The Issue Whether the Respondents' Florida real estate licenses should be disciplined based upon the following charges, as alleged in the administrative complaint: COUNTS I and II: Whether Respondent Richard Michael Regazzi ("Regazzi") is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction in violation of Section 475.25(1)(b), Florida Statutes. COUNT III: Whether Respondent Regazzi is guilty of failure to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), Florida Statutes. COUNT IV: Whether Respondent Atlantic Rentals Realty, Inc. is guilty of failure to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), Florida Statutes. COUNT V: Whether Respondent Regazzi is guilty of failure to prepare the required written monthly escrow statement- reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and therefore in violation of Section 475.25(1)(e), Florida Statutes. COUNT VI: Whether Respondent Atlantic Rentals, Inc. is guilty of failure to prepare the required written monthly escrow statement-reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and therefore in violation of Section 475.25(1)(e), Florida Statutes. COUNT VII: Whether Respondent Regazzi is guilty of having been found guilty for a third time of misconduct that warrants his suspension or has been found guilty of a course of conduct or practices which shows that he is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom he may sustain a confidential relation, may not safely be entrusted to him in violation of Section 475.25(1)(o), Florida Statutes.
Findings Of Fact Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaint pursuant to the laws of the State of Florida, in particular Section 20.165, Florida Statutes, and Chapters 120, 455 and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent Regazzi is, and was at all times material hereto, a licensed Florida real estate broker. License number 0273453 was issued in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker in care of Atlantic Rentals, Inc., 6811 North Atlantic Avenue, No. B, Cape Canaveral, Florida. Respondent Atlantic Rentals, Inc. is, and was at all times material hereto, a corporation registered as a Florida real estate broker having been issued license number 0273444 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 6811 North Atlantic Avenue, No. B, Cape Canaveral, Florida. At all times material hereto, Respondent Regazzi was licensed and operating as the qualifying broker and officer of Respondent Atlantic Rentals, Inc. On January 28, 1997, Petitioner's Investigator Maria Ventura ("Investigator Ventura") conducted an audit of Respondents' escrow account #3601612291, maintained at NationsBank and titled Atlantic Rentals, Inc., Multi Unit escrow Account (escrow account). On January 28, 1997, Respondents had a reconciled bank balance of $46,166.93. As of January 28, 1997, Investigator Ventura determined that Respondents had a total trust liability of $84,586.77. By comparing Respondents' reconciled bank balance with Respondents' trust liability, it was determined that Respondents had a shortage of $38,419.84 in their escrow account. In addition, Respondents were not performing monthly reconciliations of their escrow account. On January 28, 1997, Respondent Regazzi prepared a monthly reconciliation statement (reconciliation statement) for December 1996, and provided it to Petitioner on the same day. Respondent Regazzi's reconciliation statement indicated that there was shortage of $28,885.36 in the escrow account. Respondent Regazzi's reconciliation statement is not signed, and does not indicate what month was being reconciled. The statement indicates that the reconciled bank balance and trust liability agree when, in fact, the reconciliation statement indicates a shortage of $28,885.36. Respondent Regazzi's explanation of how the funds were removed from the escrow account by a third party is not credible. Even if this account were credible, it does not lessen Respondent Regazzi's culpability. On April 21, 1992, the Florida Real Estate Commission ("FREC") issued a final order whereby Respondent Regazzi was found guilty of misconduct and was fined $200, and placed on probation for one year with a requirement to complete and provide satisfactory evidence to the Department of having completed an approved 30-hour broker management course. Respondent successfully completed the terms of probation. On November 12, 1996, the FREC issued a final order whereby Respondent Regazzi was fined $250 for misconduct and Respondent Atlantic Rentals, Inc. was reprimanded.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent Regazzi be found guilty of violating Sections 475.25(1)(b), (e), (k), and (o), Florida Statutes (1995), as charged in the Administrative Complaint. Respondent Atlantic Rentals, Inc. be found guilty of having violated Sections 475.25(1)(b), (k), and (e), Florida Statutes, as charged in the Administrative Complaint. That Respondents Regazzi's real estate license be revoked and that he be ordered to pay restitution in the amount of $38,419.84, plus interest. That Respondent Atlantic Rentals, Inc.'s corporate brokerage registration be revoked. RECOMMENDED this 23rd day of December, 1997, at Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of December, 1997. COPIES FURNISHED: Daniel Villazon, Esquire Department of Business and Professional Regulation 400 West Robinson Street, Suite N-308 Orlando, Florida 32801 Richard Michael Regazzi, pro se Atlantic Rentals, Inc. 6811-B North Atlantic Avenue Cape Canaveral, Florida 32920 Henry M. Solares, Division Director 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 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issue is whether Mr. Powell should be disciplined for irregularities in the handling of an escrow deposit by a real estate firm for which he was the qualifying broker.
Findings Of Fact The Respondent, Willie Powell, was at all relevant times a licensed real estate broker in the State of Florida, holding license number 0070494. Mr. Powell was the sole qualifying broker of Future Investments & Development II Co., Inc., trading as ERA Thompkins and Saunders Realty Company (hereafter, T & S), 2734 N.W. 183rd Street, Suite 206, Miami, Florida 33056. On or about November 12, 1990, Guillermo Castillo, a licensed real estate broker for Emerald Enterprises, Inc., received a listing agreement from Horace B. Miller to sell residential property (a duplex) owned by Miller located at 2331 N.W. 103rd Street, Miami, Florida. The property was listed with the Multiple Listing Service. On or about February 27 or 28, 1991, Mr. Castillo received a telephone call from Willie J. Thompkins of T & S saying he wanted to show the Miller property to a prospective buyer. On or about February 28, 1991, Mr. Castillo received through the mail slot at his office a written offer from George R. Howell of Dorchester, Massachusetts, to buy the Miller property, with a business card of Jerry Saunders of T & S. On or about March 6, 1991, Guillermo Castillo met with Horace Miller to review the Howell offer. At Miller's request, Castillo made some changes to the contract to reflect that Miller was selling the duplex in "as is" condition. Miller signed the contract and initialed the changes, and Mr. Castillo signed the contract on behalf of Emerald Enterprises, and called Willie J. Thompkins to tell him the contract had been signed. The next day, Mr. Castillo went to the office of T & S and dropped off the contract for the buyer to consider the seller's changes. A day or two later, a representative of T & S telephoned Guillermo Castillo and told Mr. Castillo that the buyer had accepted the seller's changes to the contract; Mr. Castillo then notified Miller. Mr. Castillo later received from T & S the signed contract with Mr. Miller's changes initialed by Mr. Howell. The contract was also signed by Mr. Thompkins of T & S. The contract called for a $1,000 deposit to be held in escrow by T & S (Exhibit 5, Paragraph IIa). Guillermo Castillo contacted T & S to check on the progress of the sale. He learned that J.P. Mortgage was handling the buyer's mortgage loan application. Castillo contacted J.P. Mortgage and was told that the loan was proceeding normally. After the contractual closing date of April 29, 1991, had passed without the closing taking place, Castillo contracted J.P. Mortgage again, but was told that they were no longer processing the loan. Castillo requested that J.P. Mortgage send him a letter to that effect, and he received a letter dated May 2, 1991, stating that J.P. Mortgage was withdrawing as the lender because the buyer failed to return the mortgage loan application. Castillo informed Horace Miller of the situation and Miller instructed Castillo to write to T & S making a claim to the buyer's deposit under the contract of sale. On May 4, 1991, Castillo sent a letter to T & S claiming the deposit for the seller. Paragraph Q of the contract provided for the seller to retain the buyer's deposit as liquidated damages if the buyer failed to perform the contract. On or about May 9, 1991, Guillermo Castillo received from Mr. Thompkins, the manger of T & S, a letter dated May 1, 1991, but postmarked May 6, 1991, ". . . requesting that the . . . file be cancelled" due to ". . . communication problems with . . . Mr. Howell," and citing unsuccessful attempts to contact Howell by telephone and by mail. When Castillo received that letter he contacted T & S to point out the seriousness of the matter and to press for forfeiture of the