Findings Of Fact Pabrey holds certificate number R-0211 as a Certified Public Accountant practicing in the State of Florida and held such certificate in good standing on January 1, 1974. At that time, Pabrey was subject to professional certification require- ments set forth in Chapter 473, Florida Statutes. The records of the Board reflect that Pabrey provided no evidence of the completion of any courses or studies that would give him credit towards the reestablishment of his professional competency in the period between January 1, 1974, and April 2, 1977. On October 15, 1976, Pabrey sat for an examination which was approved by the Board and given to practicing Certified Public Accountants pursuant to applicable law requiring reestablishment of professional competency. Pabrey received a score of 57 out of a possible score of 100. The established passing grade for the examination is 75. On December 31, 1976, Pabrey tendered his check to the Board in the amount of forty dollars ($40.00) as the required license fee. On May 13, 1977, the Board suspended Pabrey's certificate R-0211 as a Certified Public Accountant for failing to comply with requirements for the reestablishment of his professional knowledge and competency to practice public accounting. The check was returned to Pabrey by the Board on May 18, 1977, along with a copy of the Administrative Complaint and Order of Suspension. The questions to be answered in the uniform written professional examination administered to Pabrey on October 15, 1976, were based upon "Current Authoritative Literature' which included Accounting principles Board's Opinions, Accounting Research Bulletins, Statements and Interpretations of the Financial Accounting Standards Board, Statements on Auditing standards, and the Laws and Rules of the Florida State Board of Accountancy. Pabrey challenges thirty-six of these one hundred questions on the grounds that the approved answers are incorrect and that the answer selected by Pabrey is the proper choice. The questions attacked by Pabrey are numbers 5, 7, 11, 15, 18, 19, 22, 28, 29, 30, 31, 35, 36, 37, 42, 45, 53, 54, 55, 57, 59, 62, 63, 65, 66, 70, 72, 74, 76, 78, 86, 87, 88, 91, 92, and 98. The title of the uniform written professional examination is "Examination of Current Authoritative Accounting and Auditing Literature and Rules of the Florida State Board of Accountancy. The approved answer to each of the questions on the examination is that which is mandated by the "Current Authoritative Literature." The examination does not purport to seek answers outside of the requirements of the Current Authoritative Literature. Each of the approved answers in the thirty-six questions listed above are consistent with the demands of the Current Authoritative Literature. None are vague, misleading, unfair or improper. Each of Pabrey's answers is contrary to the provisions of the Current Authoritative Literature. Accordingly, the answers selected by Pabrey are not the best answers and were properly graded incorrect on his examination answer sheet.
Findings Of Fact The Petitioner completed an academic program in accounting at the University of South Florida in March, 1976. She applied to sit for the May, 1976 Certified Public Accountant's examination, and paid her fee. There are four sections to the examination: Auditing, Law, Theory, and Practice. At the May, 1976 examination the Petitioner passed the Law section, but failed the sections on Auditing, Theory and Practice. Accordingly, under the Board's rules, the Petitioner was not credited with having passed any sections of the examination, and needed to take the entire test again. She applied to sit for the November, 1976 examination, paid her application fee, and sat for the examination. On this occasion she passed the Theory and Practice sections of the examination but failed the Auditing and Law sections. Under the Board's rules the Petitioner at this juncture was credited with having passed the Theory and Practice sections, and would be allowed to sit for the next three consecutive examinations in order to pass the remaining two sections. She applied to sit for the May, 1977 examination, paid her fee and sat for the examination. She passed the Law section and failed Auditing. At this juncture she needed to pass only the Auditing section, and had two examinations within which to accomplish that. She applied to sit for the November, 1977 examination. The deadline for making application was September 1, 1977. The Petitioner, through her own mistake, was lake in making application, and her application was rejected. She was not permitted to sit for the November examination. She did timely apply for the May, 1978 examination. She again failed the Auditing section with a score of 69. Under the Board's rule her application for certification as a CPA was considered she would need to being again the testing process, without being credited with having passed any sections. She applied for a regrading of the May, 1978 examination. The examination was regraded, but her score was not changed. The Petitioner is seeking, through this proceeding, an opportunity to retake the Auditing section of the examination, while continuing to receive credit for having passed the Law, Theory, and Practice sections. Under the Board's interpretation of its rules, she would not receive credit for having passed the sections, but would need to begin the testing procedure as a new applicant.
The Issue Is Respondent, Peter H. Myers, guilty of the allegations contained in the Administrative Complaint issued by Petitioner and, if so, what is the appropriate penalty.
