times pertinent to this proceeding, Respondent was a licensed real estate broker in accordance with Chapter 475, Florida Statutes. The last license issued to Respondent, license number 0325134, was issued to him in care of Zorcorp Builders, Inc., 2208 Buena Vista Boulevard, Vero Beach, Florida 32960. Respondent is also a licensed general contractor. Both his real estate business and his contracting business are operated out of his residence. On August 13, 1998, Dawn Luchik, an investigator employed by Petitioner, conducted a routine inspection of Respondent's real estate offices. As part of her inspection, Ms. Luchik audited Respondent's escrow account. 1/ As of August 13, 1998, Respondent's escrow account contained the sum of $8,909.76. Ms. Luchik determined that the total trust liability was $8,140.00, which included a bank charge in the amount of $7.46. Deducting the total trust liability and the bank charge from the amount in the account revealed an overage in the escrow account in the amount of $769.76. Respondent testified that the overage represented earned commissions that he left in the escrow account in an effort to keep enough money in the account to avoid bank charges. Those earned commissions constituted Respondent's personal or brokerage business funds. Rule 61J2-14.010(2), Florida Administrative Code, provides as follows: A broker is authorized to place and maintain up to $200 of personal or brokerage business funds in the escrow account for the purpose of opening the account, keeping the account open, and/or paying for ordinary services. Respondent testified that he was unaware of Rule 61J2- 14.010(2), Florida Administrative Code, before Ms. Luchik's inspection. After he learned of that Rule, Respondent immediately withdrew the sum of $600 from his escrow account, leaving an overage of less than $200. There was a conflict in the evidence as to whether Respondent reconciled his escrow account on a regular basis. Ms. Luchik testified that she found no evidence that Respondent attempted to reconcile his escrow account on a monthly basis. Respondent testified that he used a very simple method to reconcile his escrow account each month, but he conceded that his method did not comply with the requirements imposed by Petitioner. 2/ Respondent's testimony established that he failed to properly reconcile his escrow account on a monthly basis.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding Respondent guilty of the violations alleged in Counts I and II of the Administrative Complaint. It is further RECOMMENDED that an administrative fine in the amount of $250 be imposed for each Count (for a total fine of $500), and that Respondent's licensure be placed on probation for a period of six months for each violation, to run concurrently. It is further RECOMMENDED that as a condition of probation, Respondent be required to complete an appropriate continuing education course in escrow account management. DONE AND ENTERED this 14th day of June, 2000, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 14th day of June, 2000
The Issue The issue in this case is whether the allegations of the Administrative Complaints are correct and, if so, what penalty should be imposed.
Findings Of Fact Respondent James G. Adair is and at all material times has been licensed as a real estate broker, Florida license number 0409004, t/a Investor's Equity, 415 Beckwith Road, Suite 210, Panama City, Florida 23407 In November, 1988, Respondent negotiated a contract for the sale of real property identified as the Stopway Grocery. Said contract identified the purchasers of the property as Pakesh Jethani and Suresh S. Satiana. The Stopway Grocery property was owned by James A. White and located in Panama City, Florida. Respondent obtained an earnest money deposit in the amount of $5,000, allegedly from the purchasers, which was deposited into the Investor's Equity escrow account. Subsequently to the execution of the original contract, addenda to the contract were negotiated and agreed between the parties. The sale was to scheduled to close in December, 1988. During the period of time between the contract execution and the scheduled date upon which the sale was to close, the seller repeatedly contacted the Respondent to assure himself that the sale and closing were proceeding appropriately. At no time did Respondent inform the seller of any problems with the transaction or suggest that the sale would not close in December, 1988. The transaction did not close on the scheduled date. Neither the Respondent nor the purchasers attended the scheduled closing. Subsequent to the closing date, the seller contacted the buyers identified in the contract, at which time the seller learned that the buyers would not complete the transaction. The seller obtained legal representation. A demand for the escrow deposit was made on behalf of the seller. By letter dated May 1, 1989, Respondent informed the Petitioner that a dispute related to the escrow deposit had arisen between the parties to the transaction. By letter dated May 15, 1989, Petitioner advised Respondent of alternative methods by which the dispute could be resolved, and requested that Respondent notify Petitioner of the method chosen. After receiving no response, Petitioner, by letter dated July 14, 1989, again requested that Respondent notify Petitioner of the dispute resolution method chosen. As of July 1, 1991, Petitioner has received no further information from Respondent. Subsequent to the July 14, 1989 letter, an investigator for the Petitioner went to the Investor's Equity office in order to review the escrow account documentation. 1/ He was unable to do so because the books and records were not at the office but rather were allegedly in the Respondent's possession. The investigator attempted to contact both the Respondent and the alleged buyers in order to ascertain the disposition of the escrow deposit, but was unable to locate any of them. The Respondent's partner in the Investor's Equity operation, Robert Hodges handled mortgage brokerage activities for the business. The Respondent performed the real estate brokerage activities. Hodges testified that the referenced escrow deposit was received, but stated that the Respondent had stopped coming to the office during this time and was absent from the premises for more than one year. Hodges eventually closed the Investor's Equity operation. He stated that the relevant deposited funds were not in the escrow account, but was unable to otherwise identify the disposition of the deposit.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: that the Department of Professional Regulation, Division of Real Estate, enter a Final Order revoking the real estate broker licensure of James G. Adair. DONE and ENTERED this 1st day of August, 1991, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM 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 1st day of August, 1991.