buyer's deposit. On May 9, 1991, Castillo received a telefax from Mr. Thompkins of T & S stating that the Howell deposit check had been returned for insufficient funds and attaching a copy of the returned check. Prior to his receipt of this telefax, Castillo had not taken any independent steps to verify whether T & S had actually received the Howell deposit. He had relied on the contract, which had been executed by a licensed salesman and believed he did not require further verification that the escrow deposit had been made. Neither Mr. Castillo nor Mr. Miller dealt with the Respondent, Mr. Powell, at any time concerning the sale of the Miller property. T & S received George Howell's $1,000 deposit in the form of a check on March 4, 1991, drawn on a Massachusetts bank and deposited it in its account with First Union National Bank which was used as the escrow account, account number 15462242336, on March 5, 1991. The check was charged back to the account twice, on March 11, 1991, and on March 26, 1991. Mr. Powell was a signatory on that escrow account. After Guillermo Castillo received the May 9, 1991, telefax, he notified Horace Miller. Mr. Miller had not taken any steps on his own to verify whether T & S had received the deposit because he had confidence in his broker to let him know right away if there were any problems with the sale. By May 9, 1991, Horace Miller had already incurred expenses preparing the property for closing, and had lost rent by terminating a tenancy in the property. Because the transaction never closed, Mr. Miller sustained financial damage, some of which he might have avoided if he had been notified earlier of the buyer's dishonored escrow deposit check. On or about May 28, 1991, Miller filed a complaint with the Department of Professional Regulation, which Sidney Miller investigated. He found that the person introduced to him during his investigation at T & S as Willie Powell was not actually the Respondent. In March 1991, Mr. Powell had not seen the bank statements for the T & S escrow account for several months, and had not signed the written monthly escrow account reconciliation statement for the month of October 1990 or for any subsequent month. Mr. Powell was serving as the qualifying broker of T & S for a salary of $75 per month and no commissions. He was not active in the management of the firm. He would come to the office of T & S approximately three days per week to check files and sign listing agreements, and he would call in to see if there were any problems, messages or documents to sign. He essentially loaned his brokers' license to those who operated T & S as an accommodation because he had known the Thompkins family for 25 years. Mr. Powell argues in his proposed order that "the adequacy of [Mr. Powell's] monthly reconciliations were impeded by frauds perpetrated upon him by persons at [T & S]" (PRO at page 9, paragraph 5). It is obvious that there were problems at T & S, since a person there misrepresented himself to the Department's investigator as Mr. Powell. The full extent of the misconduct there is unclear. There is no proof in this record that salespersons at T & S had fabricated escrow account statements for Mr. Powell. Had Mr. Powell proven that he performed monthly reconciliations with what turned out to be falsified records of T & S, his argument might be well taken. The record, unfortunately, shows that no reconciliations were done. Had Mr. Powell done them, the problem here should have been uncovered.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be issued finding Willie Powell guilty of violating Section 475.25(1)(b), Florida Statutes, finding him not guilty of violating Section 475.25(1)(d), Florida Statutes, and taking the following disciplinary action against him: Issuance of a reprimand. Imposition of an administrative fine in the amount of $1,000 to be paid within 30 days of the date of the final order adopting the recommended order. Placement of the license of Mr. Powell on probation for a period of one year beginning on the date of the final order and providing that during that period he shall provide satisfactory evidence to the Florida Department of Professional Regulation, Division of Real Estate, Legal Section, Hurston Building, North Tower, Suite N-308, 400 West Robinson Street, Orlando, Florida 32801-1772, of having completion a 30-hour postlicensure education course in real estate brokerage management, in addition to any other education required of him to remain current and active as a real estate broker in the State of Florida, and that he be required to submit to the Commission during that year his monthly trust account reconciliations. Cf. Rule 21V-24.002(3)(i), Florida Administrative Code, on penalties for violation of Rule 21V-14.012(2), Florida Administrative Code. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 16th day of July 1992. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of July 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-0192 Rulings on Findings proposed by the Commission: Adopted in Findings 1 and 2. Adopted in Finding 2. Adopted in Finding 3. Adopted in Finding 4. Adopted in Finding 5. Adopted in Finding 6. Adopted in Findings 7 and 8. Adopted in Finding 9. Adopted in Finding 12. Adopted in Finding 13. Adopted in Finding 11. Adopted in Finding 15. Rulings on Findings proposed by Mr. Powell: Adopted in Finding 1 with the exception of the license number. Adopted in Finding 3. Adopted in Finding 2. Adopted in Finding 4. Rejected as unnecessary. Adopted in Finding 5. Adopted in Finding 4. Adopted in Finding 6. Generally adopted in Finding 6. Implicit in Finding 10. Adopted in Finding 6. Adopted in Finding 6. Adopted in Findings 7 and 8. Adopted in Finding 9. Adopted in Finding 10. Rejected as subordinate to Finding 10. Adopted in Finding 13. Rejected as unnecessary, the reconciliation was not one done shortly following the month of March reconciling the account for March 1991. It was done during the investigation conducted by Mr. Miller and took place between approximately June 20 and July 10, 1991. Adopted in Finding 15. Rejected as unnecessary. Adopted in Finding 14. Rejected as unnecessary, or subordinate to Finding 10. Rejected as unnecessary. Rejected as unnecessary. COPIES FURNISHED: Theodore R. Gay, Esquire Department of Professional Regulation Suite N-607 401 Northwest 2nd Avenue Miami, Florida 33128 Harold M. Braxton, Esquire Suite 400, One Datran Center 9100 South Dadeland Boulevard Miami, Florida 33156 Darlene F. Keller Division Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792
The Issue Whether Respondents committed the offenses set forth in the six-count Administrative Complaint dated October 15, 2003; and, if so, what penalty should be imposed.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made: The Department of Business and Professional Regulation, Division of Real Estate (the "Department"), is the state agency charged with enforcing the statutory provisions pertaining to persons holding real estate broker and sales associate's licenses in Florida, pursuant to Section 20.165 and Chapters 455 and 475, Florida Statutes (2003). At all times relevant to this proceeding, Respondent Richard R. Page, was a licensed Florida real estate broker/officer, having been issued broker license no. KB-0148248. He was the qualifying broker for Aztec Realty. At all times relevant to this proceeding, Respondent Aztec Realty, was a corporation registered as a Florida real estate broker, having been issued corporate registration no. CQ-0156640. Aztec Realty's business location was 4456 Tamiami Trail, Charlotte Harbor, Florida 33980. Barbara Kiphart was a 13-year employee of the Department who had performed thousands of audits of broker records. After conducting agent interviews on an unrelated matter in the office of Aztec Realty, she informed Mr. Page that she planned to perform an audit of the corporation's escrow accounts. Ms. Kiphart testified that it was routine for the Department to perform such audits when visiting brokers' offices for other reasons. Ms. Kiphart informed Mr. Page that she would need all documents necessary to complete an audit of Aztec Realty's escrow accounts, including bank statements, account reconciliations, and liability lists. Mr. Page referred Ms. Kiphart to Cheryl Bauer, Aztec Realty's financial manager. With Ms. Bauer's assistance, Ms. Kiphart completed the audit on June 12, 2003. Three accounts were examined: the sales escrow account; the security deposit account; and the property management account. The sales escrow account was found to be in balance, with liabilities equal to the bank balance of $382,300.52. The security deposit account was found to have liabilities of $45,533.29 but only $16,429.84 in its bank balance, a shortage of $29,103.45. The property management account was found to have liabilities of $22,545.54 but only $16,594.71 in its bank balance, a shortage of $5,950.83. Ms. Kiphart testified that the security deposit account had not been reconciled in the year 2003, and she had no way of saying when it was last reconciled. She determined the account's balance from Aztec Realty's bank statements, but had to extrapolate the liabilities from a computer printout of security deposits. Ms. Bauer testified that she handles the finances for all aspects of Aztec Realty's real estate sales business, including the sales escrow account, and that she was able to provide all the information Ms. Kiphart needed to audit that account. However, Ms. Bauer