Findings Of Fact Petitioner is the state agency charged with the responsibility and duty to prosecute administrative complaints pursuant to Section 20.165 and Chapters 120, 455, and 475, Florida Statutes. Respondent Myers is a licensed real estate broker, having been issued license number BK-0646846. Ocean Village Sales & Rentals, Inc. (Ocean Village) is a real estate broker corporation and Respondent is the qualifying broker for said corporation. Background Petitioner and Respondent were involved in earlier disciplinary cases in 1998 and 1999. On or about December 7, 1999, Petitioner and Respondent entered into a Stipulation which resolved DBPR Case Nos. 98-81236 and 99-80423. The Stipulation placed Respondent on probation for a period of one year from the effective date of the Final Order of the Florida Real Estate Commission (FREC), which adopted the stipulation and was issued on or about January 19, 2000. The Stipulation read in pertinent part as follows: Respondent agrees not to hold or maintain any escrow, trust or real estate related escrow or trust funds for the one(1) year probationary period. Respondent is permitted to be a signatory on the operating and payroll accounts for his brokerage firm only. Respondent shall place all escrow, trust or real estate related funds with a title company, attorney, or other proper depository as permitted under Chapter 475, Fla. Stat., and Fla. Admin. Code r. 61J2. Respondent further agrees not to be a signatory on any escrow, trust or real estate related account with the exception of the operating and payroll accounts for his brokerage firm for the one (1) year probationary period. In compliance with the terms of the stipulation, Respondent placed his escrow account with Joseph Roth, a certified public accountant and licensed real estate broker in the State of Florida. In the Stipulation, Respondent admitted to, among other things, 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. Escrow accounts audit Gail Hand is an Investigation Specialist II with the Department of Business and Professional Regulation (the department). She has approximately 16 years of regulatory and investigative experience with the department. When she started working with the department, she conducted from 20 to 30 trust account audits per month. She routinely conducts audits and inspections of the records of real estate brokers. When reviewing escrow accounts, Ms. Hand's review of escrow accounts has two components. First, she reviews the bank statement reconciliations which compares the statement balance to the checkbook balance. Next she reviews a comparison of the bank statement reconciliations with the broker's total trust liability. The broker's total trust liability is the total of all the money that the broker is holding in his trust or escrow account. On or about January 26, 2001, Ms. Hand conducted an office inspection and escrow account audit of Respondent's business, Ocean Village. Respondent and his daughter were present. During this inspection and audit, Ms. Hand requested to inspect financial documents of the company. Respondent and his daughter provided all documents requested and were very cooperative during the course of the audit. Ms. Hand inspected the November and December 2000 bank reconciliation statements from the escrow trust account of Ocean Village and determined that they were properly prepared. However, Ms. Hand determined that the determination of the broker's trust liability was not properly prepared in that she could not identify the broker's total trust liability from a review of the documents provided by Respondent. The calculations in Respondent's financial records included broker's money, bank fees, and negative owner balances. According to Ms. Hand, the reconciled checkbook to bank statement balance should be compared to a balance that does not include broker's money, bank fees or negative owner balances. Because of this, she could not identify the total broker's trust liability. She normally does not have trouble identifying a broker's total trust liability when conducting an audit. During the audit, Respondent could not identify the total broker's trust liability. Respondent deferred to his accountant, Mr. Roth. Ms. Hand did not discuss the financial documents which she reviewed as part of the audit with Mr. Roth because, "Mr. Myers was responsible." License renewal Respondent's renewal fees for his corporate registration and his individual broker's license became due in March 1999. Respondent renewed his corporate registration in March 1999 but failed to renew his individual broker's license. Respondent did not renew his individual broker's license until February 2001. At that time, he paid for the time period in which he was in arrears and for another 24 months in the future, as well as a late fee or penalty. Respondent continued to conduct real estate transactions during the period of time that his individual broker's license was in involuntary inactive status.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, the evidence of record and the demeanor of the witnesses, it is RECOMMENDED: That a final order be entered by the Florida Real Estate Commission finding the Respondent, Peter H. Myers, guilty of violating Sections 475.25(1)(e) and (o), and 475.42(1)(a), Florida Statutes, and imposing a fine of $2,500.00. DONE AND ENTERED this 4th 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 4th day of September, 2002.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Board of Accountancy was the state agency responsible for the certification and licensing of public accountants and the regulation of the public accounting profession in Florida. Respondent, Gerald E. Shaw, was licensed as a certified public accountant, (CPA), in Florida and operated a public accounting practice in Florida as Gerald E. Shaw, P.A. During the period between December 31, 1990 and April 20, 1991, Respondent was retained to audit the financial books and records of High Point of Fort Pierce Condominium Association Section I, Inc. His audit report and allied papers were submitted to the membership of the association by letter dated April 20, 1991. In his letter he indicated he had conducted his audit in accordance with generally accepted auditing standards, (GAAS), and he opined therein that the financial statements he prepared, "present fairly, in all material respects, the financial position of the [Association] as of December 31, 1990 and the results of its operations for the year then ended in conformity with generally accepted accounting principles." At some point thereafter, the Department/Board of Accountancy received the financial statements prepared by the Respondent which contained apparent deficiencies on the face, particularly the lack of adequate note disclosure. Thomas F. Reilly, C.P.A., an expert in public accounting and an individual who had, on previous occasions, conducted similar investigations for the Board of Accountancy, was retained to conduct an investigation to ascertain the facts related to the instant financial statements prepared by the Respondent. By letter dated October 4, 1991, the Department notified Respondent that the investigation would take place and the subject matter thereof. Mr. Reilly thereafter met with the Respondent and discussed the financial statements and work papers in issue with him. Though Respondent was initially reluctant to participate in the investigative process unless he was provided, ahead of time, with a list of the reported deficiencies, he later agreed to a review of his work product. When he had completed his investigation, Mr. Reilly prepared a report in which he stated his opinions regarding the sufficiency of the financial statement prepared by Respondent which he determined to be inadequate. His opinion was based on his findings that there were a significant number of departures from the accounting standards called for in Statement of Accounting Standards, (SAS), 58 developed and promulgated by the American Institute of Certified Public Accountants, (AICPA). Mr. Reilly also found there were no references in the Financial Statement prepared by Respondent to footnotes as required by Accounting Principles Board, (APB), Statement 4. There also was no summary of significant accounting policies as required by APB Statement 22. All of this was determined from the hierarchy of accepted auditing principles as found in SAS 5. APB Statement 22 is at the top of the hierarchy and indicates that a failure to follow generally accepted accounting principles is a significant deviation. Among the deviations Mr. Reilly found were included: Cash in reserve funds was incorrectly referred to as a current asset. Reserve funds should not be considered current assets. (See APB Statement 43). Leases should be disclosed and here these were significant. (See FASB 13, Section L-10). Related party disclosures are not mentioned in the notes as they should be. Here there were 3 separate condominium associations and this financial statement related to only one of them. Since the 3 associations were related, however, the statement should have referred to the others within the complex shared by them all. Because of their interrelationship, disclosure was important. There was no allocation of expenses among the three different associations. There were some invoices paid which may have been allocated among the 3 associations and this was not discussed. It could be significant. Rule 7D-23, F.A.C., requires disclosure of common property and the costs of repair thereof. This requires reserves be maintained for future repair, and the method of allocation, or