The Issue The issue to be resolved is whether the Respondent's license as a real estate broker should be disciplined because he violated a lawful order of the Florida Real Estate Commission and because he failed to timely account for and deliver an escrowed real estate deposit.
Findings Of Fact Petitioner is a state government licensing and regulatory agency charged with the responsibility to prosecute Administrative Complaints pursuant to Section 20.30, Florida Statutes, Chapters 120, 455 and 475, Florida Statutes, and the rules promulgated pursuant to those statutes. Respondent Richard F. Gallo was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0029993 in accordance with Chapter 475, Florida Statutes. The last license issued the Respondent, as of November 7, 1990, was as a broker-salesman % Bucek & Bucek, Inc., in Port St. Lucie, Florida, with a home address of 2664 West End Road, West Palm Beach, Florida 33406. That is the same address Respondent placed on the request for hearing he filed in this case. On or about March 20, 1989, an Escrow Disbursement Order was issued by the Florida Real Estate Commission and received by the Respondent whereby the Respondent, as a broker, was ordered to disburse a $300 earnest money deposit to the buyers, Eugene and Dorothy McCrory, as a refund in accordance with the terms of a sales contract. The escrow funds were to be disbursed to the buyers in accord with the terms of their offer. As of March 22, 1990, the Respondent and not disbursed the $300 earnest money deposit to the buyer, Eugene McCrory. On April 11, 1990, almost one year after the filing of the Administrative Complaint, a stale-dated check for $300 was delivered to Eugene McCrory. From January 3, 1990 through January 22, 1990, Petitioner's Investigator Terry Giles made a diligent effort to locate the Respondent at his business address and listed home address, but could not contact him at either place. Investigator Giles has been unable to locate and interview the R Respondent and no response from the Respondent was made to Investigator Giles. The only statement received from Mr. Gallo was the letter addressed to counsel for the Commission in this case on July 9, 1990. (Exhibit 2) No proof of the contentions made in that letter was offered at the final hearing. The contentions are rejected as unsupported. The Respondent was aware that a Division of Administrative Hearing's case number had been assigned and therefore that the proceeding were forthcoming. (See, Exhibit 2.)
