The Issue Whether petitioner should take disciplinary action against respondent for the reasons alleged in the administrative complaint?
Findings Of Fact Respondent Marc M. Harris holds a license to practice certified public accounting in Florida, No. AC 16869. Respondent compiled, permitted his name to be associated with, and issued a balance sheet or statement of financial position, including notes, for MMH Equity Fund, Inc., purporting to represent the company's position as of March 31, 1988. Petitioner's Exhibit No. 1; Petitioner's Request for Admissions Nos. 4, 5 and 6. The body of respondent's letter accompanying the balance sheet or statement of financial position reads: We have compiled the accompanying balance sheet of MMH Equity Fund, Inc., as of March 31, 1988, except as noted in the last paragraph, in accordance with the standards established by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial statements information that is the representation of the individual. We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any form of assurance on them. MMH Equity Fund, Inc., has elected to use the equity method to report its holdings in majority-owned subsidiaries. If the consolidated disclosures were included in the financial statements, they might influence the user's conclusions about the Fund's financial position. Accordingly, these financial statements are not intended for those who are not informed about such matters. Petitioner's Exhibit No. 1 (Emphasis supplied.) Dated April 15, 1988, the letter evinces an intention to qualify the balance sheet or statement of financial position. But the balance sheet or statement of financial position does not contain a reference to the accountant's report or to the notes. Petitioner's Request for Admissions Nos. 32 and 33; Petitioner's Exhibit No. 1; T. 26. While the letter refers to a "balance sheet," the document itself is styled a statement of financial position. Statements on Standards for Accounting and Review Services (SSARS), which have been adopted by Florida's Board of Accountancy, require that the balance sheet contain a reference to the accountant's report and notes to the financial statement, if any. Petitioner's Request for Admission No. 34; T. 26- This is particularly important when the report contains significant qualifications. Lack of Independence Undisclosed Respondent Harris was an officer and/or a director of MMH Equity Fund, Inc. Petitioner's Request for Admission No. 41. A company's officer or director is not independent of the company. In evaluating financial assets, liabilities and equity or net worth, certified public accountants offer three levels of service: audit, review and compilation. Certified public accountants are forbidden to undertake audits or reviews for entities with respect to which they are not independent. In contrast, nothing prohibits a certified public accountant's performing a compilation, despite a lack of independence. But the lack of independence must be disclosed: If the accountant is not independent, he should specifically disclose the lack of independence . . . When the accountant is not independent, he should include the following as the last paragraph of his report: I am . . . not independent with respect to XYZ Company. Statements on Standards for Accounting and Review Services, (SSARS) Section 100.22 (Jan. 1, 1987). The respondent's lack of independence was not disclosed in the accountant's report, on the statement of financial position, or in the notes. Petitioner's Exhibit No. 1; Petitioner's Request for Admission No. 42; T. 30, 31. Accepted Principles Disregarded A provision in SSARS 1 requires the accountant "to read the financial statements and make certain that there are no obvious deviations from generally accepted accounting principles." T. 29. This requirement applies specifically to compilations, to prevent disregard for generally accepted accounting principles. Petitioner's Exhibit No. 7; T. 29. Respondent did not adhere to applicable generally accepted accounting principles or exercise due professional care in compiling and issuing the March 31, 1988, statement of financial position for MMH Equity Fund, Inc. Assets should equal equity plus liabilities. T. 11. On the compiled balance sheet or statement of financial position, total liabilities and stockholders' equity do not add up to the amount stated as total assets. The document reflects a discrepancy of $100,000. Petitioner's Exhibit No. 1; T. 11. The balance sheet or statement of financial position puts total assets at $13,171,000 but, as stated individually, they add to $13,216,000. Petitioner's Exhibit No. 1; Petitioner's Request for Admissions Nos. 9 and 10. The balance sheet or statement of financial position shows investment in operating affiliates in the amount of $6,234,000. But there is no further disclosure as to who or how many those affiliates are; as to how much of the $6,234,000 is invested in any one entity; or as to what percentage of ownership MMH Equity Fund, Inc. has in any one entity. Petitioner's Exhibit No. 1; T. 18. With respect to investments accounted for by the equity method, Accounting Principles Board Statement No. 18 requires that the name of each investee and the percentage of the investor's ownership of common stock, if significant, be disclosed in the notes. Petitioner's Request for Admissions No. 25; Petitioner's Exhibit No. 4; T. 17-20. If the certificates of deposit were held by related parties, they should have been disclosed in the notes. T. 22. Financial Accounting Standards Board Statement No. 57 requires that the name and amount or amounts due to or from related parties be disclosed. Petitioner's Exhibit No. 5; T. 23. The notes do not disclose the balances of major classes of depreciable assets by nature or function. Petitioner's Requests for Admissions Nos. 15 and 16; Petitioner's Exhibit No. 1; T. 15. Accounting Principles Board Statement No. 12 requires that depreciable assets be broken down by class together with the accumulated depreciation thereon. T. 16; Petitioner's Exhibit No. 3. Neither the gross amount of assets in the balance sheet nor the accumulated amortization for the assets recorded under capital leases is disclosed in the notes. Petitioner's Requests for Admission Nos. 26 and 27; Petitioner's Exhibit No. 1; T. 24. The notes do not disclose accumulated depreciation by class nor do the notes disclose total accumulated depreciation. Petitioner's Requests for Admissions Nos. 18 and 19; Petitioner's Exhibit No. 1; T. 15 and 16. Neither the aggregate cost nor the market value of marketable securities is disclosed on the balance sheet or statement of financial position or in the notes. Petitioner's Requests for Admissions Nos. 29 and 30; Petitioner's Exhibit No. 1; T. 25. The requirement is that both the original cost and market value be disclosed. Petitioner's Request for Admissions No. 31; T. 25. No allowance for doubtful accounts is disclosed on the balance sheet or statement of financial position or in the notes, and no explanation is offered why such an allowance might be unnecessary. Petitioner's Request for Admissions No. 21; Petitioner's Exhibit No. 1; T. 16. Accounting Principles Board Statement No. 12 requires either that allowance for doubtful accounts be made or that an explanation as to why one is not needed be included in the notes. Petitioner's Request for Admissions No. 22; Petitioner's Exhibit No. 3; T. 16, 17. Neither the March 31, 1988, compiled balance sheet or statement of financial position for MMH Equity Fund, Inc. nor the notes disclose any maturity schedule for long term notes. But these long term notes represent indebtedness of $11,000, or less than one thousandth of total assets, and the omission of a maturity schedule is immaterial.
Recommendation It is, accordingly, recommended that the Board of Accountancy reprimand respondent; and place him on probation, on condition that he not practice in Florida without supervision by another certified public acountant licensed in Florida, until he has practiced in Florida under the supervision of another certified public accountant licensed in Florida satisfactorily for a year; and completed 24 hours of continuing education in generally accepted accounting principles. RECOMMENDED this 12th day of September, 1990, 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 12th day of September, 1990. COPIES FURNISHED: Charles F. Tunnicliff, Esquire Tobi C. Pam, Senior Attorney Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 Marc M. Harris Apartado 6-1097 Estafeta El Dorado Panama, Republica de Panama Kenneth E. Easley, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 Martha Willis Executive Director Department of Professional Regulation Suite 16 4001 Northwest 43rd Street Gainesville, FL 32606 =================================================================
Findings Of Fact The Corporation, John L. Bennett, Sr., Inc., is a corporation organized and existing under the laws of the State of Georgia. Mr. John L. Bennett, Sr., is the sole owner of all its outstanding stock. The corporation conducts a small loan business, and makes and collects all its loans exclusively within the State of Georgia. The Corporation has never engaged in any other business. The Corporation has been assessed intangible tax upon accounts receivable made and collected within the State of Georgia for the years 1973, 1974 and 1975. On October 26, 1976, the Corporation paid the tax totaling Nine Hundred Sixty-Eight Dollars and Eighty-Six Cents ($968.86), including interest and penalties. Georgia intangible tax was also paid on these receivables for the same years. On May 27, 1977, the Corporation formally executed a requisition for refund of the intangible tax payment. On June 9, 1977, the requisition for refund of taxes was denied by the Office of the Comptroller. John L. Bennett, Sr. is president of the Corporation as well as sole stock holder. He resides in Orlando, Florida, and has lived there since 1937. Mr. Bennett maintains a small office in Orlando staffed with a full-time secretary. The Corporation pays the rent on the office, the secretary's salary, Mr. Bennett's salary, insurance premiums and other miscellaneous items. A check for these expenses is mailed each month from the Corporation's Georgia office to the Orlando office where it is deposited in a local bank account. The secretary in the Orlando office then draws on the account in order to make the foregoing payments. During the tax years in question, the Corporation maintained as many as four loan offices in Georgia. That number has since been reduced to the one presently located in Waycross, Georgia. The Orlando office is the only one which keeps centralized financial data from all Georgia offices. In addition to maintaining these duplicate records, the Orlando office is used for the preparation of all corporate tax returns. Mr. Bennett also keeps his personal records there. However, no customer transactions are conducted from Orlando. Corporate meetings are held in the Orlando office and Mr. Bennett visits the Corporate offices in Georgia Once a month. Most policy decisions are made in the State of Georgia during these monthly trips, however, Mr. Bennett writes letters and makes phone calls to the Georgia offices from Orlando two to three times each month as required by circumstances. Corporate employees in Georgia have the authority to, and do, make routine business decisions on their own. All corporate funds are kept in Georgia with the exception of the monthly expense check referred to previously.