had no responsibility for the other two accounts, both of which related to the rental property management side of Aztec Realty's business. She had to obtain information about those accounts from Jill Strong, her newly- hired counterpart in property management. At the time she provided the computer printout on the property management accounts to Ms. Bauer and Ms. Kiphart, Ms. Strong told them that she knew the numbers were inaccurate. Aztec Realty had purchased Tenant Pro, a new rental management software package, in 2001. In the course of approximately 18 months, Aztec Realty had three different employees in Ms. Strong's position. One of these short-term property managers had misunderstood the software for the security deposit account. Opening balances were entered for accounts that had, in fact, already been closed out with the deposits returned. This had the effect of inflating the apparent liabilities in that account. The previous property manager was also unable to print checks on the printer attached to her computer terminal. Ms. Bauer would print the deposit refund checks on her own printer, with the understanding that the property manager was recording these entries against the security deposit account. Ms. Strong discovered that these entries had not been recorded. Thus, monies that had been paid out to owners, renters, and vendors were never recorded anywhere besides a sheet that Ms. Bauer kept for printing out checks, again inflating the account's apparent liabilities. Ms. Strong had been working for Aztec Realty for about one month at the time of the audit. She was still in the process of sorting out the problems in the security deposit account, hence her statement to Ms. Bauer and Ms. Kiphart that she knew the numbers were inaccurate. Subsequent to the Department's audit, Ms. Bauer and Ms. Strong commenced their own audit of the security deposit and property management accounts. Their efforts were complicated by a storm and tornado that struck the area on June 30, 2003. The offices of Aztec Realty suffered over $100,000 in damage, including water damage to the roof that caused the office to be flooded. Records were soaked and Ms. Strong's computer was destroyed. By mid-July 2003, Ms. Bauer and Ms. Strong had completed their corrected audit of the security deposit account. They concluded that the actual shortfall in the account was $13,764.43. That amount was immediately transferred from the real estate operating account to the security deposit account to bring the latter account into balance. The real estate operating account was essentially Mr. Page's personal funds. As to the property management account, also referred to as a "rental distribution" account, Ms. Bauer and Ms. Strong performed a subsequent audit indicating that the account was out of balance on the positive side. They discovered that there were items paid out of the property management account that should have been paid from escrow and vice versa. When the audit brought the accounts into balance, the property management account was approximately $200 over balance. In an audit response letter to Ms. Kiphart dated July 16, 2003, Mr. Page acknowledged that the property management account had been improperly used to pay occasional expenses, but also stated that the practice had been discontinued. At the hearing, Mr. Page conceded that no reconciliations had been performed on the security deposit account or the property management account from at least January 2003 through May 2003. Mr. Page and Ms. Bauer each testified that the corrective actions taken in response to the audit have been maintained and that there have been no accounting problems since June 2003. Aztec Realty has contracted to sell its property management department. The evidence established that no client of Aztec Realty or other member of the public lost money due to the accounting discrepancies described above. Neither Mr. Page nor Aztec Realty has been subject to prior discipline. Mr. Page has worked in the real estate business in the Port Charlotte area for nearly 30 years and is a past president of the local association of realtors. He credibly expressed remorse and testified that, given his position in the community, he was "mortified" at having allowed his company to be placed in this position. Aztec Realty has operated for nearly 30 years and currently has 20 employees and approximately 65 agents.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order: Dismissing Counts II and III of the Administrative Complaint against Mr. Page; Dismissing Counts V and VI of the Administrative Complaint against Aztec Realty; Imposing an administrative fine against Mr. Page in the amount of $1,000 for the violation established in Count I of the Administrative Complaint; and Imposing an administrative fine against Aztec Realty in the amount of $1,000 for the violation established in Count IV of the Administrative Complaint. DONE AND ENTERED this 27th day of July, 2004, in Tallahassee, Leon County, Florida. S 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 27th day of July, 2004.
Findings Of Fact Based upon the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made. At all pertinent times, Respondent, Karen A. Mason, was a licensed real estate broker in the State of Florida having been issued license no. 0432242 in accordance with Chapter 475, Florida Statutes. The license issued to Respondent was as a broker t/a Mason Realty and Mortgage Company, 4538 Gardenette, West Palm Beach, Florida 33406. Respondent's real estate office was a small operation that handled strictly rental properties. Respondent established her real estate office to handle rentals as a sideline to a property maintenance business that she owned. In 1987, there were two other people who worked in Respondent's real estate office. One of the employees, Linda Bennett, received a $2,200 deposit with respect to a lease agreement for certain property owned by Chris Jimenez on Scottdale Road in West Palm Beach, Florida. That lease agreement was evidenced by a Receipt for Deposit and Contract to Lease (the "Contract") that was signed Mr. Jimenez and by Frank Kontis on behalf of the lessee, Angelo Geragonis. The $2,200 deposit was paid by check from Mary Kontis, the wife of Frank Kontis who was related to the lessee, Mr. Geragonis, and was acting as his agent. Mr. Geragonis did not sign the Contract. The $2,200 deposit was placed in an escrow account maintained by Respondent at Barnett Bank on January 13, 1987. The Contract called for the lease term to run from February 1, 1987, to February 1, 1988, at a monthly rental of $850.00 per month. By checks dated January 14, 1987, part of the deposit ($850.00) was distributed to Respondent and Linda Bennett. On January 30, 1987, another $550.00 of the deposit was distributed to Chris Jimenez. The basis for these disbursements is not clear. The evidence did not establish that the distributions were unauthorized. In any event, as of January 30, 1987, only $800 of the deposit remained in escrow. Shortly after the contract was executed, Mr. Kontis died. Mr. Geragonis traveled to Florida and decided not to rent the Scottdale Road property and requested a return of the deposit. Mr. Jimenez, the owner of the property, had already moved out of the house and rented a new residence in reliance upon the Contract. He claimed that he was entitled to all or a portion of the deposit. By letter dated January 23, 1987, the Respondent requested instructions from the Florida Real Estate Commission (the "Commission") regarding how to handle the dispute and the conflicting claims to the deposit. Respondent also discussed the matter by phone with employees of the Commission. By letter dated February 10, 1987, Jack King, Chief Investigator for the Florida Real Estate Commission, advised Respondent of her options. In his February 10, 1987 letter, Mr. King advised Respondent that she had to either (1) arrange for arbitration, (2) place the matter before a civil court or (3) request an Escrow Disbursement Order from the Florida Real Estate Commission. By letter dated February 17, 1987, the Respondent requested an Escrow Disbursement Order from the Florida Real Estate Commission. By letter dated June 17, 1987, Manuel Oliver, an attorney for the Florida Real Estate Commission, wrote to Respondent and advised her that, because of the existence of factual disputes between the parties, the Florida Real Estate Commission would not issue an Escrow Disbursement Order. Respondent was advised to use one of the other alternatives described in Mr. King's February 10, 1987 letter. Respondent denies ever receiving the June 17, 1987 letter. No further action was taken on the matter until the fall of 1988. On September 2, 1988, an attorney for Mr. Geragonis contacted the Respondent and inquired as to the status of the money being held in escrow. By letter dated September 16, 1988, Respondent inquired of Mr. King as to the status of her request for an Escrow Disbursement Order. By letter dated October 27, 1988, Manuel Oliver advised Respondent of the June 17, 1987 letter and also advised her that, because of her failure to promptly implement one of the other alternatives outlined in Mr. King's letter of February 10, 1987, he was going to refer the matter to the Complaint Section of the Florida Real Estate Commission for investigation of a possible violation of the licensure law. In December of 1988, Respondent resolved the dispute by paying $1100.00 to Mr. Geragonis and $550.00 to Chris Jimenez. The