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered by the Florida Real Estate Commission finding the Respondent: guilty of failing to account for or deliver money which has come into his hands and which is not his property or which he is not in law or equity entitled to retain under the circumstances, as prohibited by Subsection 475.25(1)(d), Florida Statutes, as charged in Count I of the Administrative Complaint; and guilty of having violated the provisions of a lawful escrow disbursement order as prohibited by Subsection 475.25(1)(e), Florida Statutes, as charged in Count II of the Administrative Complaint. It is further recommended that the Final Order suspend all real estate certifications, licenses, permits and registrations of the Respondent as to Counts II of the Administrative Complaint, for a period of 2 years and that he be fined $1,000 and that such real estate certifications, licenses, permits and registrations of the Respondent also be suspended concurrently for a period of one (1) year as to Count I of the Administrative Complaint, and that he be fined an additional $1,000 for a total fine of $2,000. RECOMMENDED this 15th day of January, 1991, at Tallahassee, Florida. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of January, 1991. COPIES FURNISHED: James H. Gillis, Esquire Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Richard F. Gallo 2664 West End Road West Palm Beach, Florida 33406 Darlene F. Keller, Director Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Kenneth E. Easley, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Petitioner is a state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints against real estate professionals pursuant to the laws of the State of Florida, in particular Section 20.30 and Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent, Eugene A. Oathout, is now and at all times pertinent to this proceeding has been a duly licensed real estate broker in the State of Florida. Mr. Oathout's license number is 0064983. The last license issued to him was as a broker in care of C I Associates, Inc., trading as C I, 5075 N. A1A, Post Office Box 3070, Vero Beach, Florida 32964-3070. Respondent, C I Associates, Inc., trading as C I, is now and at all times pertinent to this proceeding has been a duly licensed real estate broker in the State of Florida. C I's license number is 0232366. The last license issued to it was for the address 5075 N. A1A, Post Office Box 3070, Vero Beach, Florida 32964-3070. At all times pertinent to this proceeding, Respondent Oathout was licensed and operating as the qualifying broker and officer of Respondent C I. On August 30, 1994, Dawn R. Luchik, an investigator employed by Petitioner, paid an unannounced visit to Respondents' real estate brokerage office for the purpose of performing a random audit of Respondents' escrow accounts. Respondent Oathout was present at the Respondents' office on August 30, 1994, but because his secretary was not there, he had difficulty finding all the files and records Ms. Luchik wanted to review. At that time, Respondents maintained two escrow accounts, one for real estate sales matters (the sales account) and one for rental and property management matters (the management account). After her review of the records on August 30, 1994, Ms. Luchik tentatively concluded that there was no problem with the sales account but that there existed a shortage in the management account of $4,111.00. Ms. Luchik testified that Mr. Oathout appeared shocked at her tentative finding as to the management account. An appointment was scheduled for Ms. Luchik to return to complete her audit on September 6, 1994. This second appointment was made so Respondent Oathout could, with the assistance of his secretary, attempt to locate certain files and determine how a deficiency in the escrow account occurred. Rule 61J2-14.012(2), Florida Administrative Code, requires real estate brokers to reconcile escrow accounts monthly. Respondent Oathout attempted to reconcile this account by comparing the liabilities of the account with the monthly bank balance that reflected the actual amount in the account at the end of each month. At all times pertinent to this proceeding, Respondent Oathout determined the liabilities of the account from computer generated data using a computer data base contained in a commercial software computer program known as "Ability". Respondents had purchased and installed this software program between five and six years prior to the audit and used it until the audit. This software program determined the liabilities against the management escrow account by adding four columns of numbers. The program then added together the sums of the four columns and the resulting number was supposedly the total liabilities against the management escrow account. In reviewing his records in an effort to determine the existence and extent of any problem with the management account, Respondent Oathout determined that this "Ability" computer program had regularly misadded two of the four columns summaries that he prepared monthly. The two columns erroneously totalled by the computer program were the one for last month's rental deposits and the one for security deposits. No pattern or reason for the miscalculations by the accounting program is apparent. Unlike other recurring monthly income and expense items, disposition of these payments occurred only on the termination of a tenancy. Consequently, Respondent Oathout did not regularly review or reconcile the entries in these columns. Because the two incorrect columns consistently under-reported Respondents' liability for last month's and security deposit payments, Respondents' balances showed a lower escrow account liability than actually existed. In addition to managing rental properties for clients, Respondent Oathout had his own rental properties. Respondents maintained in the management account deposits made by tenants of Respondent Oathout in addition to deposits made by their clients. Each month, near month's end, Respondent Oathout would take a trial balance of the management account. Based on the information contained in the computer printout and after accounting for uncleared and outstanding checks and unrecorded current deposits, he would determine whether there existed a surplus in the management account. Because the calculation of liabilities was consistently understated, his calculation of the surplus was consistently overstated. Respondent Oathout would thereafter assume that any surplus reflected in the account belonged to him and he would withdraw the excess from the account. Respondents' reconciliation statements contained small discrepancies that were inadequately explained and failed to provide the corrective action that Respondents would take to resolve the discrepancies. Because the computer software error had gone undetected for so long, Respondents' accounting records had been overstated a total of $27,992.30 with a corresponding shortage in the management bank account in the sum of $23,482.97. When Ms. Luchik returned to Respondents's office on September 6, 1994, Respondent Oathout told her that he calculated the shortage in the management account as being $23,482.97 as opposed to $4,111.00, showed her his records, and explained that he had detected an error in the computer program. Ms. Luchik amended her final investigation report to reflect that the amount of shortage in the management account was the amount calculated by Respondent Oathout. When the existence of a shortage was verified and the amount confirmed, Respondent Oathout promptly corrected the shortages. On September 6, 9, and 12, 1994, he made deposits from his own funds into the management account in the respective amounts of $12,000, $2,500, and $8,982.97. There was no evidence that Respondent Oathout knew of this computer problem or that he was aware that a shortage existed before Ms. Luchik's audit. The software problem was a glitch that was not caused by Respondents or manipulated by them.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order that adopts the findings of fact and conclusions of law contained herein, dismisses the charges alleged in Counts One and Two, finds Respondents guilty of the charges alleged in Counts Three, Four, Five, and Six. It is recommended that Respondent Oathout be placed on probation for a period of one year for these violations. 1/ Administrative fines in the total amount of $500.00 should be imposed against the Respondents for the violations of Counts Three and Four. Administrative fines in the total amount of $2,000.00 should be imposed against the Respondents for the violations of Counts Five and Six. DONE AND ENTERED this 29th day of March, 1996, 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 March 1996.