The Issue Whether Respondent timely filed a quarterly report as required under chapter 560, Florida Statutes (2015), or related rules.
Findings Of Fact OFR is the state agency responsible for the administration and enforcement of chapter 560, related to licensing of money services businesses, a term that includes money transmitter services, and the rules promulgated thereunder. Respondent is a money services business and has license number FT30800590. Respondent operates as a check casher, and is located at 3220 Sydney Dover Road, Dover, Florida. Every Florida licensed check casher is required to submit quarterly reports to OFR in a format which includes information specified by rule. See § 560.118(2), Fla. Stat. The due date for a check casher to have filed its money services business quarterly report for the quarter ending December 31, 2014, was February 16, 2015. OFR sent a reminder to Respondent within ten days following December 31, 2014, to file the quarterly report. OFR sent seven additional e-mails before the deadline advising Respondent to file the quarterly report within the deadline. On March 6, 2015, Respondent filed the quarterly report in the proper format; however, it was 18 days after the applicable filing deadline. OFR determined that Respondent’s late filing of the quarterly report is a “Class A” violation pursuant to rule 69V- 560.1000(39) and (150). OFR determined the appropriate penalty to be a $1,000 fine. Mr. Grosmaire’s testimony on the basis of OFR’s imposition of the $1,000 fine is credible.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Office of Financial Regulation enter a final order imposing an administrative fine of $1,000. DONE AND ENTERED this 19th day of July, 2016, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK 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 19th day of July, 2016. COPIES FURNISHED: Amjad J. Hijaz Mexican American Grocery 1105 Spurwood Court Brandon, Florida 33511 (eServed) William Michael Oglo, Esquire Office of Financial Regulation Fletcher Building, Suite 550 200 East Gaines Street Tallahassee, Florida 32399-0376 (eServed) Eric O. Husby, Esquire 2001 West Cleveland Street Tampa, Florida 33606 (eServed) Drew J. Breakspear, Commissioner Office of Financial Regulation 200 East Gaines Street Tallahassee, Florida 32399-0350 (eServed) Colin M. Roopnarine, General Counsel Office of Financial Regulation The Fletcher Building, Suite 118 200 East Gaines Street Tallahassee, Florida 32399-0370 (eServed)
Findings Of Fact The Respondent, Robert Watson, Jr., is a real estate broker-salesman, having been issued license Number 0093690. He resides and has his business in Jacksonville, Florida. On or about September 1, 1978, the Respondent negotiated and drafted a contract for sale of a certain piece of residential real estate, the purchaser for which was one Mr. Lacy Cole. The Respondent was Mr. Cole's broker in that transaction. The Respondent informed Mr. Cole that he would have to pay a two- hundred-dollar deposit as prospective buyer pursuant to the deposit receipt, sales contract agreement drafted by the Respondent. Mr. Cole did not pay the entire two-hundred-dollar deposit, but he did pay the Respondent sixty-five dollars. The closing was held October 20, 1978, at which time Mr. Cole's attorney directed the Respondent to pay Mr. Cole a two-hundred-dollar refund as the contract for sale provided that financing would be through the Veterans Administration and that in such a Veterans Administration sponsored transaction the buyer is precluded from paying closing costs. Mr. Cole cashed the two- hundred-dollar check in good faith and later was informed that the Respondent had stopped payment on it, which resulted in Mr. Cole having to make the check good. The Respondent has failed to recompense Lacy Cole for the sixty-five- dollar deposit he had already paid pursuant to the contract for sale drafted by the Respondent. Mr. Watson has also never repaid the two hundred dollars which Mr. Cole had to expend in order to provide payment on the two-hundred-dollar check on which the Respondent had stopped payment. In response to the Petitioner's demonstration that the Respondent had obligated Mr. Cole for a two-hundred-dollar "binder or closing costs" which he was not obligated to pay under Veterans Administration policy, the Respondent stated that he wrote the contract with the two-hundred-dollar binder with the understanding that Cole would pay a portion of it at the first of each month until it was paid and that he only received a total of sixty-five dollars from Cole. The seller agreed to sell the property to Mr. Cole anyway. The Respondent maintained that he merely told Mr. Cole at the closing that he would write him a two-hundred-dollar check and deliver it to him at closing with the understanding that Cole would deliver it back to him immediately afterward to keep from confusing the attorney." The Respondent, however, failed to refute the showing by the Petitioner that the Respondent attempted to obligate that purchaser to pay two hundred dollars in "closing costs" which he was not legally obligated to pay and for which the seller of the property was responsible in the first place. The Respondent adduced no evidence contrary to that of Petitioner which established that, after being informed by the attorney that Mr. Cole was not responsible for any deposit or closing costs, the Respondent still retained the sixty-five dollars paid him as earnest money by Mr. Cole and, further, that after stopping payment on Cole's refund check, causing Mr. Cole to incur two hundred dollars additional expense for which he was not obligated, the Respondent failed to recompense Cole. There is thus no question that the Respondent misrepresented to his client, Mr. Cole, the obligations and expenses Mr. Cole would have to incur in order to purchase the property and thus, in effect, wrongfully obtained two hundred sixty-five dollars from Mr. Cole. On or about September 16, 1978, Mrs. Joanne Wesley deposited a ten- dollar check with the Respondent as a partial deposit for a down payment on a home. On or about September 20, 1978, she deposited an additional one-hundred- dollar check with the Respondent as further deposit on the same contract for sale and purchase which the Respondent had at that time not yet drafted. The Respondent never made an appropriate deposit of the above referenced checks in his escrow account, but, instead, cashed them for his personal use. On or about October 25, 1978, the contract for sale and purchase was finally drafted by the Respondent. On approximately December 4, 1978, Mrs. Wesley deposited with the Respondent an additional check for eight hundred fifty dollars as the final installment of her deposit money with regard to the proposed purchase of the home. On December 29, 1978, Mrs. Wesley learned that she had failed to qualify for FHA financing with regard to the above-referenced contract and, after looking at another home which was not to her liking offered to her by the Respondent as a "replacement dwelling," finally requested the refund of her total deposit of nine hundred sixty dollars. The Respondent then requested Mrs. Wesley to wait until January 2, 1979, for that refund and on January 2, 1979, tendered to her four hundred dollars cash as partial reimbursement. On January 3, 1979, the Respondent tendered to her an additional three hundred dollars cash and drew and delivered to her his escrow check, post-dated to January 10, 1979, in the amount of two hundred fifty dollars. That escrow account check was returned for insufficient funds. On February 1, 1979, Mrs. Wesley's attorney made demand on the Respondent for payment of the two hundred fifty dollars outstanding, represented by the invalid check. On approximately February 3, 1979, the Respondent ultimately paid the two hundred fifty dollars due Mrs. Wesley. Thus, at that point the Respondent had refunded nine hundred fifty dollars of the nine hundred sixty dollars in deposit money due Mrs. Wesley. The entire refund had become due on December 29, 1978, when it was learned that she could not qualify for FHA financing with regard to the proposed purchase, which qualification for financing was a condition precedent to performance of the contract. In his defense the Respondent stated that he attempted to arrange the purchase of another dwelling for Mrs. Wesley upon learning that she could not qualify for financing on the subject property and that he retained her deposit money in his escrow account for that reason and ultimately repaid it to her, although after over a month's delay. The Respondent contended that he had opened the subject account as a business account when he was doing appraisal work and had not considered it to be an escrow account and "did not know when they switched it over to escrow." The Respondent did acknowledge that he had used this escrow account as his business account and commingled personal and business operating funds in it and made withdrawals from time to time for business and personal reasons. With further regard to the Cole transaction, the Respondent contended that he felt it was customary for a veteran to pay two hundred dollars closing costs and even when he learned the veteran was not obligated to pay closing costs in such a transaction, that he still felt it was "customary as earnest money" even though the seller obviously was obligated to pay closing costs. The Respondent also testified that as of the time of the hearing and for an indeterminant period of tinge before the hearing, he had terminated active practice of real estate brokerage and was mostly performing appraisal work. There is thus no question that the Respondent informed Mr. Cole that he was obligated to pay two hundred dollars "earnest money" or "closing costs" and that his actions forced Mr. Cole to incur the two-hundred-sixty-five dollar expense described above, even after the Respondent was informed by the closing attorney that the purchaser was not obligated for those expenses. There is no question with regard to the Wesley transaction that he delayed an inordinate amount of time in refunding her deposit money after the condition of financial qualification for the purchase did not occur, and, further, that he commingled these purchaser deposit funds in his escrow account with personal and business funds and used a portion of them for personal purposes.