money to settle the dispute was paid from a new escrow account opened by Respondent at Carney Bank in October of 1987. The evidence did not establish when the Barnett Bank escrow account was closed and/or how much money was transferred from that account to the new escrow account at Carney Bank. In the meantime, in February of 1987, Respondent was involved in a business dispute with her employee, Linda Bennett. Ms. Bennett ended up leaving the company. In the process, she took some of the office equipment, files and other paperwork including ledgers. She also caused two unauthorized checks to be written on the Barnett Bank escrow account. The unauthorized disbursements from the escrow account totaled at least $1100. In January of 1989, an investigator from the Department attempted to conduct an audit of Respondent's business pursuant to the referral from Mr. Oliver as set forth in Findings of Fact 12 above. Respondent objected to the tactics and approach of the investigator and complained to the Department. The audit of Respondent's records was halted pending a review of the Respondent's complaints. In October of 1989, another investigator from the Department met with Respondent to review her records. By the time this audit was conducted in October of 1989, Respondent's real estate office had essentially closed. The only business activity being conducted by the office was the management of certain properties owned by the Respondent. The Department's investigator requested to see all of the Respondent's records regarding her escrow accounts. Respondent produced her records regarding the escrow account at Carney Bank. However, because that account was not opened until October of 1987, there were no records regarding the Geragonis Contract. The Department's investigator specifically inquired as to the records regarding the escrow deposit on that Contract. Respondent investigated her records in an attempt to determine how that deposit had been handled. Because the office had essentially been shut down, all of the records were in storage and were not readily accessible. Initially, Respondent informed the Department's investigator that the money had been deposited into a Merrill Lynch money market account that she used for a variety of personal and business purposes. Respondent provided the investigator with some of the statements related to that money market account. However, upon further review and investigation, the Respondent determined that the deposit had actually been deposited in the escrow account at Barnett Bank. The records regarding that deposit at Barnett Bank were introduced at the hearing in this case, but had not previously been provided to the Department's investigator. Because the records of the Barnett Bank account were not previously provided to the Department's Investigator, no audit of those records has been conducted. At the hearing, the bank statements for the Barnett Bank escrow account were provided from December of 1986 through April of 1987. As noted above, there were certain unauthorized disbursements made from the Barnett Bank escrow account by one of Respondent's employees. Thus, it is difficult to draw any conclusions regarding the balance in the Barnett Bank Escrow Account during the period ending April, 1987. A review of those bank statements indicates, that, except for March 4, 1987 when a $1350.00 check was returned unpaid and again on March 23 when the balance of the account dipped to $685.00 following the return of an unpaid check in the amount of $275.00 on March 13, there was always at least $800 in the account. Respondent has not provided any records regarding the Barnett Bank account subsequent to April of 1987. The Carney Bank escrow account was not opened until October of 1987. It is not clear where or if the remainder of the Geragonis deposit was held in escrow during the period from April of 1987 through October of 1987. Moreover, Respondent has not produced any records demonstrating that the remaining deposit was being held in escrow at Carney Bank subsequent to October of 1987. While Respondent apparently believes that the remainder of the Geragonis deposit was stolen by her former employee, Respondent did not provide any documentation regarding the money that remained in the escrow account and failed to produce any evidence that she attempted to reconcile that account with the various claims on those funds. Respondent argues that, given the lapse of time between the events in question and the filing of the Administrative Complaint, she can not realistically be expected to have records on these matters. However, it is clear that the dispute over the Geragonis Contact was not resolved until December of 1988. When the Department's investigators conducted their audit in October of 1989, Respondent should have had available any and all records related to that Contract including documentation regarding the remaining escrow funds. While Respondent contends that some of her business records and ledgers were stolen by her former employee, the evidence indicates that the employee in question left around February of 1987. The absence of records subsequent to April of 1987 can not be attributed to theft by this former employee. The Department's investigators testified that the records of the Carney Bank escrow account indicated that on a couple of occasions that escrow account was overdrawn. The circumstances and specific facts surrounding those instances were not established in this proceeding. The records of Respondent's escrow account at Carney Bank reflect a number of disbursements made from the escrow account to her or her company. Respondent contends that those disbursements were for commissions and other monies owed to her. Insufficient records were provided to document these transactions. There is no indication that any client or other member of the public lost any money and/or that Respondent was unable to timely disburse money from her escrow account as required in connection with a particular transaction. There is no indication that Respondent ever used the escrow account for improper purposes or withdrew money from the escrow account for her own personal or business use. No persuasive evidence was presented that Respondent's own funds were commingled with escrow funds in either of her escrow accounts. While one of the Department's investigators claimed that Respondent told him that she was depositing money from another business that she owned into one of her accounts, any such reference would appear to have been to the money market account and not the escrow accounts. No persuasive evidence was presented to establish that the Respondent commingled personal funds with the money in the Barnett Bank or Carney Bank escrow accounts.
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 II and III of the Administrative Complaint, finding Respondent guilty of Counts I and IV, and reprimanding her, suspending her license for a period of three months and imposing a fine of $500.00. RECOMMENDED in Tallahassee, Leon County, Florida, this 16th day of May, 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 16th day of May, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-5966 Both parties have submitted Proposed Recommended Orders. The following constitutes my rulings on the proposed findings of fact submitted by the parties. 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. Rejected as unnecessary. Adopted in substance in Findings of Fact 1. Rejected as unnecessary. 4.(a) Adopted in substance in Findings of Fact 3. Adopted in substance in Findings of Fact 13. However, the evidence established that there was a prior escrow account at Barnett Bank. Rejected as not established by competent substantial evidence. The subject matter is addressed in Findings of Fact 18. Rejected as irrelevant. See Findings of Fact 18. Rejected as irrelevant. See Findings of Fact 18. Rejected as irrelevant. See Findings of Fact 18. Rejected as irrelevant. See Findings of Fact 4 and 18. Adopted in substance in Findings of Fact 24. The Respondent'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. Rejected as a mischaracterazation of the evidence. The audit conducted by the Department's investigator was not limited to the Escrow Disbursement Order Request. Rejected as constituting legal argument rather than a finding of fact. Rejected as constituting legal argument and as irrelevant. Rejected as irrelevant. This subject matter is addressed in Findings of Fact 8 and 9. Rejected as irrelevant. This subject matter is addressed in Findings of Fact 14. Rejected as constituting legal argument rather than a finding of fact. Rejected as irrelevant. Rejected as irrelevant. This subject matter is addressed in Conclusions of Law 12. Rejected as constituting legal argument rather than a finding of fact. Subordinate to Findings of Fact 22. Rejected as constituting legal argument. Rejected as irrelevant. COPIES FURNISHED: James H. Gillis, Esquire Department of Professional Regulation Division of Real Estate Legal Section 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Karen Mason 4538 Gardnette West Palm Beach, Florida 33406 Darlene F. Keller Division Director 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792
The Issue The issues for determination in this proceeding are whether Respondent violated Sections 475.25(1)(b), (d), (e), and (k), Florida Statutes, 1/ by committing the acts alleged in two administrative complaints; and, if so, what, if any, penalty should be imposed.
