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
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 Whether the Respondents committed the violations alleged and, if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency charged with the responsibility of regulating real estate licensees. At all times material to the allegations of this case, Respondent, Harold E. Hicks, was licensed as a real estate broker, license number 0136248. At all times material to the allegations of this case, Mr. Hicks was the qualifying broker for the Respondent corporation, Service First Realty, Inc. (the corporation), whose address is 9715 N. W. 27th Avenue, Miami, Florida 33147. The Respondent corporation holds license number 0223295. Mr. Hicks was responsible for the day-to-day business operations of the corporation. Mr. Hicks was responsible for the financial records kept and maintained by the corporation. All financial records at issue in this proceedings were in the name of the corporation. In 1996, an investigator employed by the Petitioner, Kenneth G. Rehm, attempted to conduct an audit of the Respondents' financial records. This audit was in response to a complaint not at issue in this proceeding. Mr. Rehm went to the Respondents' place of business and asked for the financial records for all real estate accounts. Mr. Hicks provided the investigator with records which established a negative escrow bank balance of $761.00. Moreover, there was no monthly reconciliation for the escrow account. Based upon the bookkeeping method used, the Respondents' records did not show how much money was being held in trust for individual clients. Respondents pooled money for different rental properties into one escrow account without establishing that they maintained accurate ledger balances per client. When Mr. Rehm was unable to reconcile the accounts, he elected to offer Respondents additional time to gather the records and to prepare for a complete audit. Such audit was assigned to Petitioner's investigator, Roberto Castro. Mr. Castro attempted to complete the follow-up audit of Respondents' financial records on February 13, 1996. Once again, the audit was hampered due to the lack of escrow account records. Based upon the records that were provided by Respondents, Mr. Castro computed that Respondents had $3,922.45 in outstanding checks from the rental distribution trust account but only $2,241.58 in the account. This calculation resulted in a shortage of $1,680.87. Mr. Castro also determined that Respondents were not completing monthly escrow account reconciliations in accordance with the rule promulgated by the Florida Real Estate Commission. On May 3, 1996, Respondents were served with a subpoena to provide Mr. Castro with all escrow records from February 1995 to February 1996. Respondents did not respond to the subpoena. As of the date of hearing, Respondents have not shown monthly escrow account reconciliations in accordance with the rule promulgated by the Florida Real Estate Commission.
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 the Respondents guilty of violating Sections 475.25(1)(b), (e), and (k), Florida Statutes, and imposing an administrative fine in the amount of $1,500.00. It is further recommended that the Commission suspend Respondents' licenses until the Respondent Hicks has completed a seven-hour course in real estate escrow management and that such suspension be followed by a probationary period with monitoring of the Respondents' financial records to assure compliance with all Commission rules. DONE AND ENTERED this 25th day of November, 1997, in Tallahassee, Leon County, Florida. J. D. Parrish Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 25th day of November, 1997. COPIES FURNISHED: Henry M. Solares Division Director Division of Real Estate 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 Daniel Villazon, Esquire Department of Business and Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, Florida 32802-1900 Harold E. Hicks, pro se Service First Realty, Inc. 9715 Northwest 27th Avenue Miami, Florida 33147
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 In this disciplinary proceeding, the issues are whether Respondents, who are licensed real estate brokers, failed to reconcile their brokerage escrow account properly; failed to maintain trust funds in an escrow account as required; filed a false report or record; obstructed or hindered Petitioner’s investigator in an official investigation; failed to account for and deliver trust funds; committed various acts of fraud, misrepresentation, dishonest dealing, or culpable negligence in any business transaction; or committed any of these enumerated offenses, as alleged by Petitioner in its Administrative Complaint.