The Issue The issue to be resolved in this proceeding concerns whether the Respondent's Florida Real Estate Broker's License should be the subject of sanctions, based upon the charges alleged in the Administrative Complaint, wherein it is contended that the Respondent has violated Section 475.25(1)(k), Florida Statutes, and Rules 61J2-14.012(2) and (3), Florida Administrative Code, and derivatively, Section 475.25(1)(e), Florida Statutes (1998 and 1999).
Findings Of Fact The Petitioner is an agency of the State of Florida charged with regulating and enforcing the statutory provisions pertaining to real estate licensure and practice in the State of Florida. It is charged with the duty to prosecute Administrative Complaints against perceived violations and violators of the Florida Real Estate Practice Act, Chapter 475, Florida Statutes, and the rules promulgated pursuant thereto, as well as in the manner envisioned in Chapter 455, Florida Statutes, and Chapter 120, Florida Statutes. The Respondent, at all times pertinent hereto, has been a licensed Florida real estate broker, holding License 0596898. The Respondent was last licensed as an inactive broker due to non-renewal. He has not been charged or found guilty of any violations of the statutes and rules pertaining to real estate licensure and practice in the past. His last known address is 212-B Sudduth Place, Parker, Florida 32404. The Petitioner's investigator John Hentz conducted an office inspection and an audit of the Respondent's escrow accounts and broker's trust accounts on April 2, 1999. The audit was conducted at the office of the Respondent, trading as George H. Smith Real Estate. The Respondent maintained an account with Bay Bank of Panama City entitled "Rental escrow account." This was actually the "owners' distribution escrow account." The account number is 2603100501. An audit of that escrow account revealed a total trust account liability of $16,861.51, meaning the total amounts of escrows the Respondent and his firm were liable to pay out if the account was entirely paid-out to those for whom it was held in trust. The reconciled bank balance, however, was for $4,001.82. This resulted in an apparent shortage of $12,858.69. The Respondent and his company also maintained an account entitled "escrow rental deposit account." This account was maintained at Regions Bank of Panama City. The account will be described as the "security deposit escrow account." The security deposit escrow account bears account number 55-022- 9270. An audit of that account revealed that the total trust liability for that account was $22,525.00. The reconciled bank balance for that account was $21,277.50. This resulted in an apparent shortage in the amount of $1,247.50. Mr. Hentz established that the audit disclosed that the Respondent failed to prepare written monthly reconciliation statements for both of the accounts from at least May of 1998 forward. The Respondent, however, asserted that he had prepared a written reconciliation for the February 1999 time period, but admitted that he had not provided the required explanation on the reconciliation form. The evidence also shows that the Respondent began operating as the managing or operating broker of George H. Smith Real Estate sometime in the period March through May of 1999. The records maintained by the Petitioner show that the qualifying broker was George H. Smith, the Respondent's father. George H. Smith and the Respondent provided the Petitioner with the corrective documentation registering the Respondent as the operating broker, however. Mr. Hentz obtained the broker's records from the Respondent during the course of his audit, including, but not limited to, bank statements, lists of balances for the owners' accounts, and the security deposit accounts, as well as a list of clients and a record of outstanding checks. Mr. Hentz reviewed the Respondent's "owner balance" list and the "checks pending" list for the owner's distribution account for the period up to February 28, 1999. Through this procedure he was able to determine the broker's trust liability for the account. Mr. Hentz calculated the broker's trust liability of $16,861.51, by adding the positive balance as identified on the Respondent's owner balance sheet as the amount of money that should be held on behalf of the property owners for the properties the Respondent managed. He then added the list of any outstanding checks or deposits. Mr. Hentz then compared the broker trust liability to the actual bank balance of $4,001.82 for the owners distribution account in order to determine whether the account was in balance and concluded that it was not. The difference between the broker liability and the bank balance reflected a shortage of at least $12,858.69. this indicated the amount of funds the Respondent did not properly maintain in the owners' distribution escrow account. Mr. Hentz also admitted that he should not have subtracted one particular negative balance and that the shortage should have actually been $532.00 greater than what was stated on the audit