Findings Of Fact 1. Petitioner is the governmental agency responsible for issuing licenses to practice real estate and for regulating licensees on behalf of the state. Respondent is a licensed real estate broker under license number 0377781. The last license issued to Respondent was issued as a broker at Wilson Realty International, 1059 Aurora Road, Melbourne, Florida 32935. The Myrie Transaction On July 22, 1993, Respondent negotiated a property management agreement with Harold E. and Bernia L. Myrie (the "Myries") who are residents of New York. Pursuant to the property management agreement, Respondent agreed to manage a rental house owned by the Myries and located in Florida (the "Myrie property"). On August 20, 1993, Respondent negotiated a lease agreement for the Myrie property with Mr. Eric A. Bogle and Ms. Jearlene Davis, as tenants. The tenants paid Respondent $2,590.60 in rental payments for the period August 20 through November 18, 1993. Respondent failed to deposit the rental payments into her escrow account. On November 19, 1993, Respondent issued check number 1501 to the Myries in the amount of $562.50. Respondent represented to the Myries that $562.50 was the net amount due them. The Myries deposited check number 1501. However, the check was returned for insufficient funds. Respondent replaced check number 1501 with another check for $562.50. There were sufficient funds to cover the second check. On December 29, 1993, the Myries cancelled their property management agreement with Respondent. They demanded the balance of $2,028.10. Respondent claimed that $562.50 was the total amount Respondent owed the Myries. Respondent represented that she had incurred expenses for repairs and maintenance to the Myrie property. Respondent never provided an accounting of either the rental proceeds received from the tenants or the alleged expenses for repairs and maintenance. 2/ Respondent failed to produce documents Petitioner needed to conduct an audit of her escrow account. Respondent failed to produce deposit receipts for rent and cancelled checks and written receipts for expenses incurred by Respondent. After Respondent failed to comply with two requests to produce the records Petitioner needed to conduct an audit, Petitioner subpoenaed Respondent's records on August 1, 1994. 3/ Respondent agreed to produce her records for review and audit on August 12, 1994. However, Respondent failed to keep her appointment and never produced the documents subpoenaed by Petitioner. 4/ Respondent misappropriated $2,028.10 paid to her by the tenants and converted those funds to Respondent's personal use. The tenants paid those funds to Respondent in trust for the Myries. The Myries authorized Respondent to collect those funds in trust and to remit the funds to them. Respondent breached the trust of both parties in a business transaction within the meaning of Section 475.25(1)(b). Respondent misrepresented and concealed her use of escrow funds for personal purposes. Respondent engaged in false pretenses to justify her misappropriation and conversion of the escrow funds. Respondent's failure to account for escrow funds paid to her in the Myrie transaction and her failure to produce records needed by Petitioner to audit Respondent's account is culpable negligence. When considered in their totality, the acts committed by Respondent in the Myrie transaction constitute fraud and dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Respondent failed to timely account or deliver rental trust funds within the meaning of Section 475.25(1)(d). Respondent failed to preserve and make available to Petitioner all books, records, and supporting documents and failed to keep an accurate account of all trust fund transactions within the meaning of Florida Administrative Code Rule 61J2-14.012(1). 5/ Respondent failed to maintain trust funds in her real estate brokerage escrow account until disbursement was authorized within the meaning of Section 475.25(1)(k). 2. The Timoll Transaction In June, 1993, Respondent negotiated a property management agreement with Lawrence and Sheila Timoll (the "Timolls") who were residents of New York. Pursuant to the property management agreement, Respondent agreed to manage a rental house owned by the Timolls and located in Florida. (the "Timoll property"). On July 14, 1993, Respondent procured tenants for the Timoll property. William and Sambri Dulmage (the "Dulmages") executed a one year lease. Pursuant to the terms of the lease, the Dulmages agreed to pay a security deposit of $625 and rent at the monthly rate of $600. Respondent received $4,800 from the Dulmages as payment of rent, a security deposit, and expenses associated with the Timoll property. Respondent never delivered any part of the $4,800 to the Timolls. Respondent represented to the Timolls that they were not entitled to any of the $4,800 because the Dulmages had vacated the property and stopped paying rent. Respondent also represented that she had incurred expenses for repairs and maintenance to the Timoll property. 6/ The Dulmages in fact occupied the Timoll property for the duration of the lease and timely paid all amounts in accordance with the terms of the lease. The Timolls knew that the Dulmages were complying with the lease and arranged for the rent to be paid directly to the Timolls in February, 1994. With three minor exceptions, 7/ Respondent did not incur expenses for maintenance and repairs to the Timoll property. 8/ From July 14, 1993, through February 22, 1994, the Timolls made repeated demands for Respondent to deliver the rent and security deposit, and to account for the expenses allegedly incurred by Respondent. Respondent produced property accounting forms describing expenses for maintenance and repairs to the Timoll property. With three minor exceptions, the accounting forms provided by Respondent contained fabricated expenses for maintenance and repairs. 9/ Respondent misappropriated $4,419.45 10/ paid to her by the Dulmages and converted those funds to Respondent's personal use. Those funds were paid to Respondent in trust for the Timolls. The Timolls authorized Respondent to collect those funds in trust and to remit the funds to them. Respondent breached the trust of both parties in a business transaction within the meaning of Section 475.25(1)(b). Respondent misrepresented and concealed her use of escrow funds for personal purposes. Respondent engaged in false pretenses to justify her misappropriation and conversion of escrow funds. Respondent's failure to account for the escrow funds paid to her in the Timoll transaction and her failure to produce records needed by Petitioner to audit Respondent's account constitutes culpable negligence. When considered in their totality, the acts committed by Respondent in the Timoll transaction constitute fraud and dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Respondent failed to timely account or deliver rental trust funds within the meaning of Section 475.25(1)(d). Respondent failed to preserve and make available to Petitioner all books, records, and supporting documents and failed to keep an accurate account of all trust fund transactions within the meaning of Rule 61J2- 14.012(1). Respondent failed to maintain trust funds in her real estate brokerage escrow account until disbursement was authorized within the meaning of Section 475.25(1)(k). 3. The Veil Transaction On November 29, 1993, Respondent entered into a short term lease agreement between Respondent, as the landlord, and Herman J. and Joyce Veil (the "Veils") as tenants (the "Veil transaction"). The Veils lived out of state. They paid Respondent a deposit of $1,919.36 to secure the seasonal rental of Unit 511, Ocean Walk Condominiums ("unit 511"). On March 1, 1994, the Veils traveled to Melbourne and discovered that unit 511 was not available. Respondent never provided the Veils with a rental unit of any kind. The Veils demanded the return of their deposit. On March 11, 1994, Respondent issued check number 1127 in the amount of $1,394.01. Respondent represented to the Veils that $1,394.01 was the total amount due. Respondent deducted $525.35 for motel charges allegedly incurred by Respondent to provide the Veils with temporary lodging for 11 days while Respondent attempted to procure an alternate rental for the Veils. The deduction of $525.35 was not authorized by the Veils. The Veils did not agree to pay for their own motel room. In addition, the motel charges deducted by Respondent included charges for two nights paid by the Veils. After Respondent issued check number 1127 for $1,394.01, Respondent ordered the bank to stop payment on the check. The bank erroneously cashed the check and subsequently requested the Veils to return the proceeds. The Veils refused. Respondent misappropriated $525.35 paid to her by the Veils and converted those escrow funds to Respondent's personal use. Those funds were paid to Respondent in trust for the Veils' seasonal condominium. Respondent breached that trust in a business transaction within the meaning of Section 475.25(1)(b). Respondent misrepresented and concealed her use of escrow funds belonging to the Veils. Respondent engaged in false pretenses to justify her misappropriation and conversion of the escrow funds. Respondent's failure to account for escrow funds paid to her in the Veil transaction and her failure to produce records needed by Petitioner to audit Respondent's accounts constitutes culpable negligence. When all of the facts and circumstances surrounding the Veil transaction are considered, Respondent's attempt to stop payment of her check to the Veils constitutes dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Respondent failed to timely account or deliver rental trust funds within the meaning of Section 475.25(1)(d). Respondent failed to preserve and make available to Petitioner all books, records, and supporting documents and failed to keep an accurate account of all trust fund transactions within the meaning of Rule 61J2-14.012(1). Respondent failed to maintain trust funds in her real estate brokerage escrow account until disbursement was authorized within the meaning of Section 475.25(1)(k). 