the waiver thereof, should be explained. This can be very significant, and it was not done by Respondent here. Among the work papers submitted some things which should have been shown were not in evidence. These included: A written audit program should have outlined as required by SAS 22 and SAS 41. This is very significant. A client representation letter should have been obtained as called for in SAS 19. Without it, a limitation on the audit is imposed. This is very significant. A review of related party transactions was not shown to have been done as required by SAS 45. Because of the related organi- zations, this was a material deviation. There appeared to be no review of the internal control structure, (policies, pro- ceedings, etc. relating to the accounting practices of the organization). The auditor should look at this and understand it so he can plan his audit, as required by SAS 55. Here, the audit report did not show it was done and this is significant. A preliminary judgement of materiality levels, as required by SAS 47 was not done. There was no showing that planning had been done as required by SAS 22 and 47, or analytical procedures used in planning the nature, timing and extent of other audit procedures, as required by SAS 56. Each of these alone might not be significant, but taken together, they all are significant. There appeared to be no consideration given to applicable assertions in develop- ing audit objectives as required by SAS 31. An attorney's letter was not in the file as required since the books showed an attorney had been used during the year. This is called for by SAS 12 and is used to check on the status of the legal work and any potential liability of the client. No check was made to see if any test- ing had been done to insure the association was in compliance with Rule 7D-23, FAC. No inquiry was made to see if the client was in compliance with the laws and regulations of the state in general, as called for by SAS 63. The work papers contained a lot of unnecessary bills and statements not norm- ally included. These should not have been there in that form without a showing they were used in the audit. (See SAS 41) There was no showing that any tests were done to insure a correct expense all- ocation among the 3 entities. There was no reporting disclosure checklist. While not required, such a list is common practice to insure all required disclosures pertinent to condo associations were made. The failure to do this is, in Reilly's opinion, practice below commonly accepted standards. The checklists are available from many sources readily access- ible to accountants. There is nothing secret or exclusive about them. Accounting competency standards are found in Rule 21A-22.001 - 21A- 22.003, F.A.C. In Mr. Reilly's opinion, based on, among other discrepancies, the matters outlined above, Respondent deviated from these standards to a point below the standard for a reasonably prudent certified public accountant. He defines "generally accepted accounting practices", (GAAP), as a source of knowledge that exists as defined within the parameters of SAS 5. Certified public accountants keep current in literature pertinent to their professional practice by attendance at continuing education courses, conferences, by performing quality and peer reviews, by doing investigations for the Board of Accountancy, and by networking with other CPA's. These are, of course, not the sole methods of maintaining currency but the ones used mostly by active practitioners, to the best of Mr. Reilly's knowledge. In his report of investigation, Mr. Reilly notes that Respondent is not a member of either the Florida Institute of Certified Public Accountants or the American Institute of Certified Public Accountants and does not participate in the peer review or quality review programs of either organization. His continuing professional education, as reported by him, consisted mainly of self study programs published by Accounting Publications, Inc., and though his practice is related, to a substantial degree to condominium associations, he has not attended any recognized continuing professional education course in that area. Mr. Felsing, also a CPA, heard Mr. Reilly's testimony at the hearing and reviewed his report of investigation. He agrees with Mr. Reilly concerning Respondent's report and he also considers Respondent's departure from generally accepted accounting standards to be significant. He notes that the Respondent here expressed a "clean" opinion regarding the status of the association which he should not have done because of the deficiencies in his work. Mr. Felsing did not review Respondent's work papers, but based on his understanding of Reilly's testimony, he identified what he considers to be significant departures from standard. These include: There should have been a work program developed as required by SAS 22. This is very significant. There should have been a client representation letter as required by SAS 19. This is significant because the failure to have it requires a qualification of the report. SAS 45 requires a review of all related parties and this was not done here even though related parties existed. Respondent's failure to document his thought processes on understanding on internal control standards is indicative of Respondent's attitude toward those standards. Felsing generally concurs with the opinions given by Mr. Reilly right down the line. He concludes that the Respondent's demonstrated lack of planning raises a question as to the effectiveness of the audit since one cannot determine if all required tasks were done. Generally accepted accounting standards require the use of analytical procedures as a valuable tool. Failure to use them would be a significant departure from accepted standards since they all relate to the planning of the engagement and without documentation, a reviewer of the audit report cannot tell if the required tasks were performed. The mere inclusion of client documents in the work papers is not acceptable proof that the work was done. The significance of the disclosure checklist lies in the fact that it is the only way to insure that all required items are included in the financial statement. After a review of all the evidence available to him, Mr. Felsing concluded that Respondent failed to use due diligence as a CPA in this audit. In the aggregate, the information available shows Respondent was either not aware of or chose to disregard the applicable professional standards pertinent here. In his defense against the charge of failing to conform to generally accepting accounting standards, Respondent refers to SAS 5 and AU 411.02 and 411.05. These authorities basically outline the standards against which accounting practice is measured. He notes that the term, "generally accepted accounting practices" includes not only pronouncements but also concept statements of the Financial Accounting Standards Board and "broad conventions and rules" which are not pronouncements. Respondent urges that a practitioner has to follow generally accepted accounting practices when performing an audit. There are two subgroups of these practices which pertain to (1) profit and nonprofit organizations, and (2) governmental entities. According to the AICPA interpretation of Conduct Rule #3, there are reasons to depart from GAAP when appropriate. One is the evolution of a new form of business transaction and another is new legislation requiring a departure. In either case, a certified public accountant might legitimately deviate from GAAP. Since, he claims, GAAP is somewhat fluid in application, the auditor has the responsibility and the right not to act as a robot but to see that the audit properly serves the purpose of the entity being audited so as to promote decision making and to identify net income and net worth. Respondent asserts that GAAP are not an end in themselves but a tool in making business decisions. The usefulness of the financial information should be the primary quality to be sought. Usefulness deals with relevance and reliability. In the instant case, Respondent claims that the concept of condominium ownership of realty is so new and so different, and governed by such new legislation that GAAP which have been in use over the past 10 or 15 years and developed to deal with the condominium association are not pertinent. Here, he claims, he had to modify. His position, however, is not well taken. The audit report in issue was to be read by the condominium owners who are interested in the stewardship of the condominium board and the net worth of the association. Respondent contends they are not interested in profit or tradable net worth. A condominium association has a clear and stated purpose which is the management and maintenance of the condominium property. Therefore, an accountant who goes into an audit of a condominium association without having these concepts in his mind is, in his opinion, not doing a good job. Turning to the specifics of the allegations made by Petitioner's witnesses and in the report of investigation, while he accepts some of the comments as valid so far as they allege a particular action, he also claims, in those cases, that the alleged inadequacy has no significant effect on the financial statements. For example, on page C-1 of Mr. Reilly's report, under the heading, Financial Statements, he refers to audits (plural) when only one year is reported on. On the other hand, Respondent disagrees with Reilly's comments regarding an "unorthodox" practice of presenting separate operating statements for the general and reserve funds. Respondent claims there is no