Recommendation Having considered the foregoing findings of fact and conclusions of law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is RECOMMENDED that the license of Robert Watson, Jr., as a real estate broker in the State of Florida be REVOKED. DONE AND ENTERED this 1st day of February, 1982, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of February 1982. COPIES FURNISHED: Barry S. Sinoff, Esquire 2400 Independent Square One Independent Drive Jacksonville, Florida 32202 Robert Watson, Jr. 9527 Abedare Avenue Jacksonville, Florida 32208 Frederick B. Wilsen, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Samuel Shorstein, Secretary Department of professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 C. B. Stafford, Executive Director Board of Real Estate Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802
The Issue Whether Respondents violated the statutes and rules alleged in the Second Amended Administrative Complaint; and, if so, what is the appropriate penalty to be imposed against Respondents.
Findings Of Fact OFR is the state agency charged with administering and enforcing chapter 560, Florida Statutes, including part II related to money services businesses. At all times material hereto, Payservices has been a foreign corporation and part II licensee pursuant to chapter 560, specifically a "money services business," as defined in section 560.102(22), and "money transmitter," as defined in section 560.102(23).4/ At all times material hereto, Mr. Danenberg has been the chief executive officer, compliance officer, and an owner of Payservices. As such, Mr. Danenberg is an "affiliated party" and a "responsible person" as defined in sections 560.103(1) and 560.103(33). Count I Licensees, such as Payservices, are required to annually file a financial audit report within 120 days after the end of the licensee's fiscal year. The financial audit report is prepared by a certified public accountant and is used to demonstrate to OFR that the licensee has the financial health to conduct its business and transmit funds within the State of Florida. Payservices' fiscal year ends December 31st. Respondents were required to provide Payservices' 2016 financial audit report to OFR by no later than May 1, 2017. On December 20, 2017, William C. Morin, Jr., OFR's Chief of the Bureau of Registration, contacted Payservices by email with regard to Payservices' failure to timely file a financial audit report within 120 days after the 2016 fiscal year ended. Mr. Danenberg responded by email that same day, telling Mr. Morin that Payservices' accountant had prepared a financial audit report "many months ago," and that it was his "impression" that it had been uploaded to the REAL system "at some point when we filed the quarterly reports." Mr. Danenberg attached to his December 20, 2017, email what OFR accepted as the financial audit report that same day. Notably, the document indicated it was prepared by a certified public accountant on June 15, 2017, after the May 1, 2017, deadline. In any event, Mr. Morin reviewed the REAL system regarding Payservices and determined there were no problems with the REAL system's ability to accept uploaded documents. Mr. Morin testified that he could see on the REAL system that Payservices successfully uploaded a quarterly report and Security Device Calculation Form on January 26, 2017, which created a transaction number. Mr. Morin also observed that Payservices started to upload its financial audit report, which would create a transaction number, but no financial audit report was actually attached and uploaded to the REAL system on January 26, 2017, under that transaction number. According to Mr. Morin, Payservices may have attempted to start to file a financial audit report on January 26, 2017, but it did not complete the transaction because no financial audit report was attached. At hearing, Mr. Morin acknowledged that: "When I looked at the Financial Audit Report transaction, nothing was attached. And I also know that the functionality of the REAL system will kind of allow for the transaction to be completed and nothing attached." Tr. p. 100. Mr. Morin testified that Mr. Danenberg was cooperative when he was contacted on Decemeber 20, 2017, and submitted the financial audit report. The persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not submit their financial audit report to OFR until December 20, 2017, almost eight months after the May 1, 2017, deadline. Count II Licensees, such as Payservices, are required to annually file Form OFR-560-07, Security Device Calculation Form, by January 31st of each calendar year for the preceding calendar year. The Security Device Calculation Form requires licensees to report to OFR the dollar amount of transactions with Florida consumers. The dollar amount of transactions identified in the form is then utilized by OFR to determine if additional collateral is necessary to protect Florida consumers in the event a claim is made against the collateral for monies that were not properly transmitted by the licensee. Andrew Grosmaire, OFR's Chief of Enforcement in the Division of Consumer Finance, acknowledged at hearing that a licensee has 60 days to amend the face value of its surety bond, should an increase be required, and that at all times material hereto, the value of Payservices' surety bond has been correct for the minimum amount required. Nevertheless, Mr. Morin testified that Respondents did not file Form OFR-560-07, Security Device Calculation Form, until February 10, 2018, ten days late. The persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not file Form OFR-560-07, Security Device Calculation Form, until February 10, 2018, ten days late. Count III Licensees, such as Payservices, are required to update information contained in an initial application form, or any amendment to such application, within 30 days after the change is effective. In Payservices' initial application dated September 25, 2015, Respondents identified Corporate Access, Inc., as its registered agent with an address for service of process at 236 East 6th Avenue, Tallahassee, Florida 32303. According to the Department of State, Division of Corporation's records, on January 10, 2017, Mr. Danenberg was appointed as Payservices' registered agent with a new address for service of process at 300 West Palmetto Park Road, A210, Boca Raton, Florida 33432. Respondents filed an amended license application with OFR on August 28, 2017, which still listed Corporate Access, Inc., as the registered agent for service of process. On February 26, 2018, Respondents amended their registered agent information with the Department of State listing a new address for Mr. Danenberg at 14061 Pacific Pointe Place, No. 204, Delray Beach, Florida 33484. Mr. Morin testified that at no time have Respondents updated their initial application with OFR to reflect Mr. Danenberg as the registered agent for Payservices and his address as the registered agent.5/ Mr. Morin and Mr. Grosmaire testified that the reason a licensee needs to update a change in the registered agent's name and address is so that OFR may effectuate service of process against the licensee. Yet, Mr. Grosmaire acknowledged that OFR has access to the Division of Corporation's records. Nevertheless, the persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not update their initial application with OFR to reflect Mr. Danenberg as the registered agent for Payservices and his address as the registered agent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that OFR impose an administrative fine against Respondents in the amount of $6,000. DONE AND ENTERED this 16th day of December, 2019, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ 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 16th day of December, 2019.
The Issue Whether the proposed decision of the Department of Children and Family Services to award the contract for Florida Assertive Community Treatment (FACT) Programs for District 11, as set forth in RFP No. 01H02FP5, to Psychotherapeutic Services of Florida, Inc., was contrary to the Agency's governing statutes, the Agency's rules or policies, or the specifications of the RFP?