4. The Sella Transaction On February 14, 1994, Respondent procured a construction contract between Militano Construction, Inc. (the "seller"), and Mr. Lino Sella, (the "buyer"). The buyer lived in Italy and required an interpreter for his negotiations with Respondent. On February 14, 1994, the buyer entrusted Respondent with an escrow deposit of $12,250. The buyer authorized Respondent to administer funds entrusted to her because the buyer was in Italy. 11/ On February 15, 1994, Respondent cashed the check for the escrow deposit. Respondent obtained a cashier's check for $12,250 made payable to "Wilson Realty." Respondent then endorsed the cashier's check for her personal use. 12/ In July, 1994, the buyer authorized Respondent to release the escrow deposit to the seller upon issuance of a certificate of occupancy ("CO") by the City of Indian Harbour Beach, Florida (the "city"). The city issued the CO on September 1, 1994. After the city issued the CO, the seller repeatedly made verbal demands for Respondent to deliver the escrow deposit. On September 9, 1994, the seller wrote a letter to Respondent demanding the escrow deposit. On September 13, 1994, the buyer physically inspected the house, found that it was acceptable, and again authorized disbursement of the escrow deposit. The seller again demanded the escrow deposit. Respondent never delivered the escrow deposit. Respondent never accounted for the deposit to the seller, the buyer, or Petitioner. The seller was unable to pay approximately $9,000 to subcontractors used to construct the buyer's house. The subcontractors recorded mechanics' liens against the Sella property and precluded the seller from delivering good and sufficient title to the buyer. The seller's failure to provide the buyer with good and sufficient title precluded the seller from satisfying its obligations under the terms of the contract with the buyer and caused the seller to breach the contract. The buyer incurred legal expenses in an attempt to quiet title to his house. The seller incurred legal expenses in an attempt to recover the escrow deposit from Respondent. Respondent misappropriated a $12,250 escrow deposit in the Sella transaction and converted that escrow deposit for personal use. The escrow deposit was given to Respondent in trust. Respondent breached that trust in a business transaction within the meaning of Section 475.25(1)(b). Respondent misrepresented and concealed her use of the escrow deposit in the Sella transaction. Respondent's failure to account for the escrow deposit and her failure to produce records needed by Petitioner to audit Respondent's escrow account constitutes culpable negligence. When considered in their totality, the acts committed by Respondent in the Sella transaction constitute fraud and dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Respondent failed to timely account or deliver trust funds within the meaning of Section 475.25(1)(d). Respondent failed to preserve and make available to Petitioner all books, records, and supporting documents and failed to keep an accurate account of all trust fund transactions within the meaning of Rule 61J2-14.012(1). Respondent failed to maintain trust funds in her real estate brokerage escrow account until disbursement was authorized within the meaning of Section 475.25(1)(k). 5. The Stanley Transaction In March, 1994, Respondent procured a construction contract between Atlantic Construction, Inc. (the "seller"), and Trevor and Carol Stanley (the "buyers") who are residents of New York. The buyers entrusted Respondent with an escrow deposit of $7,800. The buyers were unable to qualify for a mortgage and terminated the agreement in accordance with the terms of the construction contract. The buyers agreed to forfeit $500 of the escrow deposit to Respondent as real estate commission. On July 12, 1994, the buyers demanded that Respondent return $7,300 of their escrow deposit. Respondent claimed the entire $7,800 escrow deposit and neither delivered the $7,300 agreed to by the buyers nor accounted for any of the escrow deposit. Petitioner was unable to audit Respondent's escrow account. The bank where the escrow account was maintained closed the account because the account was overdrawn. The bank charged off $3,483.45 in overdrawn funds. Respondent misappropriated a $7,300 escrow deposit in the Stanley transaction and converted the escrow deposit to Respondent's personal use. Those funds were given to Respondent in trust. Respondent breached that trust in a business transaction within the meaning of Section 475.25(1)(b). Respondent misrepresented and concealed her use of escrow funds in the Stanley transaction. Respondent's failure to account for the escrow deposit and her failure to produce records needed by Petitioner to audit Respondent's account constitutes culpable negligence. When considered in their totality, the acts committed by Respondent in the Stanley transaction constitute fraud and dishonest dealing by trick, scheme, or device within the meaning of Section 475.25(1)(b). Respondent failed to timely account or deliver trust funds within the meaning of Section 475.25(1)(d). Respondent failed to preserve and make available to Petitioner all books, records, and supporting documents and failed to keep an accurate account of all trust fund transactions within the meaning of Rule 61J2-14.012(1). Respondent failed to maintain trust funds in her real estate brokerage escrow account until disbursement was authorized within the meaning of Section 475.25(1)(k). 6. Respondent's Conduct Respondent evidenced a gross disregard for the rights and property of others, applicable laws, and the legal process. 13/ Respondent's conduct demonstrated culpable intent to commit the offenses for which she is charged. Respondent has made no attempt at restitution to any of the five clients she harmed, and has made no attempt to pay the overdraws charged off by the bank. Respondent has made no attempt to pay the Sella subcontractors or otherwise remove any cloud on the title to the Sella property. Respondent ignored valid subpoenas issued by Petitioner. Respondent engaged in dilatory acts and misrepresentations. Respondent delayed this proceeding through repeated false pretenses that she was represented by counsel who was unable to appear for previously scheduled formal hearings. Respondent participated in this proceeding for a frivolous purpose. There was a complete absence of a justiciable issue of law or fact in Respondent's defense. Respondent's defense was baseless and a sham. It was no more than a stonewall defense presented for the purpose of delay. Respondent failed to show any of the facts asserted in her defense. She called no witnesses and submitted no material exhibits for admission in evidence. Respondent's cross examination of Petitioner's witnesses nominally attempted to create issues but failed to produce any competent and substantial evidence to support those issues. Respondent repeatedly attempted to establish issues either by unsworn representations or by arguing with witnesses during cross examination. Respondent's sworn testimony at the formal hearing was not credible and was unpersuasive. No competent and substantial evidence supported her testimony. Any evidence that Respondent adduced during her testimony, her cross examination of other witnesses, and in her exhibits was immaterial. Respondent's conduct in this proceeding constituted a reckless waste of quasi-judicial resources as well as a waste of the time and money of Petitioner and its witnesses. Many of those witnesses had already lost time and money as a result of Respondent's conduct before this proceeding began.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent guilty of violating Sections 475.25(1)(b), (d)1., (e), and (k); and Rule 61J2- 14.012(1); revoking Respondent's real estate license; and imposing a fine of $20,000. RECOMMENDED this 15th day of November, 1995, in Tallahassee, Florida. DANIEL S. MANRY 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 November 1995.