definition of "unorthodoxy" for a condominium association and, as evidenced by the 1990 budget of the association, there were more than one reserve account indicated on the financial statement. In his opinion, the accountant should honor that segregation of funds. Respondent agrees that his financial statements do not contain a general reference to the accompanying notes, but he cannot see where any damage was done to a reader of those statements because the footnotes were there without a separate reference. He disagrees that it is generally accepted to record changes in financial position as a basic part of the financial statement when dealing with condominium associations. They are "new animals" and as the accountant, he has the right, he claims, to decide if that information is necessary to the reader of the financial statement. Here, he concluded it was not and, in fact, could be a source of confusion. Respondent also disagrees the Reilly's comment regarding the information regarding reserve funds. He believes that if the financial reporter feels there is a need for segregation of funds, he has to present that segregation in detail. In this case, Respondent believes there is no orthodoxy for condominium reporting and it would be useful to the reader of the statement to see total assessments from all sources so as to determine the justification for his monthly assessment. He also disagrees with Reilly's conclusion that the financial statements do not contain a summary of significant accounting policies. There are, he claims, no alternatives to the way he presented them. Respondent has difficulty responding to Reilly's seventh assertion which is to the effect that cash in reserve funds was inappropriately reflected as a current asset since the reserves are long term. Mr. Shaw believes that if the cash is there, it is available to the board whether it is used or not. This appears to be a matter of semantics and not an issue particularly related to the accounting for condominium associations. While it is true the reserve asset is current and available, it is a dedicated asset and the better accepted accounting practice, as indicated by both experts, is to treat it more as a long term asset. It is so found. Respondent also disagrees with Reilly's conclusion that his terminology in Sections 2 and 3 of the balance sheet is unorthodox. He asserts that those sections do not have to be defined anywhere in the financial statements and are not related to Section 1. He contends that any reader of the audit report would know what is what and be able to understand it. With regard to the "missing" note disclosures, he disagrees with all allegations. He claims that disclosures under FASB #13 and #96 clearly do not apply to condominium associations but relate to investor owned leaseholds. Review of the pertinent bulletin does not necessarily support Respondent's position. He also claims that since there are no related parties none need be disclosed as regards the property management company or the other Sections. The same, he contends, relates to disclosure of potential allocation of expense between the three associations in the same complex. He also does not accept the need to disclose the allocation of interest income between funds utilized by the association. As to disclosures related to reserves and the funding for major repairs and replacements, he contends there is no GAAP that requires this disclosure. Only the state requires it. If a practice is called for in either a statute or rule governing a business activity, whether the profession agrees or not, that requirement must be met and one who fails to do so omits at his peril. In general, those things omitted from his audit, such as a cash flow statement, were not requested by the client, he claims. Had he been asked for them, he would have provided them. Respondent also seeks to rebut some of Mr. Reilly's comments regarding his work papers. He has no complaint with the first two which are not critical of his audit, and he admits he may be in violation of GAAP with regard to Reilly's finding that certain required documentation was not included therewith. However, if, as he alleged, the financial statement conforms to GAAP, there is no harm done when the supporting work papers are not exactly as they should be. He contends, as well, that several, such as SAS #22 which refers to assistants, do not apply. Admitting to a violation of SAS #19 which calls for a client representation letter, he claims to have cured that defect by subsequently getting one and thereafter saw no reason to change the financial statement. Again, as with his response to the complaints regarding the financial statement, he claims any alleged failure regarding related parties is invalid since, he asserts, there are none. With regard to the remaining alleged defects in the supporting documentation to the work papers, he claims there was a search for unrecorded liabilities but because there was no mention made of it, Reilly could not tell this from the documents. Admitting there was no documentation regarding understanding of the internal control structure, as required by SAS #55, Respondent claims he understood it. He alleges he did accomplish an assessment of control risk as required by SAS #55 but admits there is no record of it in the work papers. The preliminary judgement of materiality levels, planning, and analytical procedures in planning the nature, timing and extent of other audit procedures, as required by SAS #'s 22,47 and 56 were all accomplished, he claims, but admits they were not included in the work papers. He also admits he did not get an attorney's letter and that this is a violation. However, he claims he did test to determine if the association was in compliance with pertinent statutes and rules, but it was not written down in the work papers, and he claims that confirmation of accounts receivable was not necessary because there were none except from Sections 2 and 3, which he did verify. In this latter assertion, it appears he was correct. Mr. Shaw refers to allegations 4 - 6 regarding work papers as mere statements of fact with which he takes no issue. A closer look at the report, however, reveals that numerous omissions were noted here as well. He admits that a financial statement reporting checklist was not in evidence but relates he deemed it not necessary. Mr. Reilly disagreed and his opinion is more supportable. There is little to disagree with in Mr. Reilly's item 8 under work papers when he asserts that the omission of an overall index of the work papers made them difficult to review and void of audit methodology. Taken together, the evidence demonstrates that Respondent's audit did not sufficiently conform to GAAP and was less than required under the circumstances.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is recommended that a Final Order be entered in this case placing Respondent, Gerald E. Shaw's, license as a certified public accountant in Florida on probation for a period of three years under such terms and conditions relating to practice and continuing education as are deemed appropriate by the Board of Accountancy. RECOMMENDED this 12th day of October, 1992, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 12th day of October, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-3420 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of fact submitted by the parties to this case. FOR THE PETITIONER: Accepted and incorporated herein except as they relate to the treatment of reserve accounts as long term assets. FOR THE RESPONDENT: None submitted. COPIES FURNISHED: Charles F. Tunnicliff, Esquire Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Gerald E. Shaw 10780 South US 1 Port St. Lucie, Florida 34952 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Martha Willis Executive Director Department of Professional Regulation/Board of Accountancy Suite 16 4001 Northwest 43rd Street Gainesville, Florida 32606
Findings Of Fact Shechet holds Certificate No. R-0573 as a certified public accountant practicing in the State of Florida, which he received by virtue of reciprocal status, having previously practiced in the State of Ned York. Shechet began his accounting career in 1924 and has practiced his profession continuously for the fifty-three years since that time. The records of the Board reflect that Shechet provided no evidence of the completion of any courses or studies that would give him credits towards the reestablishment of his professional competency in the period between January 1, 1974, and April 2, 1977. On September 15, 1975, Shechet sat for an examination which was approved by the Hoard and given to practicing certified public accountants pursuant to applicable law requiring reestablishment of professional competency. Shechet received a score of 3 out of a possible score of 100. The established passing grade for the examination is 75. The examination consisted of 100 multiple choice questions, each with 4 responses. The approved method of answering the questions was to select one response and then, on the answer sheet, darken the circle corresponding to the letter assigned to the selected response. If more than one circle is darkened in a given set of responses, the answer is marked wrong. In each of the 100 answers, Shechet marked more than one response either by darkening, check mark or "X". On May 13, 1977, the State Board of Accountancy suspended Shechet's certificate R-0573 as a certified public accountant for failing to comply with requirements for the reestablishment of his professional knowledge and competency to practice public accounting.