Findings Of Fact The Parties Respondent Rudolph Dyer (“Dyer”) is a licensed real estate broker subject to the regulatory jurisdiction of the Florida Real Estate Commission (“Commission”). Respondent Golden Key Realty, Inc. (“Golden Key”) is and was at all times material hereto a corporation registered as a Florida real estate broker subject to the regulatory jurisdiction of the Commission. Dyer is the president and a director of Golden Key, and at all times relevant to this case he had substantial, if not exclusive, control of the corporation. Indeed, the evidence does not establish that Golden Key engaged in any conduct distinct from Dyer’s in connection with the transactions at issue. Therefore, Respondents will generally be referred to collectively as “Dyer” except when a need to distinguish between them arises. Petitioner Department of Business and Professional Regulation, Division of Real Estate, has jurisdiction over disciplinary proceedings for the Commission. At the Commission’s direction, Petitioner is authorized to prosecute administrative complaints against licensees within the Commission’s jurisdiction. Escrow Account Irregularities and Related Misconduct On or about November 14, 2001, Petitioner conducted a routine audit of Dyer’s records. Pursuant to the audit, Catherine Rivera (“Rivera”), Petitioner’s investigator, determined that as of October 31, 2001, the balance in Dyer’s escrow account was $127. Rivera determined further that Dyer’s trust liability, i.e. the total amount of money that Dyer should have been holding in escrow on his clients’ behalf, was $2,870. Thus, there existed a shortfall of $2,743 in Dyer’s escrow account. In light of this discovery, Rivera requested that Dyer provide additional records, including previous bank statements and the reconciliation statements that licensed brokers must prepare each month showing either that their trust liabilities and bank balances are in agreement or explaining why they are not. Dyer was unable to produce these records, whereupon Rivera advised him that Petitioner would initiate disciplinary proceedings. On or about April 26, 2002, after being formally notified of pending administrative charges arising from the aforementioned deficiencies concerning his escrow account and associated records, Dyer sent Rivera a letter in which he a) admitted having failed to reconcile his bank balances and trust liabilities and b) informed Rivera that “immediately after the audit [on November 14, 2001,] steps were taken to close out all escrow deposit accounts being held by the company.” In fact, Dyer continued to use his escrow account to hold funds in trust through June 2002; as it happened, the escrow account would not be completely closed until July 29, 2002. The undersigned is not convinced, however, that Dyer lied to Petitioner about closing the escrow account, as Petitioner here contends. Rather, given the ambiguity of the language used (“steps were taken”), the undersigned accepts Dyer’s explanation that what he intended to communicate was that activity in the escrow account was being allowed to wind down in an orderly fashion——which was substantially true. Continuing to investigate the matter, Rivera arranged to meet with Dyer at his office on June 19, 2002, to review the previously requested bank records and files. When Rivera arrived on that date, however, Dyer again failed to provide the desired documents. As a result, Rivera scheduled yet another appointment to inspect records at Dyer’s office. The next such meeting would take place on July 29, 2002. In the meantime, Petitioner served a subpoena duces tecum on Dyer’s bank and obtained a complete set of bank records, including canceled checks, pertaining to Dyer’s escrow account. On July 29, 2002, Dyer finally provided reconciliation statements for his escrow account pursuant to Rivera’s longstanding request. These statements were self-contradictory and woefully inadequate, but, if nothing else, they clearly demonstrated (and the undersigned finds) that the escrow account balance fell significantly short of Dyer’s total trust liability during the months of May through August 2001, inclusive. Indeed, there is no dispute (for Dyer admitted at final hearing), and it is hereby found, that at all times relevant to this case, Dyer was commingling trust funds with other funds, to the point that the escrow account effectively became an operating account of Golden Key. Dyer also produced documents purporting to be copies of checks drawn on his escrow account. At least seven of these copies were not genuine reproductions of the respective originals but were, instead, fakes.1 Specifically, in five instances, the payee of an escrow-account check was, according to the copies that Dyer produced, an individual whom, the inference is clear, Dyer owed escrowed funds. In reality, each such check actually had been made payable to and been uttered