Findings Of Fact On or about February 18, 2002, DCF issued RFP No. 01H02FP5 for the implementation of Florida Assertive Community Treatment (FACT) Programs for persons with severe and persistent mental illnesses in DCF Districts 4, 7, and 11. The review in this case is limited to DCF's proposal to award a FACT contract in District 11. Three vendors submitted proposals for District 11, including Petitioner and Intervenor. Section 5.2 of the RFP requires that each proposal include a title page as page two of the proposal and include the RFP number; title of proposal; prospective offeror's name; organization to which the proposal is submitted; name, title, phone number and address of person who can respond to inquiries regarding the proposal; and name of project director, if known. The proposal submitted by Intervenor contained a title page identifying the offeror as Psychotherapeutic Services of Florida, Inc., (PSFI) with a mailing address in Chesterfield, Maryland. Further, every page of Intervenor's proposal had the name Psychotherapeutic Services of Florida, Inc. printed on the bottom left corner of every page. Section 6.1 of the RFP describes two phases of DCF's review of the proposals. The first is an initial screening of all proposals for what the RFP describes as "Fatal Criteria." The second is the qualitative review by an evaluation team of each proposal using criteria set out in the RFP. Fatal Criteria Section 5.4 of the RFP reads as follows: 5.4 RESPONSE TO INITIAL SCREENING REQUIREMENTS The initial screening requirements are described as FATAL CRITERIA on the RFP Rating Sheet (see section 6.1). Failure to comply with all initial screening requirements will render a proposal non-responsive and ineligible for further evaluations. The fatal criteria are: Was the proposal received by the date, time and location as specified in the Request for Proposal (section 2.4)? Was one (1) original and eight (8) copies of the proposal submitted and sealed separately? (section 5.12)? Did the provider include a Proposal Guarantee payable to the department in the amount of $1,000.00 (section 2.11)? Did the application include the signed State of Florida Request for Proposal Contractual Services Acknowledgement Form, PUR 7033 for each proposal submitted? Did the provider submit the Notice of Intent to Submit form contained in Appendix 2 by the required due date? Did the provider register and attend the offeror's conference? Did the proposal include the signed Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion Contracts/Subcontracts (Appendix 6)? Did the proposal include the signed Statement of No Involvement(Appendix 7)? Did the proposal include the signed Acceptance of Contract Terms and Conditions indicating that the offeror agrees to all department requirements, terms and conditions in the Request for Proposal and in the Department's Standard Contract (Appendix 8)? Did the proposal include a signed lobbying form (Appendix 9)? Did the proposal include an audited financial statement for fiscal years 1999- 2000 and 2000-2001? Did the proposal include a certification of the offeror's good standing (Appendix 1)? Did the proposal contain evidence the minimum staffing levels in section 3.11 will be hired and employed? Did the proposal contain a signed Certification of a Drug-Free Workplace program (Appendix 10)? Did the proposal contain a certification regarding electronic mailing capability as referenced in section 3.20 (Appendix 5)? (emphasis in original) Section 6.1 of the RFP includes a Fatal Criteria rating sheet requiring "yes" or "no" responses by the reviewer, which included, among other provisions, the following: 4. Did the proposal include a signed Form PUR 7033? * * * 11. Did the proposal include independent audited financial statement from a CPA firm for fiscal years 1999-2000 and 2000-2001? Form PUR 7033 Section 5.1 of the RFP, entitled, STATE OF FLORIDA REQUEST FOR PROPOSAL CONTRACTUAL SERVICES ACKNOWLEDGMENT FORM, PUR 7033, requires proposers to manually sign an original Form 7033 on the appropriate signature line. The signed form 7033 must appear as the first page of the proposal. Form PUR 7033 is not a form generated by DCF but is generated by the Department of Management Services. The RFP did not set forth any fatal criteria in connection with this form other than it be signed. The proposal of Intervenor, PSFI, contained form PUR 7033 with the signature of PSFI's Chief Executive Officer, D. Cherry Jones, within the signature block designated as "authorized signature." The name Psychotherapeutice [sic] Services appears on Intervenor's form 7033 in the block entitled "vendor name." The address which appears in the block designated as "vendor's mailing address" on Intervenor's form PUR 7033 is the same mailing address in Chesterfield, Maryland, that appears on the title page of Intervenor's proposal. In completing the RFP forms designated as Appendix 1, Offeror Certification of Good Standing; Appendix 5, Certification of Electronic Mail Capability; Appendix 7, Statement of No Involvement; Appendix 8, Acceptance of Contract Terms and Conditions; and Appendix 10, Certification of a Drug-Free Workplace Program, Psychotherapeutic Services appears in the blank designated for the name of the vendor or offeror. These appendices were all signed by D. Cherry Jones. No required appendix was omitted or unsigned in Intervenor's proposal. Petitioner contends that the use by Intervenor of Psychotherapeutic Services or a shortened version of its full name instead of Psychotherapeutic Services of Florida, Inc., on Form PUR 7033 and the required appendices renders Intervenor's proposal non-responsive to fatal criteria and caused confusion within DCF as to the corporate status of the actual offeror. In Appendix 8 to Intervenor's proposal, the corporate documents from the Florida Department of State were for Psychotherapeutic Services of Florida, Inc. Timothy Griffith is Deputy Executive Director of Psychotherapeutic Services of Florida, Inc. According to Mr. Griffith, the use of the term Psychotherapeutic Services refers to a group of companies that make up the Psychotherapeutic Services Group. The parent company of all Psychotherapeutic Services affiliates, including Psychotherapeutic Services of Florida, Inc., is Associated Service Specialists, Inc. The relationship between Psychotherapeutic Services of Florida, Inc., and Associated Service Specialists, Inc., was set forth in sufficient detail in Intervenor's proposal. There is no evidence that anyone in DCF or its evaluators were confused as to what entity was identified in the proposal submitted by Intervenor. Stephen Poole is a Senior Management Analyst II with DCF, and is the procurement manager for the RFP. There was never any confusion in his mind as to what entity was making the offer to DCF. He understood Psychotherapeutic Services to refer to Psychotherapeutic Services of Florida, Inc., and had a "common sense" understanding of who the offeror was. Consistent with his testimony, Mr. Poole's reference to Psychotherapeutic Services, Inc., on the bid tabulation sheet was simply shorthand for Psychotherapeutic Services of Florida, Inc. Similarly, the bid tabulation sheet references Petitioner as Bayview Center for Mental Health even though its full name is Bayview Center for Mental Health, Inc. Likewise, his reference to "PSI" on the fatal criteria evaluation sheet "stood for and stands for, in our language, Psychotherapeutic Services of Florida, Inc." Petitioner's assertion that Intervenor's proposal was non-responsive as a result to the use of an abbreviated form of Intervenor's name is not supported by the above findings. Financial Statements Petitioner asserts that Intervenor failed to meet the requirement set forth in Section 5.4k of the RFP and referenced in paragraph 11 of the fatal criteria RFP rating sheet, that proposers include independent audited financial statements for fiscal years 1999-2000 and 2000-2001. The RFP did not provide any definition, standard, guideline, or mandatory requirement for the format or content of financial statements, audits, or audited statements. The RFP simply required that they be included. Intervenor's proposal contained audited financial statements for fiscal years 1999-2000 and 2000-2001. Intervenor's 2000-2001 audited financial statements consisted of an independent auditor's report from Nardone, Pridgeon & Company, P.A., Certified Public Accountants, dated August 10, 2001; balance sheets; statements of cash flow; statements of operations and retained earnings (deficit); and personnel and operating expenses. However, four pages, consisting of the Notes to Financial Statements, were omitted. There is no dispute regarding the contents of the audited financial statements for 1999-2000 submitted by Intervenor. The independent auditor's report stated in pertinent part: We have audited the accompanying balance sheets of Psychotherapeutic Services of Florida, Inc. as of June 30, 2001 and 2000, and their related statements of operations and retained earnings (deficit) and cash flows for the years then ended. . . . In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Psychotherapeutic Services of Florida, Inc. as of June 30, 2001 and 2000 We conducted our audits to form an opinion on the 2001 and 2000 basic financial statements taken as a whole. Luther Cox is a certified public accountant and has expertise in accounting and financial statements. It is Mr. Cox's opinion that the notes to financial statements are a required element of an audited financial statement. Mr. Cox's opinion was based in part on the Florida Board of Accountancy Rules in defining the term, "financial statement." Mr. Cox acknowledged, however, that based upon the representation that the auditors provided in the first paragraph of their letter, the auditors reviewed all of the financial statements. Additionally, Mr. Cox acknowledged that based upon his review of the notes to the financial statements, there was no negative information which should have been disclosed in the subject auditor's opinion letter and that the letter was a "clean opinion", meaning that no adverse financial information was known to the auditors which otherwise would have been required to be reported. Martin Kurtz is also a certified public accountant. He acknowledged that that the omission of the notes is not consistent with the standards of the practice of accountancy in Florida. However, he was of the opinion that, based upon the way the independent auditor's opinion letter is written, the letter relates to a full set of financial statements. "They may not have all been presented in the proposal. But there was a full set of audited financial statements." Thus, the auditor's clean opinion letter included a review of the notes. According to Mr. Kurtz, the text of Intervenor's proposal contains more information about the relationship between the parent company and Psychotherapeutic Services of Florida, Inc., than the notes