Findings Of Fact Petitioner is an agency of the State of Florida charged with the responsibility and duty to prosecute violations of the statutes and rules regulating the practice of real estate in the State of Florida. Respondent, Benjamin C. Rolfe, is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0318091 in accordance with Chapter 475, Florida Statutes. The last license issued to Mr. Rolfe was as a broker with Squires Realty of the Palm Beaches, Inc., 721 U.S. 1, #217, North Palm Beach, Florida. Respondent, Duane C. Heiser, is now and was at all times material hereto a licensed real estate broker in the State of Florida having been issued license number 0038233 in accordance with Chapter 475, Florida Statutes. The last license issued to Mr. Heiser was as a broker effective February 8, 1991, at Duane C. Heiser Realty Co., 1312 Commerce Lane A1, Jupiter, Florida. On or about December 12, 1998, a Final Order was issued by the Florida Real Estate Commission and received by Mr. Heiser whereby his real estate broker's license was suspended for two (2) years from January 12, 1989, through January 10, 1991. During the month of October 1989, Mr. Heiser violated the lawful suspension order of the Commission by personally delivering rental checks to and ordering the disbursement of escrow funds from the Property Management-Operating Account, which is an escrow account, of Squire's Realty Company of the Palm Beaches, Inc. Between March 22 and March 26, 1990, the escrow account records of Mr. Rolfe, who was the qualifying broker for Squire's Realty of the Palm Beaches, Inc., were audited by Petitioner's authorized representatives. The Escrow/Trust Account Audit revealed that Respondent Rolfe failed to properly document and reconcile the Property Management-Operating Account, which is an escrow account. Mr. Rolfe was responsible for this account. Mr. Rolfe was negligent regarding the management of this escrow account by allowing a suspended licensee, Mr. Heiser, access to this account. Mr. Rolfe and Petitioner stipulated that the appropriate penalty for Mr. Rolfe's violation of Section 475.25(1)(b), Florida Statutes, would be the imposition of an administrative fine in the amount of $300.00 and the placement of his licensure on probation for a period of one year. They further stipulated that the administrative fine was to be paid within thirty days of the filing of the final order. They also stipulated that during his term of probation Mr. Rolfe would be required to complete sixty hours of continuing education with thirty of those sixty hours being the thirty hour management course for brokers. They further stipulated that Mr. Rolfe would be required to provide to Petitioner satisfactory evidence of his completion of those sixty hours of continuing education and that those sixty hours of continuing education are to be in addition to any other continuing education required of Mr. Rolfe to remain active and current as a real estate broker in the State of Florida. Mr. Heiser and Petitioner stipulated that the appropriate penalty for Mr. Heiser's violation of Section 475.25(1)(b), Florida Statutes, would be the imposition of an administrative fine in the amount of $300.00 and the placement of his licensure on probation for a period of one year. They further stipulated that the administrative fine was to be paid within thirty days of the filing of the final order. They also stipulated that during his term of probation, Mr. Heiser would be required to complete sixty hours of continuing education with thirty of those sixty hours being the thirty hour management course for brokers. They further stipulated that Mr. Heiser would be required to provide to Petitioner satisfactory evidence of his completion of those sixty hours of continuing education and that those sixty hours of continuing education are to be in addition to any other continuing education required of Mr. Heiser to remain active and current as a real estate broker in the State of Florida.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered which: Dismisses Counts I, III, and V of the Administrative Complaint; Finds Mr. Heiser guilty of having violated a lawful order of the Florida Real Estate Commission in violation of Section 475.25(1)(e), Florida Statutes, as alleged in Count II of the Administrative Complaint. It is further recommended that the Final Order impose an administrative fine in the amount of $300.00 upon Mr. Heiser and place his licensure on probation for a period of one year. It is also recommended that the conditions of probation require that Respondent Heiser pay the said administrative fine within thirty days of the filing of the final order and that he be required to complete sixty hours of continuing education during his term of probation. It is further recommended that as part of the sixty hours of continuing education, Mr. Heiser be required to successfully complete the thirty hour management course for brokers, that he be required to provide satisfactory evidence of completion of such continuing education to Petitioner, and that these sixty hours of continuing education be in addition to any other continuing education required of Respondent Heiser to remain active and current as a real estate broker in the State of Florida. Finds Mr. Rolfe guilty of culpable negligience in a business transaction in violation of Section 475.25(1)(b), Florida Statutes, as alleged in Count IV of the Administrative Complaint. It is further recommended that the Final Order impose an administrative fine in the amount of $300.00 upon Mr. Rolfe and place his licensure on probation for a period of one year. It is also recommended that the conditions of probation require that Respondent Rolfe pay the said administrative fine within thirty days of the filing of the final order and that he be required to complete sixty hours of continuing education during his term of probation. It is further recommended that as part of the sixty hours of continuing education, Mr. Rolfe be required to successfully complete the thirty hour management course for brokers, that he be required to provide satisfactory evidence of completion of such continuing education to Petitioner, and that these sixty hours of continuing education be in addition to any other continuing education required of Respondent Rolfe to remain active and current as a real estate broker in the State of Florida. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 30th day of December, 1991. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 1991. COPIES FURNISHED: James H. Gillis, Esquire Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Neil F. Garfield, Esquire Garfied & Associates, P.A. World Executive Building Suite 333 3500 North State Road 7 Fort Lauderdale, Florida 33319 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