by Golden Key, which latter facts are irrefutably established by the bank-produced records.2 Dyer admitted that the above-described copies of checks he had produced to Petitioner were fakes, but he denied having personally altered the underlying documents to create the false copies, blaming an unnamed accountant for that misdeed, and he disclaimed advance knowledge of the tampering. The undersigned, however, does not fully believe Dyer’s explanation. Dyer had exclusive authority over the escrow account and substantial control over Golden Key’s operations. The undersigned finds it inconceivable that a stranger to the subject transactions could have knowingly falsified these particular checks, in the manner shown, without Dyer’s active assistance. Therefore, while acknowledging the possibility that Dyer himself might not have altered the documents in question, the undersigned finds that he was, at the very least, aware of and knowingly complicit in the attempted deception. The Fanfan Transactions On or about June 13, 2001, Dyer facilitated a contract between Herinslake, as seller, and Francique Fanfan (“Fanfan”), as buyer, for the purchase and sale of real property commonly known as 5435 Northwest Tenth Street, Plantation, Florida. The contract called for an initial deposit of $500 and an additional deposit of $500 to be placed with Dyer within ten days after the buyer’s acceptance. Dyer received $500 from Fanfan on June 19, 2001. In evidence as Petitioner’s Exhibit 9 is a $500 money order dated June 18, 2001, which names the sender (maker) as “Fan Fan” and lists as his address “601 W Oakland Pk Blvd, Ft Lauderdale 33311.” The undersigned infers that Petitioner’s Exhibit 9 is, in fact, a copy of the money order that Fanfan tendered to Dyer on June 19, 2001, as a deposit on the contract to purchase property from Herinslake. Petitioner alleges (and Dyer disputes) that some time after June 19, 2001, Dyer collected the agreed-upon second $500 deposit from Fanfan, making a total of $1,000 being held in escrow on Fanfan’s behalf. Petitioner asserts that Petitioner’s Exhibit 7, which is a $500 money order dated July 9, 2001, payable to Golden Key, is proof of the second deposit. Petitioner further alleges that after the contract between Herinslake and Fanfan failed to close (which is undisputed), Dyer returned $500 to Fanfan and kept $500 (which is disputed). Taken together, the testimony of Dyer and that of his former salesman, Elysee Joseph, is imprecise, confusing, and somewhat in conflict as it relates to Fanfan. They agree, however, that when the Herinslake-Fanfan transaction fell apart, Dyer returned Fanfan’s entire deposit——of $500. Dyer also points out that months later he assisted Fanfan in the purchase of a condominium unit located at 2800 Northwest Fifty-Sixth Avenue, Lauderhill, Florida. His testimony is corroborated by the settlement statement from that transaction, which is in evidence as part of Petitioner’s Exhibit 11. The settlement statement identifies the seller as Evelyn Goodison; names Francique Fanfan, “a single man,” as buyer; and indicates that the transaction closed on April 10, 2002. According to the settlement statement, Fanfan had placed a $1,000 deposit against the purchase price, and the testimony at final hearing established that Dyer had held this sum in escrow pending the closing. The undersigned finds that Petitioner has failed to prove, clearly and convincingly, that Dyer retained $500 belonging to Fanfan in connection with the aborted contract between Herinslake and Fanfan, for several reasons. First, the money order dated July 9, 2001, a copy of which is in evidence as Petitioner’s Exhibit 7, appears not to have been tendered by Francique Fanfan, the alleged victim here. This particular money order identifies the sender as “Michelle Fanfan” and gives as her address “2076 Kimberly Blvd, N Lauderdale, Fl 33068.” There is no evidence whatsoever in the record regarding Michelle Fanfan, and hence no finding can be made that she was in any way related to Francique Fanfan, who (the evidence shows) was a single man. Moreover, Michelle Fanfan’s address does not match Francique Fanfan’s address as reported in Petitioner’s Exhibit 9. Second, the undersigned believes that it is highly unlikely Fanfan would have continued to do business with Dyer if, as Petitioner alleges, Dyer had cheated him out of $500 on an earlier deal. Thus, the very fact that Fanfan purchased the Goodison property through Dyer tends to refute Petitioner’s charge. Finally, Fanfan, the alleged victim, did not testify at the final hearing, and consequently there is no direct evidence that Dyer took $500 from Fanfan. The Charges In counts I and VII of its Administrative Complaint, Petitioner accuses Respondents of having failed to properly prepare monthly escrow-reconciliation statements. Petitioner’s position is that in maintaining records showing significant