to the financial statements. With the above competing opinions by certified public accountants, it is appropriate to examine the agency's use of the audited financial statements in their review of the proposals. According to Mr. Poole, the requirement to have the proposals contain independently audited financial statements was to assure DCF that the offeror possessed sufficient financial sophistication and organizational capacity to perform a FACT contract. In reviewing compliance with the requirement for an audited financial statement, DCF reviewed the submission to determine whether or not it had a letterhead from an independent auditor and whether there were financial statements. The submitted financial statements were not reviewed by a certified public accountant of DCF. According to Mr. Poole, DCF was looking generally for the "strength, administratively of the offeror. If it had the level of management expertise to be able to perform a contract in that amount of money of a million dollars." The independent auditor's letter represents that Intervenor's financial statements for fiscal years 2000-2001 were in fact audited. Petitioner's assertion that Intervenor's proposal is non-responsive because of the omission of the notes to the financial statements is not supported by the above findings. In further support for its assertion that Intervenor's omission of the notes to the financial statements renders Intervenor's proposal non-responsive for failure to meet fatal criteria, Petitioner asserts that the requirement for the inclusion of audited financial statements was not only considered within the fatal criteria of the RFP, but also was a "key consideration" for scoring criterion 36 of the RFP. Organizational capacity is set forth in section 5.5(4) of the RFP and states in pertinent part: To assist in the determination of the offeror's organizational capacity, please provide, as part of this section, the following: 4. A copy of the financial statements or audits for state fiscal years 1999-2000 and 2000-2001. 6. Evidence that the offeror has met its financial obligations in a timely and consistent manner without the need to incur loans or a line of credit to routinely meet its expenses. (emphasis in original) Section 6.3.6 of the RFP contains certain criteria for the evaluators to score with regard to organizational capacity of the proposers. Criterion 36 reads as follows: 36. What evidence did the proposal provide that the offeror has not had to obtain loans or a line of credit to routinely meet its financial obligations and expenses in a timely and consistent manner as referenced in section 5.5(4)? Key considerations for scoring: Its independently audited financial statements for fiscal years 1999-2000 and 2000-2001 support response. Offeror's independently audited financial statements for the last two years give evidence of ability to start a new program without benefit of start-up funds. Each of the evaluation criteria contained references to key considerations for scoring. The key considerations were to assist the evaluators in assessing the merits of the proposals. In evaluating criterion 36 pertaining to lines of credit, it was the role of the individual evaluators to interpret the degree of routine reliance and assign, accordingly, a particular score from zero to three. Intervenor directly addressed loans and lines of credit in the text of its proposal in response to criterion 36. As with the other criteria, evaluators could score this criterion from zero to three. The Department deferred to the evaluators regarding how they interpreted offerors' responses to the requirements of 5.5(4). Thus, the omission of the auditor's notes in regard to criterion 36 goes to the weight of the information in the proposal, not as to whether or not fatal criteria were met. Evaluation Committee Process Members of the Evaluation Committee were given instructions by Mr. Poole prior to commencing the qualitative review of each proposal. Each Evaluation Committee member signed a conflict of interest statement indicating they had no conflicts. The members were specifically instructed that the proposals were to be reviewed independently from one another and from each other; that any problem an evaluator may have with a proposer was not to be considered as part of their score; that the universe began and ended within the confines of the proposal; and that they were to use a scoring protocol to affix their score and to report back the following week to give that score, but not to share their results with anyone until the briefing meetings that followed the qualitative review. The Evaluation Committee consisted of employees of DCF, except for Barbara Johanningsmeier, who is a National Alliance for the Mentally Ill (NAMI) representative. Mr. Poole spoke to the executive director of NAMI explaining that the NAMI evaluator should be a person who is knowledgeable either through life experience or work of Florida's community mental health system; who has an understanding of the system of care that is publicly funded; and who has an interest and some knowledge and expertise in the area of programs either through employment or through other factors. NAMI provided Ms. Johanningsmeier as the evaluator requested by DCF. Mr. Poole explained DCF's unquestioned acceptance of Ms. Johanningsmeier as an evaluator: We accepted Mrs. Johanningsmeier as the representative of NAMI because of our relationship with NAMI and our shared vision and mission of a community mental health system of Florida that is responsive to the individual needs with persons with severe and persistent illness and that our goals in some ways are the same, that we want a responsive system to people with a very serious disability . . . . [T]here would be no reason to question the validity or expertise of a representative of NAMI because NAMI has an interest in Florida's publically funded community mental health system. According to Celeste Putman, DCF's Director of Mental Health, the evaluation team included a NAMI representative to make sure that the team had a strong representative who really understood the needs of people with very severe, persistent mental illness, and who has worked closely with that population. Ms. Putnam explained that DCF has always felt that it is important to have a family member, someone who is close, from a personal standpoint, to the service delivery involved. Ms. Johanningsmeier had experience evaluating at least three other similar procurements. Further, Ms. Johanningsmeier was a member of the Board of Directors of NAMI, Florida, at the time she served on the Evaluation Committee and was a member of a local Board of Directors of NAMI. She was familiar with the NAMI PACT manual. Ms. Johanningsmeier gave an extensive description of her personal experiences with the public and private mental health systems in Florida, from her child's experience in those systems. Ms. Johanningsmeier's purpose on the evaluation team was to represent NAMI and not to promote the NAMI viewpoint in the evaluation. She denied scoring any of the criteria out of bias toward or against any of the participants using criteria outside of those that were given to her in the RFP, or attempting to skew the score in any way. Petitioner alleges that many of its responses to subjective questions were better than those of Intervenor and therefore should have been scored higher. Robert Ward, President and chief executive officer of Bayview, believed that Ms. Johanningsmeier scored Petitioner low, and as a result he felt there was either a bias of some kind or that the evaluator did not know what she was doing. Mr. Ward felt that something was wrong, but did know what it was. Petitioner's expert witness, Dr. Susan Kelly, is a senior research consultant with a private company. She works with data analysis and research and has expertise in statistics with a Ph.D. in sociology. She conducted a statistical test of the scoring by all evaluators for the purpose of determining the existence of patterns or any kind of irregularities or differences in scoring. The statistical significance test performed by Dr. Kelly showed variations between the scores of Ms. Johanningsmeier and two of the other reviewers. Dr. Kelly characterized Ms. Johanningsmeier's scores as an "outlier," but did not know the reason why there was a difference in scores between Ms. Johanningsmeier and the other evaluators. Dr. Kelly's analysis did not involve any review of the RFP, the proposals or information regarding Ms. Johanningsmeier's background or position to the Evaluation Committee. There was no substantial or material evidence presented by Petitioner to show that Ms. Johanningsmeier's scoring of the proposals was inconsistent with the scoring methodology in the RFP, clearly erroneous, contrary to competition, arbitrary or capricious.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED: That the Department of Children and Families enter a final order dismissing the bid protest filed by Bayview Center for Mental Health, Inc. DONE AND ENTERED this 27th day of September, 2002, in Tallahassee, Leon County, Florida. BARBARA J. STAROS 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 27th day of September, 2002. COPIES FURNISHED: Gary J. Clark, Esquire Frank P. Rainer, Esquire Sternstein, Rainer & Clark, P.A. 101 North Gadsden Street Tallahassee, Florida 32301 William A. Frieder, Esquire Department of Children and Family Services 1317 Winewood Boulevard Building Two, Room 204 Tallahassee, Florida 32399-0700 Thomas R. Tatum, Esquire Brinkley, McNerney, Morgan, Soloman & Tatum, LLP. Post Office Box 522 Fort Lauderdale, Florida 33302-0522 Paul F. Flounlacker, Jr., Agency Clerk Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204B Tallahassee, Florida 32399-0700 Josie Tomayo, General Counsel Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204 Tallahassee, Florida 32399-0700
Findings Of Fact Based upon the stipulations of the parties, the following relevant facts are found: On March 5, 1986, the Hendry Corporation filed with the Department of Transportation (DOT) its application for qualification to bid on DOT projects for the year 1986. The audited financial statement submitted with the application was dated 125 days prior to March 5, 1986. By letter dated March 6, 1986, the DOT advised the petitioner that ". . . we are unable to act favorably on the qualification of your corporation with the Department. The audited financial statements submitted are of a date of more that [sic] 120 days prior to the application; therefore, they are unacceptable per Rule Chapter 14-22 and Florida Statutes 337.14." Petitioner was further notified of his right to request an administrative hearing within ten days. Petitioner timely requested a hearing, and the Department of Transportation requested the Division of Administrative Hearings to conduct the proceedings.
The Issue Should Petitioner's application for registration as an associated person be approved?