form. Mr. Hentz stated that the properties listed on the owners' sheet for John Green and Avalon Real Estate should only have been added in the calculations as a positive balance, and not any negative balance, since the same client owned the properties for both accounts with George H. Smith Real Estate. Mr. Hentz was not of the opinion, and found no evidence, that the Respondent had taken and used any of the funds for his personal use. Rather, the shortage reflected, in essence, a situation where the brokerage had used certain owners' funds to cover other owners' expenses, when the owners with the expenses had accounts which did not contain sufficient funds to cover their own rental property management expenses. Typically these situations occurred where the owners who had expenses, such as repair work for their properties, were slow in issuing checks to the Respondent's brokerage to cover such repairs or other expenses or, in infrequent instances, where the checks issued by the owners to the Respondent's brokerage did not clear because of insufficient funds. This situation occasioned more delay in rectifying shortages caused in the brokerage-maintained account because of the necessity of obtaining reimbursement from the owners issuing insufficient checks for their expense assessments. There was no intentional conversion of funds in the owners' distribution escrow account or in the security deposit escrow account for the Respondent's own use or for any improper use or use detrimental to any client's interest. Mr. Hentz followed the same steps in auditing the security deposit escrow account. The audit revealed that the Respondent's tenant list balanced and therefore, the broker trust liability for the account as of February 28, 1999, to be $22,525.00. There were no outstanding checks or deposits. The bank statement indicated that the security deposit escrow account balance as of that date was actually $21,277.50, resulting in a shortage of $1,247.50. Mr. Hentz was unable to recall if the Respondent provided an explanation for that shortage in the security deposit account, however, he testified that the former broker and owner, George H. Smith, immediately took corrective action the same day by depositing funds in the escrow account to cover the shortage. Mr. Hentz also established that during the audit the Respondent told him that the shortage in the owners distribution account resulted from owners' failure to reimburse George H. Smith Real Estate for expense payments made on behalf of the properties owned by those property owners, or for payments an owner or tenant may have made to George H. Smith Real Estate that were returned for insufficient funds. George H. Smith admitted in his testimony that a broker should not use funds from an escrow account to "loan money" to another owner but rather should use the a brokerage's own funds and that a monthly reconciliation statement review should identify any shortages for correction. The Respondent admitted in his testimony that the audit revealed that the escrow accounts were not in accordance with properly maintaining trust and liability. The Respondent also asserted that the information provided to Mr. Hentz at the time of the audit may not have accurately provided the status of each account, as to the owner balance sheet, but he did not provide any documentation to dispute the allegations. The Respondent admitted that he was unable to provide an explanation on the reconciliation statements when the trust liability did not actually match the balance on the bank statement.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, it is, therefore, RECOMMENDED that a final order be entered by the Florida Real Estate Commission finding the Respondent guilty of violating Section 475.25(1)(k), Florida Statutes; Rules 61J2-14.012(2) and (3), Florida Administrative Code; and, derivatively, Section 475.25(1)(e), Florida Statutes. In light of the facts found and conclusions reached hereinabove concerning the Respondent's candor in admitting responsibility for the shortages, that the brokerage took immediate corrective action, that no client was harmed and that the Respondent did not use any funds involved in the shortages for personal use or fraudulent purposes, it is recommended that a one-year suspension, with a co-extensive year of probation, be imposed, together with a $1,000.00 fine. It is further recommended that the suspension be abated and, if during the one-year of probation the Respondent successfully completes a 30-hour broker management course, that the suspension be cancelled. DONE AND ENTERED this 6th day of November, 2001, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with Clerk of the Division of Administrative Hearings this 6th day of November, 2001. COPIES FURNISHED: Sunia Y. Marsh, Esquire Department of Business and Professional Regulation 400 West Robinson Street Suite N-308A Orlando, Florida 32801-1772 Andre Carlos Smith 212-B Sudduth Place Parker, Florida 32404 Buddy Johnson, Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe street Tallahassee, Florida 32399-2202