shortages in the escrow account for a period of approximately six months, and by failing to take corrective action regarding the shortages, Respondents failed to comply with Rule 61J2- 14.012, Florida Administrative Code, and hence violated Section 475.25(1)(e), Florida Statutes. In counts II and VIII, Petitioner alleges that Respondents committed 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. Petitioner’s position is that Respondents committed fraud or misrepresentation when they tendered false or forged documents to Rivera during the course of her official investigation. In addition, Petitioner asserts that Respondents committed culpable negligence towards the individuals who placed their funds in trust with Respondents. In counts III and IX, Petitioner asserts that Respondents obstructed or hindered the enforcement of Chapter 475, Florida Statutes, in violation of Section 475.42(1)(i), Florida Statutes, and therefore in violation of Section 475.25(1)(e), Florida Statutes. Petitioner’s position is that Respondents willfully interfered with Rivera’s investigation by submitting fraudulent documents to the investigator. In counts IV and X, Petitioner accuses Respondents of having made or filed a report or record which the licensee knew to be false, in violation of Section 475.25(1)(l), Florida Statutes. Petitioner’s position is that Respondents knowingly tendered false copies of canceled checks to Rivera. In counts V and XI, Petitioner charges Respondents with failing to account for and deliver trust funds, in violation of Section 475.25(1)(d)1., Florida Statutes. Petitioner’s position is that Respondents failed to account for and deliver the second deposit allegedly received from Fanfan in connection with the Herinslake-Fanfan transaction. In counts VI and XII, Petitioner accuses Respondents of having failed to maintain trust funds in the real estate brokerage escrow account until disbursement was properly authorized, in violation of Section 475.25(1)(k), Florida Statutes. Petitioner’s position is that during the six months of concern, Respondents’ escrow account funds were regularly several thousand dollars less than the trust liability. Ultimate Factual Determinations Dyer failed to prepare written monthly reconciliation statements as required by Rule 61J2-14.012, Florida Administrative Code, and thus he violated Section 475.25(1)(e), Florida Statutes. Petitioner therefore has established the charges set forth in counts I and VII of its Administrative Complaint, by clear and convincing evidence. The evidence does not establish that Dyer committed fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction. There is no persuasive evidence that Dyer intended to harm (or actually harmed) any of his clients. While Dyer did participate in a dishonest scheme to deceive Rivera by producing false copies of his canceled checks, this particular wrongdoing occurred, not in a business transaction, but rather in connection with a regulatory investigation. Thus, Dyer did not violate Section 475.25(1)(b), Florida Statutes. Counts II and VIII were not proved. Dyer attempted to obstruct or hinder Rivera’s investigation by producing copies of canceled checks that he knew were false and misleading. Petitioner has clearly established that Dyer violated Section 475.42(1)(i), Florida Statutes, which in turn constitutes a violation of Section 475.25(1)(e), Florida Statutes, as charged in counts III and IX of the Administrative Complaint. The evidence does not support the charge that Dyer violated Section 475.25(1)(l), Florida Statutes, which prohibits the filing false reports and records, because the altered documents that Dyer produced to Rivera were not signed by Dyer—— at least not in the sense contemplated by the statute, which specifies that “such reports or records shall include only those which are signed in the capacity of a licensed broker or salesperson.” Counts IV and X thus were not proved. The evidence does not clearly establish that Dyer failed to return a deposit of $500 to Fanfan after his deal with Herinslake fell through. Thus, counts V and XI, which allege violations of Section 475.25(1)(d)1., Florida Statutes, were not proved. Dyer failed to maintain trust funds in a segregated escrow account, in violation of Section 475.25(1)(k), Florida Statutes. Petitioner therefore has established the charges set forth in counts VI and XII of its Administrative Complaint, by clear and convincing evidence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order that: (a) finds Respondents guilty as charged in counts I, III, VI, VII, IX, and XII of the Administrative Complaint; (b) revokes Respondents’ respective real estate licenses; and (c) imposes an administrative fine of $3,000 against Respondents, jointly and severally. DONE AND ENTERED this 11th day of June, 2003, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 11th day of June, 2003.