Findings Of Fact From April, 1985 to August 1986, Petitioner was employed as a registered associated person of Dean Witter Reynolds in Tallahassee, Florida. The Reebok Trade On March 11, 1986, Petitioner was instructed by one of his customers to sell 200 shares of stock in Reebok International, Ltd. (Reebok). By mistake, Petitioner executed an order to sell 500 shares of Reebok on behalf of the client. On March 17, 1986, the client came to Petitioner's office and while reviewing the client's account, Petitioner discovered the error he had made on March 11, 1986. Petitioner told his supervisor, Mr. Brock, of the mistake. The supervisor told Petitioner that he should "bust" the trade. This meant reversing the transaction and purchasing 300 shares of Reebok. It is Dean Witter's policy that whenever an error is discovered, it should be covered immediately. Petitioner, however, did not cover the error. From March 11, 1986 to March 17, 1986, the price of Reebok stock had increased. Petitioner decided to wait and see if the price would come down. Sometime after March 17, 1986, Mr. Brock left the firm and a new supervisor, Mr. Cavelle, took his place. On April 30, 1986, Mr. Cavelle noticed the Reebok error in the error account and executed an order to cover the error by purchasing 300 shares of Reebok stock. From March 11, 1986 to April 30, 1986, the price of Reebok stock increased substantially, and the error in the Reebok trade resulted in a loss of $9,225.00 to Petitioner's client. The client was reimbursed by Dean Witter. Petitioner received a written reprimand from Dean Witter and agreed to pay Dean Witter the amount of the loss. While Petitioner remained employed with Dean Witter, $400.00 were deducted from his monthly pay check to pay off the loss. After Petitioner was fired from Dean Witter in early August, 1986, he has only been able to make sporadic payments, totalling approximately $600.00 to $700.00. The Corpen One Transactions Sometime in May, 1986, while Petitioner was still employed at Dean Witter, Petitioner and John Collins formed Corpen One, Inc. (Corpen). The corporation was formed to run a hot dog vending cart operation in Tallahassee, Florida. John Collins was named president and Petitioner was the secretary and treasurer responsible for handling the corporation's finances. In order to raise capital for the corporation, Petitioner found three other persons willing to invest in the corporation. Curtis Davis, J.B. Durham and Jeff Burkett each invested approximately $4,000.00, in return for part ownership of the corporation. With the unused cash which the corporation had, Petitioner opened a bank account with Barnett Bank. From May 15, 1986, to July 17, 1986, Petitioner, without the knowledge of other stockholders, wrote checks to himself from the corporate bank account totalling $3,500.00. The dates and amounts of each check were: May 15, $800; May 19, $1,200; May 27, $800; June 26, $100; July 17, $600. These amounts were used by Petitioner for personal expenses. He treated them as loans from the corporation. Eventually, he repaid the loans with interest equal to what would have been earned had the money been invested in a Dean Witter money market account. Sometime in early July, 1986, Petitioner determined that it would be a good idea to open up a Dean Witter money market account for the funds which the corporation had in the bank account. On July 9, 1986, Petitioner, in his capacity as a Dean Witter employee, assigned a Dean Witter new account number, number 531015757, to the corporation. He did this by personally writing the name Corpen One, Inc. in the Dean Witter "New Account Number Assignment" log. This procedure was contrary to Dean Witter's policy which required that the new accounts clerk assign the new account number. In the clerk's absence, a person other than a broker or salesperson should assign the number. When Petitioner returned to his desk to complete the paperwork necessary to open a new account, he discovered that he needed to have a Federal Tax Identification Number for Corpen in order to open the account. Since Corpen did not yet have such a number, Petitioner never opened the account. During the period of time he borrowed money from the corporation, Petitioner filled out Dean Witter receipts which showed Dean Witter as having received $3,300 from Corpen to be invested in a money market account. The dates and amounts of the receipts were: May 15, $800; May 19, $1,200; May 27, $800; July 17, $500. The receipts were filled out completely and included the account number which Petitioner had assigned to Corpen One for the account which was never opened. Sometime in July or early August, 1986, Mr. Durham and other shareholders of Corpen became concerned with the operation of the corporation. Sales were not as high as expected and the corporation was not doing well. Also, Petitioner wanted to be relieved of his duties, because the time needed to run Corpen was interfering with his duties at Dean Witter. The more Mr. Durham checked into the operation of the corporation, he became convinced that improprieties were taking place. After several meetings took place, Petitioner handed over to Mr. Durham the corporate records in his position. These records included the cancelled checks Petitioner had written to himself and the Dean Witter receipts. When Mr. Durham saw the Dean Witter receipts, he asked Petitioner about them. When he did not receive a satisfactory answer, he took the receipts to Dean Witter and met with Mr. Cavelle, the branch manager. Mr. Cavelle tried to look the account up on his computer and discovered there was no account. He then checked the new account log book and discovered that Petitioner had personally assigned the account number. When Mr. Cavelle asked Petitioner to explain what had happened, he received what he considered a "hazy" explanation, and fired Mr. Hicks. Mr. Cavelle's main concern was that the receipts made Dean Witter potentially liable for the amounts shown in each receipt. After being fired, Petitioner was unemployed for four to five months. From February, 1987 to May 1988, Petitioner worked for Corporate Risk Management, a company managing self-insurance funds for employees. Petitioner is now the manager of the Melting Pot restaurant in Panama City Beach, Florida. For 1987, Petitioner earned approximately $13,000. His current salary is $1,200 per month.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent issue a Final Order denying Petitioner's application for registration as an associated person. DONE and ORDERED this 19th day of January, 1989, in Tallahasee, Florida. JOSE A. DIEZ-ARGUELLES 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 19th day of January, 1989. APPENDIX The parties submitted proposed findings of fact which are addressed below. Paragraph numbers in the Recommended Order are referred to as "RO ." Petitioner's Proposed Findings of Fact Proposed Finding Ruling and RO Paragraph of Fact Number Second sentence accepted. Rest of paragraph is rejected as irrelevant or argument. Rejected as irrelevant. First three sentences rejected as argument. Fourth and fifth sentences accepted. Supported by the evidence but unnecessary to the decision reached. The implication in the first sentence that the delay was someone else's fault or that the stock market is to blame is rejected. Petitioner has only himself to blame for the delay. Third sentence is rejected as argument. Fourth sentence accepted. Last three unnumbered paragraphs are argument Respondent's Proposed Findings of Fact Proposed Finding Ruling and RO Paragraph of Fact Number Not a finding of fact. Accepted. See Background section of RO. 3.-4. Not a finding of fact. See Background section of this RO. Accepted. See Background. Not a finding of fact. See Background. Accepted RO1. Accepted RO12. Rejected as recitation of testimony. Also, as to the first sentence, Mr. Durham's testimony on direct was weakened by the cross- examination where his memory of events was tested. As to the second, third and fourth sentences, Mr. Hicks executed the receipts, and borrowed money from Corpen One. However, the evidence fails to establish that Mr. Hicks "converted" to his own use money which was to be invested in the money market account. Rejected as recitation of testimony. But see RO18. Accepted. RO20, 21. Rejected as not supported by the evidence. Rejected as recitation of testimony. Rejected as recitation of testimony except fourth and ninth sentences. ,16.,17. Rejected as not a finding of fact. Rejected as irrelevant. Accepted. RO2.-4. Rejected as recitation of testimony. But see RO6. ,22. Rejected as recitation of testimony. But see RO5.-10. 23. Rejected not as a finding of fact. 24.-28. Rejected as recitation of testimony. COPIES FURNISHED: John D. Hicks 3918-A Raven Street Panama City, Florida 32312 Reginald R. Garcia, Esquire Assistant General Counsel Department of Banking and Finance The Capitol, Suite 1302 Tallahassee, Florida 32399-1302 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 Charles L. Stutts General Counsel Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350 =================================================================
The Issue The issue in this case is whether disciplinary action should be taken against the Respondent's insurance licenses based upon the alleged violations of the Florida Insurance Code set forth in the Administrative Complaint.