The Issue The issue in this case is whether the respondents committed the violations alleged in the Amended Administrative Complaint, and, if so, the penalties which should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department of Business and Professional Regulation is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida, in particular chapters 120, 455, and 475, Florida Statutes, and the rules promulgated thereunder. The Florida Real Estate Commission operates within the Department and is the entity directly responsible for licensing and disciplining those licensed under chapter 475. Section 475.02, Fla. Stat. The Division of Real Estate operates within the Department and assists the Commission in carrying out its statutory duties. Section 475.021, Fla. Stat. Respondent Michael R. Hull is now and was at all times material hereto a licensed Florida real estate broker-sales person, issued license number 0398325 in accordance with chapter 475, Florida Statutes. The Department's records show that Mr. Hull's license is voluntarily inactive. At the times material hereto, he worked out of one of the Fort Lauderdale offices of The Prudential Florida Realty. Respondent Karolyn K. Busby is now and was at all times material hereto a licensed Florida real estate broker, issued license numbers 0152284 and 0272478 in accordance with chapter 475, Florida Statutes. The last licenses issued to Ms. Busby were as a broker c/o CMT Holdings, Inc., 1988 Gulf-to-Bay Boulevard, Clearwater, Florida 34625, and c/o Preferred Rentals, Inc., 19353 U.S. Highway 19 North, Number 100, Clearwater, Florida 34624. At all times material hereto, Ms. Busby was licensed and operating as qualifying broker and officer of respondent CMT Holdings, Inc. Respondent CMT Holdings, Inc., is and was at all times material hereto a corporation registered as a Florida real estate broker, issued license numbers 0266412 and 0266434 in accordance with chapter 475, Florida Statutes. The last licenses issued were at 1988 Gulf-to-Bay Boulevard, Clearwater, Florida 34625, and as a partner to CMT Holding, Limited, t/a The Prudential Florida Realty, 19353 U.S. Highway 19 North, Number 100, Clearwater, Florida 34624. Respondent CMT Holding, Limited, t/a The Prudential Florida Realty, is, and was at all times material hereto, a limited partnership registered as a Florida real estate broker, having been issued license number 0266433 in accordance with chapter 475, Florida Statutes. The last license issued was at 19353 U.S. Highway 19 North, Number 100, Clearwater, Florida 34624. Blucher/Gautier transaction: Counts I, II, III, IV, V, VI, and VII of the Amended Administrative Complaint Carol R. Blucher listed for sale her condominium apartment, number 405 of Harbor Haven, located in Fort Lauderdale, Florida. Deborah H. Burns and her broker, Elizabeth T. Beauchamp, were the seller's and listing agents for Ms. Blucher's condominium, and Intercoastal Realty, Inc., was the listing office. On January 1, 1994, Jacques and Aimee Gautier executed a Deposit Receipt and Contract for Purchase and Sale of Ms. Blucher's condominium. The contract disclosed that Intercoastal Realty was the listing office for the transaction and that The Prudential Florida Realty was the selling office. Michael R. Hull signed the contract as an associate of The Prudential Florida Realty. In the contract, Mr. Hull acknowledged receiving as a deposit a check in the amount of $500; Mr. Hull accepted this check on behalf of The Prudential Florida Realty for deposit in its escrow account. The contract provided that the transaction would close on or before February 28, 1994, and that Mr. and Mrs. Gautier would make an additional deposit of $7,000 within seven days of acceptance of the contract. The additional deposit was to be held by The Prudential Florida Realty in its escrow account. The Gautiers were to wire the $7,000 to the Clearwater office of The Prudential Florida Realty, since the accounting department, which handles the escrow accounts, was located in that office. Mr. Hull hand-delivered the executed Deposit Receipt and Contract for Purchase and Sale to Ms. Burns, together with a letter dated January 3, 1994. In this letter, Mr. Hull requested certain information from Ms. Burns relative to the transaction, and he informed her that Mr. and Mrs. Gautier intended to wire the additional $7,000 deposit and that he would confirm receipt with her. Ms. Burns, in turn, conveyed the contract to Ms. Blucher, who accepted the offer on January 4, 1994, by executing the contract. The executed contract was delivered to Mr. Hull on January 7, and both Mr. Hull and Ms. Burns considered January 13 to be the date on which the additional deposit was due. Mr. Gautier told Mr. Hull that the additional deposit would be wired on January 10. On January 13, Mr. Hull was told by the bookkeeper in the Clearwater office of The Prudential Florida Realty that the transfer of the $7,000 had not been confirmed. For several days thereafter, Mr. Hull was in daily contact with the bookkeeper because he feared that there had been an error in the wire transfer. The transfer of the $7,000 was not confirmed as of January 21. Mr. Hull made several attempts to contact Mr. Gautier after January 13. When he finally got in contact with him, Mr. Gautier promised Mr. Hull that he would wire the $7,000 deposit "the next day." The transfer of the $7,000 deposit to The Prudential Florida Realty was not confirmed by January 31, and Mr. Gautier did not respond to Mr. Hull's further attempts to contact him. In letters dated January 13, 21, and 31, 1994, Mr. Hull advised Ms. Burns, Ms. Blucher's selling and listing agent, of the status of his efforts to secure the additional deposit and of Mr. Gautier's responses or lack thereof. These letters were properly addressed and sent either by facsimile transmittal or by United States mail on the date shown on the letters or on the day after. Mr. Hull was in San Diego, California, from February 2 through 9, 1994, attending a realtors' conference, and his next contact with Ms. Burns was on February 15 or 16, when they spoke by telephone. During that conversation, Mr. Hull advised Ms. Burns that the transfer of the $7,000 deposit to The Prudential Florida Realty had not been confirmed by the Clearwater office and that Mr. Gautier would not respond to repeated attempts to contact him. Ms. Burns waited until on or about February 22, a week before the February 28 closing date, to notify Ms. Blucher that the Gautiers had not made the additional $7,000 deposit. Ms. Blucher was "flabbergasted." Although she had not directly asked Ms. Burns about the status of the deposit, she assumed the deposit had been received because Ms. Burns had not told her anything to the contrary. Throughout the course of this transaction, Ms. Burns dealt exclusively with Ms. Blucher as selling and listing agent, and Mr. Hull dealt exclusively with Ms. Burns. Mr. Hull did not deal directly with Ms. Blucher because he believed that it would be unethical if he did so. However, he kept Ms. Burns fully informed about the status of the transaction and assumed she was passing the information on to her client. For her part, Ms. Blucher considered Ms. Burns her realtor and expected to deal exclusively with her and to be kept informed with regard to this transaction. By advising Ms. Burns that the $7,000 additional deposit had not been received within the time specified in the contract and by keeping her informed of his attempts to secure the deposit, Mr. Hull fulfilled his duty to Ms. Blucher to disclose information material to the transaction. The Department offered no proof that, by statute, rule, or industry practice, Mr. Hull was required to inform Ms. Blucher of the status of the deposit directly rather than indirectly through her agent, Ms. Burns. Under