Findings Of Fact The Parties Petitioner, the Division of Real Estate, Department of Business and Professional Regulation, (the "division" or the "department,") created by Section 20.165, Florida Statutes, and, in part, comprised of the Florida Real Estate Commission, provides "[a]ll services concerning [Chapter 475, Florida Statutes], including ... recordkeeping services, examination services, legal services, and investigative services, and those services in Chapter 455 [general provisions in regard to the state's regulation of professions and occupations] necessary to perform the duties of [Chapter 475, Florida Statutes]." Section 475.021, Florida Statutes. Chapter 475, Florida Statutes, is the law which regulates real estate brokers. Respondent, Maria E. Vaca t/a Vaca Realty, is now, and at all times material to this case, has been a real estate broker licensed by the State of Florida. The number of her license, originally issued in June 1, 1981, is 0333239. Her license, current through September 30, 1997, shows the location of her brokerage to be 120 E. Oakland Park Boulevard 105, Fort Lauderdale, Florida, 33334. Books, Accounts and Records to be Available Section 475.5015, Florida Statutes, requires that "[e]ach broker shall keep and make available to the department such books, accounts and records as will enable the department to determine whether such broker is in compliance with the provisions of this chapter." Rule 61J2-14.012(1), Florida Administrative Code, implements Section 475.5015, Florida Statutes. The rule provides: A broker who receives a deposit as previously defined shall preserve and make available to the BPR, or its authorized representative, all deposit slips and statements of account rendered by the depository in which said deposit is placed, together with all agreements between the parties to the transaction. In addition, the broker shall keep an accurate account of each deposit transaction and each separate bank account wherein such funds have been deposited. All such books and accounts shall be subject to inspection by the BPR or its authorized representatives at all reasonable times during regular business hours. Attempts at an Audit In March of 1994, the department decided to conduct an audit of Respondent's escrow account. Two of the department's investigators, Monroe Berger and Margaret Hoskins, with fifteen years of experience at the department between them, scheduled a meeting with Ms. Vaca for April 11, 1994, in order to conduct the audit. Ms. Vaca, indicating that her records were in storage, cancelled the meeting. A second meeting was scheduled for April 20, 1994, in order to allow Ms. Vaca to retrieve the records. Ms. Vaca failed to attend the meeting. Instead, she transmitted by facsimile to Investigator Hoskins copies of nine bank statements under the name of "Vaca Realty Trust Account," for what appears to be the period from June 5, 1993 through April 5, 1994. (Generally monthly statements, one of the statements appears to be for the first quarter of 1994, from January 6 through April 5, 1994.) There were no reconciliation statements attached to the bank statements. The bank statements provided were insufficient to conduct an audit of the escrow account. On April 21, 1994, another meeting was scheduled with Ms. Vaca for April 29, 1994. In addition, Investigator Berger sent Ms. Vaca a letter confirming the April 29, 1994, meeting and asking Ms. Vaca to bring with her specific records necessary to allow the audit to be conducted. Investigator Berger wrote: This is to confirm our telephone conversation of 4-21-94. It is unfortunate that some personal problems have caused you to cancel the two previous appointments with Investigator Hoskins. In any event we are looking forward to seeing you on 4-29-94 at 1:00PM, at which time you will provide your office records for the last year. They will include but not be limited to (i) Trust liability reconciliations, (ii) Bank statements with cancelled check vouchers and deposit slips and (iii) files relating to both closed and open transactions. Petitioner's Exhibit No. 2. Ms. Vaca failed to