Findings Of Fact Respondent is currently licensed in the state of Florida as life agent, health agent and life & health agent. Pursuant to a contractual agreement executed by the Respondent on September 23, 1988, the Respondent was employed by Independent Life as a debit agent and remained employed with the Company from September 26, 1988, through April 5, 1989. His responsibilities with the Company included sales and servicing of accounts. The Respondent's duties included collecting premiums from customers either weekly or monthly for remittance to the Company. Respondent and the other agents were specifically instructed that collected premiums were to be remitted on a daily basis. Independent Life agents were instructed that all premiums collected from insureds were to be recorded in the insured's premium receipt book. The agent was then required to record the collection on the Company's field accounting route list. The field accounting route list reflects the date the last premium payment was collected, the date the next premium is due, and whether the contract is on a monthly or weekly payment schedule. When a agent collects premiums from an insured on a different day than the date which is to be reflected on the field accounting route list, that information is recorded by the agent on a memo collection list. Finally, in those cases where an insured paid by mail, the payment was to be reflected on a mail pay receipt. Together, the mail pay receipt, the memo collection list and the field accounting list should reflect all payments recorded in the insureds' premium receipt book. In other words, the records contained in the premium receipt book should exactly balance the records which appear on the field accounting route list as supplemented by the mail pay receipts and memo collection list. When accounts are audited by the Company, the sales manager compares the entries in the premium receipt books with the records reflected on the Company's field accounting route list, mail pay receipts and memo collection list. If there is a discrepancy, then the Company conducts an investigation to determine if there is a shortage. Once a shortage has been discovered, it is recorded on the Company's balance due accounting form. This form reflects the shortages which occurred on each individual account. In addition, another balance due accounting form is prepared documenting all shortages on the agent's account. On on about April 5, 1989, Respondent collected the sum of $4.72 from Diana Brown. This sum represented the insured's monthly premium payment. The payment was recorded in the insured's premium receipt book, but was not remitted by Respondent to Independent Life and/or reflected on the field accounting route list or on a memo collection list. Thus, the Respondent collected the sum of $4.72, which represented the insured's premium for a period of one month, and converted the same to his own use and benefit. On or about December 8, 1988, the Respondent collected a monthly premium in the amount of $36.36 from Winnie Christopher. This payment of $36.36 was recorded in the insured's premium receipt book. However, only $27.27 was remitted to the Company and recorded on the Company's memo collection list. This evidence indicates that the Respondent misappropriated and converted to his own use and benefit the sum of $9.09 (which represented one week's premium payment by the insured.) During the month of February, 1989, Respondent collected the sum of $24.30 from Donza Queen, which represented her premium payment for February and March of 1989. This payment was recorded in the insured's premium receipt book. However, the Respondent only recorded $12.15 in the Company's field accounting route list and that sum was the total remitted to the Company. Respondent has failed to properly account for the total amount collected for the account of Donza Queen and has unlawfully misappropriated and converted the same to his own use and benefit. On or about December 8, 1988, the Respondent collected the sum of $27.41 from Georgia Curry. This sum, which represented the insured's monthly premium payments, was recorded in her premium receipt book. However, the field accounting route list prepared by Respondent for the week of December 5, 1988, did not reflect that this collection was applied to the insured's account. Thus, Respondent unlawfully misappropriated and converted to his own use and benefit the sum of $27.41 which should have been applied to the account of Georgia Curry. During the month of January, 1989, Harold Timmerman mailed to Independent Life the sum of $31.71, which represented his premium payment for a period of three (3) months. Pursuant to Company procedures, the office staff recorded the above payment in the insured's premium receipt book, mailed the premium receipt book to the premium payer and issued a mail pay receipt to the Respondent to be applied to Mr. Timmerman's account. The Respondent failed to apply this money to the insured's account. As a result, the policy lapsed in January, 1989, for failure to pay the required premium. The insured was without coverage for a period of three (3) months until Independent Life discovered the discrepancy. In January, 1989, the Respondent collected the sum of $18.43 from William Chambliss, which represented the insured's weekly premium payment. This collection was recorded in the insured's premium receipt book. However, the Respondent failed to apply the above payment to the insured's account. Thus, the Respondent unlawfully misappropriated and converted to his own use and benefit, the sum of $18.43 which should have been applied to the account of William Chambliss. On April 4, 1989, the Respondent collected $23.80 from Claudia Hester. This payment was recorded in the insured's premium receipt book, but it was not remitted to the Company and/or reflected on the field accounting route list. Therefore, the Respondent misappropriated and converted to his own use and benefit, the sum of $23.80 which should have been applied to the account of Claudia Hester. From September, 1987 to February, 1990, Anita Campbell was the Staff Sales Manager for Independent Life. Her duties as the Staff Sales Manager included, in part, assisting other agents who had difficulty collecting their debits. During a routine review of the Respondent's accounts, Ms. Campbell ascertained that the Respondent's arrears were very high and that collection percentages were very low. As a result and in accordance with her responsibilities as Staff Sales Manager, Ms. Campbell accompanied Respondent in the collection of his debit beginning the week of April 4, 1989. Although Ms. Campbell's purpose in accompanying Respondent on his debit route was to help him get his records in order, she soon determined that, in numerous cases, the insured's premium receipt books had been marked as reflecting the payment of premiums even though the premiums were not recorded on the Company's field accounting route list, memo collection list, or other company documents. Ms. Campbell unsuccessfully attempted to discuss this matter with the Respondent who became angry and threatened to walk off the job. On April 5, 1989, the Respondent did not return to work and he was subsequently terminated. Ms. Campbell's responsibilities as Staff Sales Manager also included collecting affidavits from numerous insureds on Respondent's debit route to determine whether documented shortages existed. Her investigation uncovered numerous cases where Respondent collected money but failed to record the premium in the insured's premium receipt book. Some insureds who claim that they made their payments lost their coverage because there was no record of the payment so the Company was unable to give them credit. In other instances, payments were recorded in the premium payer's receipt book, but were not recorded in the Company's field accounting route list. Ms. Campbell completed a report regarding the numerous deficiencies and gave it to Mr. Roy Young, the District Sales Manger, who forwarded the information to the home office for further action. An audit of Respondent's agency was conducted and revealed a deficit in the amount of $1,312.31. It appears that there may be additional shortages which can not be documented. Independent Life recovered the sum of $878.88 by withholding the Respondent's last paychecks. However, there is still a documented shortage due and owing to the Company of approximately $433.43. In an effort to recover these funds, Mr. Thomas Hisle from Independent Life sent a demand letter to the Respondent dated June 14, 1989. That letter notified Respondent that $433.43 was due and owing to Independent Life. Respondent has failed to pay any portion of this outstanding balance owed to the Company.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department enter a Final Order revoking Respondent's licenses as an insurance agent in the State of Florida. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 3rd day of April, 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 3rd day of April, 1991. APPENDIX TO RECOMMENDED ORDER The Petitioner has submitted a Proposed Recommended Order. The following constitutes my rulings on the proposed findings of fact submitted by the Petitioner. 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. 1. Adopted in substance in Findings of Fact 1. 2. Adopted in substance in Findings of Fact 2. 3. Adopted 4 and 5. in substance in Findings of Fact 3, 4. Adopted in substance in Findings of Fact 6. 5. Adopted in substance in Findings of Fact 7. 6. Adopted in substance in Findings of Fact 8. 7. Adopted in substance in Findings of Fact 9. 8. Adopted in substance in Findings of Fact 10. 9. Adopted in substance in Findings of Fact 11. 10. Adopted in substance in Findings of Fact 12. 11. Adopted in substance in Findings of Fact 13. 12. Adopted in substance in Findings of Fact 14. Adopted in substance in Findings of Fact 15. Adopted in substance in Findings of Fact 16. Rejected as unnecessary. COPIES FURNISHED: John C. Jordan, Esquire Division of Legal Services 412 Larson Building Tallahassee, Florida 34953 Charles Neil Newman 2931 S. W. Brittle Circle Port St. Lucie, Florida 34953 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neill General Counsel The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Findings Of Fact The Petitioner is University General Hospital, Inc. (hereinafter "UGHI"), the present license holder of University General Hospital (hereinafter "University Hospital"), a 140-bed general acute-care hospital located in Seminole, Florida. During calendar years 1989 and 1990 and until July 30, 1991, University Hospital operated as a division of Community Health Investment Corporation f/k/a/ CHS Management Corporation (hereinafter "CHIC"). On July 30, 1991, UGHI was incorporated as a wholly-owned subsidiary of CHIC and became the license holder of University Hospital. University Hospital's change in licensure on that date did not change its ownership, control, management, reporting, or operation. On or about December 2, 1991, UGHI timely filed Certificate of Need (hereinafter "CON") Application No. 6851 to convert 12 general acute-care beds to hospital-based skilled nursing beds. As of the date of filing its CON application, UGHI was the license holder of University Hospital and complied with the definition of "Applicant" set forth in Rule 10-5.002(3), Florida Administrative Code. Prior to submission of CON Application No. 6851, UGHI retained John Gilroy of the law firm Haben, Culpepper, Dunbar & French to serve as legal counsel for the CON project. In his initial dealings with UGHI regarding compliance with the requirements of Section 381.707(3), Florida Statutes, Gilroy learned that audited financial statements previously