The Issue Whether Respondent Kenneth M. Mossell's real estate license should be disciplined because he allegedly engaged in dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction; collected money in connection with a real estate brokerage transaction except in the name of his employer and with the express consent thereof; registered as an officer of a corporation while licensed as a salesman; operated as a broker while licensed as a salesman; and failed to account and deliver any secret or illegal profit in violation of Subsections 475.25(1)(b) and (e); 475.42(1)(b) and (d), Florida Statutes; Rule Sections 21V-14.012(2) and (3), and 21V-5.016, Florida Administrative Code; and whether Respondent L. Jean Jones DuBrian's real estate license should be disciplined based upon the charge that she is guilty of dishonest dealing by trick, scheme, or device, culpable negligence or breach of trust in business transactions; operated as a broker under a trade name without causing said name to be noted in the Commission records and placed on her license; or operated as a member of a partnership or as a corporation or as an officer or manager thereof, without said partnership or corporation holding a valid current registration; failed to prepare and sign required written monthly escrow reconciliation statements, all in violation of Subsections 475.25(1)(b) and (e); 475.42(1)(k), Florida Statutes, and Rule Sections 21V-14.012(2) and (3), Florida Administrative Code.
Findings Of Fact Petitioner is the state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of Florida, specifically Chapters 120, 455 and 475, Florida Statutes, and rules and regulations promulgated thereunder. Respondent DuBrian is now, and was at all times material hereto, a licensed real estate broker in the State of Florida having been issued license number 0306696 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker, c/o United Team, Inc. t/a ERA, 5844 Main Street, New Port Richey, Florida. Respondent Mossell is now, and was at all times material hereto, a licensed real estate salesperson in Florida, having been issued license number 0538751. The last license issued was as a non-active salesperson, 3432 Lori Lane, New Port Richey, Florida. Linda Sychowski, Frederick Reimer and Mary Patricia Mossell were officers of Majestic Realty and Leasing, Incorporated (Majestic), which was formed during May of 1989. Respondent Mossell was the primary financial investor. On or about April 16, 1990, Sychowski filed Majestic's annual report for 1990 with the Secretary of State listing Mary Patricia Mossell as Director/Treasurer, Sychowski as Director/President and Reimer as Director/Vice President. Respondent DuBrian was never an officer, director or shareholder of Majestic. During August 1989, pursuant to a verbal agreement, Respondent DuBrian became qualifying broker for Majestic. During August 1989, Sychowski notarized Respondent DuBrian's signature on a document titled "State of Florida, Department of Professional Regulation, Division of Real Estate, Application and Request for Licensure of a Real Estate Brokerage Corporation or Partnership." Respondent DuBrian's name appears on the portion of the form listing all corporate officers and directors. During October 1989, Respondent Mossell opened an escrow account at Citizens and Southern Bank (C & S) on behalf of Majestic. Respondent Mossell and Sychowski were signatories on the C & S account and Respondent Mossell signed as Secretary of the corporation. On September 20, 1990, Sychowski notified the Department of Professional Regulation that Respondent DuBrian had been terminated as broker of record for Majestic. President Linda Sychowski denies that she had any understanding that Respondent DuBrian would operate an independent real estate company outside of Majestic or that DuBrian would receive commissions for real estate activities except through Majestic. Sychowski is not a real estate licensee and relied upon Respondent DuBrian's competency as a broker. During April 1990, Sychowski signed check numbers 119 and 120 drawn on Majestic's escrow account. Those checks were payable to Respondent Mossell's wife, Mary Patricia Mossell, as reimbursement for the return of a security deposit and cleaning services. Sychowski learned, subsequent to Respondent DuBrian's termination, that DuBrian operated a real estate brokerage company out of her home independent of her activities as a broker with Majestic. She learned of DuBrian's other brokerage activities during a deposition in conjunction with a civil suit filed by DuBrian against Majestic. During October 1989, Jonathan Rummey entered into a lease agreement to rent property at 5416 Aloha Boulevard. Rummey paid monthly rent pursuant to the agreement and vacated the property during October 1990. Initially Rummey paid rent to Majestic and later DuBrian notified him that she had moved to another real estate company and that the rent was to be paid directly to her. Rummey understood that DuBrian was acting as an agent for the landlord and, as such, was receiving a commission from the landlord. Respondent Mossell was aware that Respondent DuBrian was conducting a real estate rental business from her home. Mossell knew this when DuBrian was hired as the qualifying broker for Majestic. Mossell permitted DuBrian to continue operating her independent rental brokerage business. Mossell allowed this since he thought that it would not be financially prudent for DuBrian to leave her ongoing business and hire on with a new firm, Majestic, which had no rental accounts. During April 1989, Scott Spoerl entered a lease agreement with Respondent DuBrian for rental property he owned. The agreement provided that rental payments would be made to Respondent "L. Jean DuBrian, Registered Real Estate Broker." Respondent DuBrian received ten percent of the rents collected as her fee for providing rental services to Spoerl. Spoerl received checks for his portion of the rent from Respondent DuBrian's account entitled "L. Jean Jones DuBrian Escrow Account." During May 1990, DPR Investigator Marjorie May conducted an inspection and escrow account audit of Majestic. At the time, Respondent DuBrian was Majestic's qualifying broker. During that audit, Investigator May discovered that Respondent DuBrian was not preparing and signing monthly reconciliation reports. During October 1988 Walter Hankinson, Jr., and his wife entered into an agreement to rent property for $500 per month from DuBrian. The Hankinson's paid monthly rent to Respondent DuBrian personally. The Hankinsons vacated the property during January 1992. The bank account entitled "Kenneth Mossell or Jean DuBrian, Special Account Number One," account number 1519555601 maintained at Barnett Bank had statements dated October 11, 1989, and November 9, 1989. No other statements were issued for that account. Two checks were drawn on the above-referenced account, one payable to and endorsed by Kathy Renquist and one dated October 23, 1989, payable to cash. The latter check was endorsed and cashed by Respondent Mossell. The referenced account was a personal and not a business account. Escrow accounts are usually identified as such. Banks label escrow accounts as such because the account is not directly charged. When bank accounts are set up, the account is designated as the customer instructs. The customer signs the signature card after the account title is typed in. During July 1989, Arthur Wagenseil entered a lease agreement to rent property from Respondent DuBrian. Respondent DuBrian represented the landlord and the monthly lease payments were paid directly to her. In July 1989, James Irwin entered a one year lease agreement with Wagenseil. As part of the agreement, Irwin paid Respondent DuBrian a ten percent (10%) commission of rents received. Typically, Respondent DuBrian received the rent from the tenant, deducted the necessary expenses and her commission, and remitted the balance to the landlord (Irwin). Respondent DuBrian advised Irwin that she had arranged with Majestic to keep her clients and business the way she was doing it at the time. During July 1989, Edmund Lekowski entered a two year lease agreement to rent property, paying $390 per month in rent to Respondent DuBrian as agent for the landlord. In May 1989, Frederick Reimer participated in the formation of Majestic as a director and principal. The other officers of the corporation were Sychowski and Mary Patricia Mossell. Majestic was established to engage in the business of renting and leasing realty. Reimer is not licensed as a real estate salesperson or broker. Reimer met Respondent DuBrian when she applied for and was hired as the broker for Majestic. Respondent Mossell was a part owner of Majestic and, as noted, was the primary financial investor. The corporate escrow account was maintained at C & S Bank and Respondent DuBrian was not a signatory on the account. Respondent DuBrian was employed at Majestic to meet the requirement of having a broker on staff. Reimer relied on Respondent DuBrian's knowledge of real estate law. Reimer was unaware of Respondent's DuBrian's operation of a separate rental/leasing business from her home. Respondent