appear for the April 29, 1994, meeting. Again, another meeting was schedule, this one for May 2, 1994. Ms. Vaca failed to appear for the May 2, 1994 meeting. On September 22, 1994, Investigator Berger and his supervisor, Don Piersol, went to Ms. Vaca's office to conduct the audit. Ms. Vaca did not have her escrow account records on hand. She agreed, however, to bring them to a meeting scheduled for October 10, 1994. At the October 10, 1994 meeting, Ms. Vaca provided a check book but she did not provide any trust liability reconciliations or deposit slips for the previous year's transactions. Without these records an audit cannot be conducted. In addition, Ms. Vaca did not provide all files relating to open and closed transactions for the previous year, which also are necessary to conduct an audit. Ms. Vaca remembers missing only one, (perhaps two) of the meetings scheduled by the department and that because of the emergency hospitalization of her father. Certainly, her father's illness excuses abrupt cancellation of a meeting. This record is clear, however; Ms. Vaca repeatedly failed to produce the required records. Production at Hearing At hearing, Ms. Vaca produced six bank statements for what appears to be the period of the first week of September 1993 through May 5, 1994. (Five of these statements match five of the nine statements faxed to the department in April of 1994. Again, the statements are for one month's time, with the exception of the quarterly statement for the first quarter of 1994.) Attached to each of the six bank statements is a Real Estate Trust Account Monthly Statement Reconciliation form including a "Brokers Trust Liability Reconciliation." Had the reconciliation statements been provided earlier, there still would not have been enough records provided for an audit to be conducted. Deposit slips and cancelled check vouchers, records necessary to conduct the audit, have never been provided the department. Nor has Ms. Vaca to date produced all the files of transactions, open or closed, conducted during the year prior to whenever an audit has been attempted. As of the date of hearing, Ms. Vaca continued to fail to appreciate what records should be provided the department, records she was clearly on notice of as deemed necessary to an audit by the department at least since Mr. Berger's letter in April of 1994. This record does not disclose any legitimate reason for Ms. Vaca's repeated failure to produce the requested records. As of the date of hearing, an audit had still not been conducted of Ms. Vaca's escrow accounts because the department has never been given access to the records necessary to conduct the audit.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Commission suspend the license of Maria E. Vaca t/a Vaca Realty for six months and that at the end of the suspension Ms. Vaca be placed on probation for as long as it takes to attend and complete a seven-hour course in management of escrow accounts. In addition, probation should be conditioned upon production of the records the Department needed to conduct the audit attempted in 1994. DONE AND ENTERED this 27th day of September, 1996, in Tallahassee, Leon County, Florida. DAVID M. MALONEY, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of September, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-2347 1. Paragraphs 1 through 16, insofar as material, are adopted, with the exception of the statement in paragraph 8 that respondent sent by facsimile "six copies of her escrow account bank statements to Investigator Hoskins." (e.s.) Respondent sent copies of nine bank statements by facsimile. COPIES FURNISHED: Henry M. Solares Division Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32801-1900 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Daniel Villazon, Esquire Division of Real Estate Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32801-1900 Ms. Maria E. Vaca 1731 Southeast 13th Street Fort Lauderdale, Florida 33316
The Issue The issue in this proceeding is whether the Respondents' real estate brokers licenses should be suspended, revoked or otherwise disciplined.