prepared for University Hospital while it was a division of CHIC could be reissued for UGHI. Gilroy then contacted Elizabeth Dudek, Director of the Department of Health and Rehabilitative Services (hereinafter "HRS") Office of Community Health Services and Facilities, to inquire whether the proposed audited financial statements (i.e., the reissued statements) would comply with the applicable statutory requirements. Dudek suggested that Gilroy direct his inquiry to Roger Bell, an Audit Evaluation and Review Analyst with the HRS Office of Community Health Services and Facilities. In conducting her responsibilities, Dudek relies upon the opinions of experts, and Bell is the most qualified person in the HRS Office of Community Health Services and Facilities to render an opinion regarding hospital audited financial statements. Among Bell's responsibilities is advising Dudek whether CON applicants' financial statements should be accepted or rejected. At that time or soon thereafter, Gilroy had at least one telephone conversation with Bell wherein he informed Bell that UGHI had been in existence for less than one year and inquired whether the proposed reissued audited financial statements would be acceptable to HRS. Bell's response to Gilroy was that he was not aware that audited financial statements could be reissued in the manner proposed by UGHI, but if Arthur Andersen & Co. could prepare such a document, he expected that it would be acceptable. Additionally, Bell indicated to Gilroy that a balance sheet audit would not give HRS sufficient financial information and that it would be beneficial if he could look at reissued audited financial statements to conduct a more in-depth analysis. Bell did not inform Gilroy of any HRS policy regarding the types of audited financial statements HRS would accept from applicants in existence for less than one year. Following his discussion with Bell, Gilroy sent a letter to his client dated November 20, 1991, indicating that Bell agreed that the reissued statements would be acceptable and that Arthur Andersen & Co. should prepare such statements prior to January 17, 1992. In a letter dated December 12, 1991, Gilroy asked Bell to confirm HRS' position regarding reissued audited financial statements in writing, consistent with their prior conversation. In a letter dated December 16, 1991, Bell reiterated to Gilroy that "if Arthur Andersen is assuming the liability for this assertion, then it is probably in order," and also stated that "[u]nless a concern appears in the auditor's reports or notes, I do not foresee any problem." The letter did not refer to any HRS policy regarding the types of audited financial statements HRS would or would not accept from corporations in existence for less than one year. After receipt and review of Bell's December 16 letter, Gilroy remained under the impression that reissued audited financial statements would be acceptable to HRS provided they were properly executed and signed and had appropriate notes. In a letter dated December 19, 1991, HRS identified certain items of information omitted from UGHI's initial application (commonly referred to as an "Omissions Letter"), including, among other items, audited financial statements of the applicant. On that same date, HRS also sent an Omissions Letter to Edward White Hospital, Inc., an applicant in the same application review batch as UGHI. The Omissions Letter sent to Edward White Hospital, Inc., included a section as follows: If an applicant, due to non-existence as an entity, has not completed a fiscal year of operation, the applicant will submit an audited financial statement in which the balance sheet date falls within the period which begins on the first day of its existence as a legal entity and ends on the date of the applicant's choosing, provided the audited financial statement is available and included with the application during or before the end of the omissions process. Had a similar statement been contained in the UGHI Omissions Letter, Gilroy would have approached HRS to determine whether UGHI's proposed audited financial statements were acceptable notwithstanding this policy. After his review of the UGHI Omissions Letter, Gilroy remained under the impression that reissued statements would be acceptable to HRS if prepared in accordance with accounting and auditing standards. According to Dudek, HRS did not reveal its policy regarding entities in existence for less than one year in the UGHI Omissions Letter because HRS had not been provided with information prior to the issuance of the letter that UGHI was an entity that had been in existence for less than one year. Prior to the Omissions Letter, HRS was, however, informed both orally and in writing that UGHI had been in existence for less than one year. On or about January 15, 1992, UGHI timely filed its response to the Omissions Letter and included a document entitled "UNIVERSITY GENERAL HOSPITAL, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMMUNITY HEALTH INVESTMENT CORPORATION) FINANCIAL STATEMENTS AS OF DECEMBER 31, 1990 AND 1989 TOGETHER WITH REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS." In a letter dated January 28, 1992, HRS notified UGHI that its CON application was being administratively withdrawn from consideration for the sole reason that it did not contain audited financial statements of the applicant, University General Hospital, Inc. The purpose of audited financial statements from the standpoint of HRS' review of CON applications is that they provide HRS with a basis to determine the overall financial strength and financial position of the applicant and the applicant's ability to carry out the project being proposed. HRS requires that the financial statements be "of the applicant" because it looks to the source of funding and financial strength of the entity responsible for funding the project--the party submitting the CON application. The audited financial statements submitted by UGHI reflect the resources available to it for the CON project proposed in CON Application No. 6851 and are appropriate to demonstrate the financial strength of UGHI. The audited financial statements filed by UGHI contain financial documentation for years ending December 31, 1990 and 1989, as well as information through November 13, 1991. The issuance of audited financial statements for an entity incorporating a period of time before that entity's corporate existence (known as "reissuance") is a common practice in the accounting profession and, subject to the entity's ability to satisfy the specified prerequisites, is consistent with pronouncements and standards under generally accepted auditing standards (hereinafter "GAAS") and generally accepted accounting principles (hereinafter "GAAP"). The prerequisites for reissuance of an audited financial statement are adequate disclosure made in the notes of the financial statement and continuance of common ownership, control, management, reporting, and operation of the entity's activities. Prior to issuance of the audited financial statements for UGHI, Arthur Andersen & Co. conducted an extensive post-audit review of UGHI and concluded that the financial statements previously issued to University Hospital could be reissued as audited financial statements of UGHI. Had Arthur Andersen & Co. found that the previously-issued audited financial statements were misleading or that the requirements set forth in GAAS and GAAP were not satisfied, it would not have reissued the audited financial statements on behalf of UGHI. The audited financial statements submitted by UGHI to HRS constitute a valid document prepared in accordance with the pronouncements and standards under GAAS and GAAP. It is the policy of HRS that, if an entity has been in existence for less than one year, HRS will accept only a balance sheet audit as of the date of incorporation, or a short period audit from the date of incorporation through an undefined period of time. HRS' policy is not reflected in any of the statutes, rules, or HRS Manual provisions regarding audited financial statements, and HRS is not in the process of promulgating a rule regarding this policy. HRS' policy applies to all entities submitting CON applications that have been in existence for less than one year. Balance sheet and short period audits are not appropriate documents to assess an entity's financial condition. In many cases, HRS would prefer a reissued audited financial statement to a balance sheet audit in analyzing a CON application. In determining whether an applicant complies with Section 381.707(3), Florida Statutes, HRS will, with certain exceptions, look at whether the definition of "Audited Financial Statement" set forth in Rule 10-5.002(5), Florida Administrative Code, is met. HRS does not apply the definition of "Audited Financial Statement" set forth in Section 10-5.002(5), Florida Administrative Code, to applicants in existence for less than one year. The definition it applies to these entities is not set forth in any rule, statute, or HRS Manual provision. A balance sheet audit does not comply with the definition of "Audited Financial Statement" set forth in Rule 10-5.002(5), Florida Administrative Code. The audited financial statements filed by UGHI comply with the definition of "Audited Financial Statement" set forth in Rule 10-5.002(5), Florida Administrative Code. Rule 10-5.008(5)(g), Florida Administrative Code, identifies those audited financial statements satisfying the rule definition of "Audited Financial Statement" that HRS will not accept. HRS explains the exceptions set forth within Rule 10-5.008(5)(g), Florida Administrative Code, on the basis that these audited financial statements reflect financial documentation of an affiliate entity. The audited financial statements submitted by UGHI are not a combined audit, a consolidated audit, or an audit of a division, as prohibited under Rule 10-5.008(5)(g). From an accounting standpoint, the audited financial statements submitted by UGHI are those of UGHI. An accounting firm typically identifies the entity being audited on the title page of the audited financial statements and in the audit report and financial statements contained therein. The title page of, and audit report and financial statements in, the audited financial statements prepared by Arthur Andersen & Co. for UGHI all reflect that the entity being audited is UGHI. An accounting firm faces significant liability if the audited financial statements it prepares are found to be inaccurate or misleading. HRS does not dispute, and in fact agrees, that the audited financial statements prepared by Arthur Andersen & Co. for UGHI were correctly issued and are consistent with GAAS and GAAP.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered accepting Certificate of Need Application No. 6851 filed by University General Hospital, Inc. for review in the nursing home batching cycle in which it was filed. RECOMMENDED this 20th day of July, 1992, at Tallahassee, Leon County, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SC 278-9675 Filed with the Clerk of the Division of Administrative Hearings this day of July, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-1838 Petitioner's proposed findings of fact numbered 1-54 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 1-3 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 4-6 have been rejected as not being supported by the weight of the competent evidence in this cause. COPIES FURNISHED: Gerald M. Cohen, Esquire Steel Hector & Davis 4000 Southeast Financial Center Miami, Florida 33131-2398 Richard Patterson Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, Florida 32308 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Slye, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