DuBrian was not an officer of Majestic nor did she inform Reimer of the legal requirement that she be an officer of the corporation and a signatory on the escrow account. Leo Huddleston, an investigator with Petitioner, met with Respondents DuBrian and Mossell on March 19, 1991, at which time Respondent DuBrian acknowledged that she was not a signatory on the Majestic escrow account because she was not a stockholder or shareholder. During the March 19, 1991 interview, Respondent DuBrian advised Huddleston that she was conducting a rental business, as a broker, separate and distinct from Majestic. During the March 19, 1991, meeting, Respondent DuBrian advised Investigator Huddleston that she was unaware that radon and agency disclosures and written monthly reconciliations were required. Also, during that meeting with Investigator Huddleston, Respondent Mossell advised that he was a signatory on the Majestic escrow account and that he withdrew $310 from that escrow account when a Mr. Schlatterman vacated some rental property that was leased from Majestic. Respondent Mossell's withdrawal was based on repayment and reimbursement to his wife for cleaning the Schlatterman's vacated apartment and a $250.00 cash refund of a security deposit that Mary Mossell had given to the tenant, Schlatterman. Respondent Mossell did not provide Investigator Huddleston with documentation for the claim on the Schlatterman's security deposit. In this regard, the Schlatterman's experienced an emergency and had to vacate on a weekend when the banks were closed. At the time of Investigator Huddleston's interview of Respondents during March 1991, Respondent DuBrian acknowledged that while she was employed as qualifying broker for Majestic, she was also operating an independent rental business. Investigator Huddleston's investigation of the Petitioner's records revealed that Respondent DuBrian was only registered as qualifying broker for Majestic and for no other company.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding that: Respondent L. Jean Jones DuBrian's real estate license be suspended for a period of six (6) months and that she be issued a written reprimand and ordered to complete 24 hours of post licensure education within the period of suspension or as soon thereafter as is practicable. Respondent Kenneth M. Mossell be reprimanded and ordered to complete 18 hours of post licensure education within one year of the issuance of the Final Order. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 5th day of October, 1992. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of October, 1992. APPENDIX TO RECOMMENDED ORDER CASE NOS. 92-1072 AND 92-1322 Rulings on Petitioner's Proposed Recommended Order: Paragraph 17, rejected as unnecessary. Paragraph 19, rejected as unnecessary and irrelevant. Paragraph 37, rejected as unnecessary. Paragraph 57, adopted as modified, Paragraph 40, Recommended Order. COPIES FURNISHED: Janine B. Myrick, Esquire Senior Attorney Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 L. Jean Jones DuBrian 7326 Baltusrol Drive New Port Richey, Florida 34654 Kenneth Milton Mossell 3432 Lori Lane New Port Richey, Florida 34655 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792 Darlene F. Keller Division Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801
Findings Of Fact At all times relevant to the charges brought against the Respondent, Jimmy D. Hill, he was a licensed real estate broker in the State of Florida, holding license number 0144888. On June 20, 1983, a contract for the purchase of Unit 219 in Polynesian Village in Bay County, Florida, was signed by Margaret Gorshi and Glenn Coker. The buyers paid a total of $3,000 as an earnest money deposit which the Respondent deposited into his escrow account at Bay Bank and Trust Company in Panama City. This real estate transaction was subject to the buyers obtaining 90 percent financing, and it was scheduled to close on or before September 15, 1983. The transaction did not close because the buyers were not able to obtain the necessary financing, and in September of 1984 the buyers requested that their earnest money deposit be returned. On September 27, 1984, the Respondent's office manager forwarded a check for $3,000 dated September 24, 1984, to the buyers. This check was drawn on the Respondent's escrow account at Bay Bank and Trust Company in Panama City. This check was presented for payment in November of 1984, but it was not paid by the bank, and was returned because of insufficient funds in the Respondent's escrow account. The Respondent's escrow account was closed in July of 1985 without this check having been honored. Sometime prior to the issuance of the check to refund the buyer's deposit, another check in the amount of $5,400 was cashed at Bay Bank and Trust Company, drawn on the Respondent's business checking account at First National Bank. When this check was not honored by First National Bank due to insufficient funds, it was returned to Bay Bank and Trust Company. Upon receipt of this dishonored check, Bay Bank and Trust Company departed from its standard banking policy by charging the full amount thereof against the Respondent's trust or escrow account. As a result, the Respondent's escrow account became out of balance by $5,400. The Respondent's escrow account balance was at least $3,000 from June, 1983, through July, 1984. This balance was $1,600 on August 31, 1984; $1,600 on September 30, 1984; $600 on October 31, 1984; and from November 1984, through July, 1985, when the account was closed, the escrow account balance was $585. Without the unauthorized debit of $5,400, the balance was sufficient to enable the refund check to the buyers in the amount of $3,000 to clear. Although the Bay Bank and Trust Company issued a debit memo reflecting the charge of $5,400 to the Respondent's escrow account, the Respondent did not receive it. He testified that it must have been intercepted or diverted from him, by office personnel. The Respondent learned that his $3,000 check to the buyers had bounced in November or December, 1984. On February 25, 1985, the Respondent issued a replacement check for $3,000 to purchase a cashier's check which he intended to forward to the buyers. This check was given to an office employee to purchase the cashier's check, but the employee did not do so. Approximately three months later, in May of 1985, the Respondent was notified by an attorney for the buyers that they had not received the refund. The buyers had retained this attorney to obtain their refund from the Respondent, and after two or three discussions with the attorney, the Respondent finally forwarded his check for $3,400 plus, to counsel for the buyers in August of 1985. Although the Respondent's first refund check was caused to bounce by the bank's unauthorized charge of another check to his escrow account, the Respondent was negligent in not reviewing his escrow account statements so as to be informed of the bank's charge to his escrow account. The Respondent also failed to follow-up to assure that the buyers received the first replacement check when it was written in February, 1985. He did not regularly review the balances in his escrow account monthly after July of 1984, and only when he was contacted by the Real Estate Commission's investigator did he perform a thorough reconciliation of his escrow account in July, 1985. The Respondent also failed to supervise his employees and establish policies pertaining to review and verification of the balances in his escrow account.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Respondent, Jimmy D. Hill, trading as Jim Hill Associates, be assessed an administrative fine of $1,000. THIS RECOMMENDED ORDER entered this 25th day of September, 1986 in Tallahassee, Leon County, Florida. WILLIAM B. THOMAS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of Division of Administrative Hearings this 25th day of September, 1986. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-1067 Department of Professional Regulation, Division of Real Estate vs. Jimmy D. Hill, t/a Jim Hill Associates Case No. 86-1067 Rulings on Petitioner's Proposed Findings of Fact: 1-10. Accepted. 11. Rejected because not a factual finding. 12-17. Accepted. Rulings on Respondent's Proposed Findings of Fact: (Paragraphs not numbered, but referred to in order.) Accepted. First sentence accepted. Second, third and fourth sentences rejected as not supported by corroborating evidence and thus are self-serving. Fifth, sixth and seventh sentences accepted. First sentence accepted. Second and third sentences rejected as not supported by corroborative evidence and thus are self-serving. Accepted. Accepted. First sentence accepted. Second and third sentences rejected as irrelevant. COPIES FURNISHED: Arthur R. Shell, Jr., Esquire Department of Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Michael C. Overstreet, Esquire 225 McKenzie Avenue Panama City, Florida 32401 Fred Roche Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Wings S. Benton, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Mr. Harold Huff Executive Director Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802