the circumstances, Mr. Hull was justified in relying on Ms. Burns to communicate with her client. The proof is not sufficient to establish that Mr. Hull was culpably negligent or committed a breach of trust with regard to this transaction. Scarborough/Krathen transaction: Counts VIII, IX, and X of the Amended Administrative Complaint On June 18, 1993, Patrice Scarborough accepted the offer of Stephen and Mary Krathen to purchase her home in Fort Lauderdale, Florida. The offer was made in a Deposit Receipt and Contract for Sale and Purchase executed by Howard Scott, attorney for Dr. and Mrs. Krathen. The agent who prepared the contract was Sidney White of The Prudential Florida Realty. Ms. Scarborough had listed the property with Sunrise Realty, and Robert F. Mann was acting as her selling agent. In accordance with the terms of the contract, Mr. Scott tendered a check made payable to The Prudential Florida Realty in the amount of $1,000 as a deposit and partial down payment on the subject property. The check was dated June 18, 1993, and the contract shows the acknowledgment of Sidney White that, on June 18, 1993, he received $1,000 as an associate of The Prudential Florida Realty. In the contract, the Krathens, through Mr. Scott, agreed to tender an additional deposit of $44,000, with $9,000 payable on or before June 22, 1993, and $35,000 payable on or before June 29, 1993. The Krathens did not remit either the additional $9,000 or the additional $35,000 deposits, and they were in default of the contract as of June 29, 1993. In July 1993, Ms. Scarborough authorized Mr. Mann to demand the $1,000 deposit on her behalf. Mr. Mann immediately telephoned Mr. White and advised him that Ms. Scarborough felt she was entitled to the $1,000 deposit because the Krathens had defaulted on the contract by failing to remit the additional $44,000 deposit. Mrs. Krathen knew shortly after the contract was entered into that she would not be able to obtain the financing necessary to purchase the Scarborough home. She contacted The Prudential Florida Realty in July 1993 and verbally requested the return of the $1,000 deposit. After demanding the $1,000 on behalf of Ms. Scarborough, Mr. Mann was in regular contact with Mr. White with regard to the deposit. Mr. Mann and Mr. White enjoyed a good working relationship, and Mr. Mann knew that Mr. White had repeatedly tried to contact Dr. Krathen and his attorney, Mr. Scott, and had gotten no response. Meanwhile, shortly after authorizing Mr. Mann to demand the $1,000 deposit, Ms. Scarborough learned that the Krathens had previously declared bankruptcy and that, once the bankruptcy was removed from their credit report, their chances of being approved for financing would improve. Ms. Scarborough told The Prudential Florida Realty that she was willing "to go along with" Dr. Krathen in his attempts to resolve the bankruptcy issue, but the contract for purchase and sale was not modified, Ms. Scarborough did not take her home off the market, and she did not rescind her demand for the $1,000 deposit. During this time, Ms. Scarborough spoke several times directly with Sidney White and was kept informed by The Prudential Florida Realty of the status of the Krathen's attempts to secure financing. Although he cannot recall the exact date, at some point Mr. Mann telephoned Joan Sher and told her of the problems he was having getting the matter of the $1,000 deposit resolved. Ms. Sher was the broker and branch manager responsible for The Prudential Florida Realty's Fort Lauderdale office out of which Mr. White worked. Mr. Mann made a formal demand to Ms. Sher for arbitration of the deposit dispute. On December 13, 1993, Ms. Sher received a written demand for the deposit from Mr. Scott, the attorney acting on behalf of Dr. Krathen. Ms. Sher then prepared a Notice of Escrow Dispute/Good Faith Doubt, dated December 14, 1993, in which she identified Kay Rehard Busby as the broker for the Scarborough/Krathen transaction. In Ms. Busby's absence and with her authorization, Ms. Sher signed the Notice of Escrow Dispute/Good Faith Doubt "Kay Rehard Busby" and included her initials under the signature line to indicate that she had signed on Ms. Busby's behalf. At the times material to this proceeding, Ms. Busby was the broker and general manager responsible for the eight branch offices of The Prudential Florida Realty located in Broward County. On December 22, 1993, Gerri Barnoske, of the Division of Real Estate, sent a letter to Ms. Busby advising her that the Notice of Escrow Dispute/Good Faith Doubt had been received by the Division on December 20. The letter further advised Ms. Busby that, within fifteen days from the date the form was received by the Division, she must either arrange for arbitration of the dispute, put the matter before a civil court, arrange for mediation, or request an Escrow Disbursement Order from the Florida Real Estate Commission. On the Notice of Escrow Dispute form, there is a space marked "Optional" which can be checked to request the Division to send the paperwork necessary to request an escrow disbursement order. This space was not checked on the form prepared by Ms. Sher, and the Division did not send the paperwork necessary to request an escrow disbursement order. Ms. Sher thought that she had requested the necessary paperwork to request an escrow disbursement order when she submitted the Notice of Escrow Dispute to the Division of Real Estate. She had made an entry on her tickler system, and, when the tickler came up and she realized that she had not received the paperwork, she telephoned the Division. She was told to submit a request for the paperwork in writing. She did so in a letter dated January 20, 1994. The necessary paperwork was sent by the Division on January 26, 1994, and the completed Request for Escrow Disbursement Order form was received by the Division on February 4, 1994. The Request for Escrow Disbursement Order was prepared from information provided by Mr. White, and he identified July 15, 1993, and July 24, 1993, as the dates on which the conflicting Krathen and Scarborough demands were received. The form was reviewed by Ms. Sher, and signed "Kay Rehard Busby," as the requesting broker, "By Joan C. Sher." Ms. Sher signed Ms. Busby's name in her absence and with her authorization. On June 22, 1994, the Florida Real Estate Commission issued an Escrow Disbursement Order, ordering that the $1,000 deposit be paid to Ms. Scarborough. The funds were disbursed in accordance with the order. The evidence is clear and convincing that, even though Dr. Krathen's attorney did not respond to his messages or make a written demand for the deposit until December 13, 1993, Mr. White was aware by mid-July 1993 that Mrs. Krathen and Ms. Scarborough had made conflicting demands for the $1,000 deposit held in escrow by The Prudential Florida Realty. Accordingly, the proof establishes that Ms. Sher, acting on Ms. Busby's behalf, did not promptly submit the Notice of Escrow Dispute/Good Faith Doubt to the Division of Real Estate; rather, the notice was submitted approximately five months after it became known that there was a dispute. The responsibility to notify the Division was not obviated by Ms. Scarborough's willingness to "go along" until December to see if the Krathens were able to clear up their bankruptcy problems and obtain financing. In addition, the evidence is clear and convincing that none of the four alternatives available to resolve the escrow dispute was instituted promptly after notifying the Division of the dispute. Silberzweig/Vargas transaction: Counts XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, and XIX of the Amended Complaint On December 7, 1993, the personal representative of the Estate of Cecelia Silberzweig accepted the offer of Edna Vargas to purchase a condominium apartment, number 110, Building 1-J, Oriole Gold and Tennis Club, located in Margate, Florida. In the Deposit Receipt and Contract for Purchase and Sale, Ms. Vargas agreed to make an initial deposit of $500, which was received by Jean Gilchrist, as an associate of The Prudential Florida Realty. 1/ Ms. Vargas also agreed to make an additional deposit of $3,000, payable upon acceptance of the contract. The personal representative of the Estate of Cecelia Silberzweig accepted the offer to purchase on December 7, 1993, and the additional $3,000 deposit was received by The Prudential Florida Realty and deposited in its escrow account. Pursuant to the contract, the transaction was to close on or before December 10, 1993. An Addendum to the contract, executed by Ms. Vargas on December 11 but not executed by the seller, purported to extend the closing date until December 20, 1993. Notwithstanding the purported extension, Ms. Vargas requested that her interview with the condominium association be scheduled on December 23, 1993. 2/ The closing did not take place on either December 10 or December 20. On January 25 or 26, 1994, Joanna (White) Youngblood received a letter from the attorney for Ms. Vargas demanding the return of the $3,500 deposit. Ms. Youngblood also received a letter from the seller demanding the deposit. At the times material to this proceeding, Ms. Youngblood was the broker for the Fort Lauderdale office of The Prudential Florida Realty out of which Ms. Gilchrist worked. Both before and after the demand letters were received, the transaction was "on again, off again." However, for reasons which are not clear from the record, the transaction never closed. At the times material to this proceeding, Ms. Busby was the broker and general manager for The Prudential Florida Realty's Broward County offices. On February 4, 1994, she personally signed a Notice of Escrow Dispute/Good Faith Doubt form with regard to the $3500 deposit at issue in the Silberzweig/Vargas transaction. She did not check the option on this form to request that the Division of Real Estate send her the paperwork necessary to request an escrow disbursement order. On February 16, Gerri Barnoske, of the Division of Real Estate, sent a letter to Ms. Busby advising her that the Notice of Escrow Dispute/Good Faith Doubt had been received by the Division on February 10. The letter further advised Ms. Busby that, within fifteen days from the date the form was received by the Division, she must either arrange for arbitration of the dispute, put the matter before a civil court, arrange for mediation, or request an Escrow Disbursement Order from the Florida Real Estate Commission. On March 28, 1994, the Division of Real Estate received a Notice of Settlement Procedure for Escrow Dispute indicating that interpleader or other court action "has been instituted" in the Silberzweig/Vargas escrow dispute. The form was prepared by Joanna Youngblood, who signed the form "Karolyn Kay Busby, G.M. (by JWY)." The form was signed by Ms. Youngblood in Ms. Busby's absence and with her authorization; the signature was dated March 8, 1994. At the time the form was submitted to the Division, no interpleader or other court action had been instituted. When she submitted the Notice of Settlement Procedure for Escrow Dispute to the Division, or shortly thereafter, Ms. Youngblood contacted the attorney for Ms. Vargas to advise him that she intended to turn the matter over to the courts. Ms. Vargas's attorney asked that she request an Escrow Disbursement Order rather than go to court. As a result, Ms. Youngblood called the Division's Orlando office to request the paperwork necessary to request an escrow disbursement order. After calling twice, she finally received a form, but it was a Division of Real Estate Uniform Complaint Form. Even though she knew it was not the proper form, Ms. Youngblood gave the Complaint Form to Jean Gilchrist, the associate who had been involved with the transaction. Ms. Gilchrist completed and signed the form; her signature was dated May 20, 1994. The form also carries the signature "Kay Busby G.M. (by JWY)." Ms. Youngblood signed the form for Ms. Busby in her absence and with her authorization. Ms. Youngblood was subsequently advised by Don Piersol, an investigator with the Division's Fort Lauderdale office, that she had submitted the wrong form. She obtained the correct form, and, in a letter to Ms. Barnoske dated June 17, 1994, signed "Kay Busby (JWY)," she enclosed a Request for Escrow Disbursement Order, asking that the request be expedited. On February 27, 1995, the Florida Real Estate Commission issued an Escrow Disbursement Order, ordering that the $3,500 deposit be paid to Ms. Vargas. The funds were disbursed in accordance with the order. The proof is not sufficient to establish that Ms. Busby was culpably negligent with regard to the Silberzweig/Vargas transaction, or that she committed a breach of trust. Additionally, the proof affirmatively establishes that Ms. Busby timely notified the Division of the conflicting demands made for the deposit. However, the evidence is clear and convincing that those acting on Ms. Busby's behalf, and with her authorization, failed to implement promptly any of the four alternative procedures available to resolve the escrow dispute. Ms. Youngblood represented to the Division in March that an interpleader or other court action had been instituted, when, in fact, no such action had been filed. The evidence is also clear and convincing that none of the other alternatives available to resolve the escrow dispute was instituted promptly after notifying the Division of the dispute. This failure is not excused by Ms. Youngblood's confusion with regard to the proper procedure for requesting the appropriate forms.
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 Finding respondents Karolyn K. Busby, CMT Holdings, Inc., and CMT Holding, Limited, t/a The Prudential Florida Realty, guilty of violating rule 61J2-10.032, Florida Administrative Code, and section 475.25(1)(e), Florida Statutes, as charged in the Amended Administrative Complaint, Counts VIII, IX, and X, with respect to the Scarborough/Krathen transaction, and Counts XVII, XVIII, and XIX with respect to the Silberzweig/Vargas transaction; Imposing administrative penalties consisting of A reprimand of Karolyn K. Busby, CMT Holdings, Inc., and CMT Holding, Limited, t/a The Prudential Florida Realty, and An administrative fine against Karolyn K. Busby in the amount of two thousand dollars ($2,000); and Dismissing Counts I through VII and Counts XI through XVI of the Amended Administrative Complaint. DONE AND ENTERED this 30th day of May, 1996, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO, 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 30th day of May, 1996.