Findings Of Fact Respondent, Barbara Odom, is a licensed real estate broker in the State of Florida, holding license number 0189819. Ms. Odom is the owner of and the qualifying broker for Respondent, Odom Realty, Inc., located in Pensacola, Florida. Respondent, Odom Realty, Inc. is a corporation registered as a real estate brokerage company in the State of Florida, holding license number 0226080. Ms. Odom has been licensed since 1982 and has been the owner of Odom Realty, Inc., since 1983. Rita Leonard has been the corporation's bookkeeper since Ms. Odom's acquisition of the company. Previous to her employment with Odom Realty, Ms. Leonard was the financial manager in charge of a large bank's accounting and bookkeeping department. Ms. Leonard was and is highly qualified as an accountant/bookkeeper. In addition to Ms. Leonard's bookkeeping services, Ms. Odom also has Odom Realty's books and records, including the various escrow account books and records, annually audited and reviewed by her CPA. Early in the company's history Ms. Odom entered into the rental property management business. Initially, Ms. Leonard was paying clients' repair bills on that client's rental property out of the corporation's operating account. The CPA questioned whether it was appropriate to pay those bills out of the corporation's operating account and indicated that the bills should be paid out of the corporation's rental property management escrow account, #11823890431. The CPA was not sure what the appropriate bookkeeping practice should be and indicated that Ms. Leonard should check with the Florida Real Estate Commission to discover what the appropriate procedure was. Ms. Leonard called the Florida Real Estate Commission to inquire about the proper method of paying clients' repair bills. Her impression of that conversation was that client repair bills should be paid out of the escrow account regardless of whether the individual had the money in the account. After this conversation with the Florida Real Estate Commission, Ms. Leonard began paying all the clients' repair bills out of the rental property management escrow account. All such client bills were paid promptly upon the repair bill's presentation, whether or not the individual client had the money available in the escrow account. Each client was later billed for the amount not covered by the balance in that individuals' escrow account. The client billings occurred on at least a monthly basis and the majority of the rental clients remitted their payments on a monthly basis. Occasionally, one of Respondent's clients was permitted to carry a negative balance for more than a month. These carry- overs occurred in the off-season and were paid when rentals picked back up during the areas main tourist season. As a consequence of this practice, some of Respondents' clients would have negative escrow balances on their individual escrow ledger account. Respondents were under the impression that such a practice was all right as long as the corporation had money available to cover those negative balances. In fact, the corporation always had such money available, although the actual transfers of funds were never made from the corporation's operating account to the rental property management escrow account. Respondents believed this practice was tantamount to loaning the respective clients money to cover the client's negative balance until that client corrected the deficit. No client ever complained about this practice. In fact, most of Respondents' clients wanted the repair bills paid promptly so that good repair service could be maintained on that client's property. On March 15, 1990, Elaine Brantley, Petitioner's investigator, conducted an audit of all of Respondents' escrow accounts. The only account she found a problem with was the rental property management account. During that investigation, Ms. Brantley found that Respondents had a trust liability of $10,081.71 and a bank balance of $9,480.97, leaving a shortage of $600.74. Respondents, the same day and prior to Ms. Brantley leaving, transferred the amount of the shortage from the corporation's operating account to the escrow account. Ms. Brantley then explained to Ms. Odom and her bookkeeper her opinion of how the Commission wanted escrow accounts maintained. Since that time, Respondents have maintained the escrow accounts in the manner prescribed by Ms. Brantley and no longer follow their policy of maintaining negative balances on the individual ledger sheets of their clients. They now make the actual transfer of funds from the operating account to the escrow account prior to paying any bill which would take an individual client over the amount of money that client has in the escrow account. The Respondents' books and records for the rental property management account were meticulously kept and both total and individual reconciliations were completed on a monthly basis by Respondents. All the records, including the monthly reconciliations reflected the appropriate negative balances if a particular client should have such a balance. As a consequence of this method of bookkeeping, there were no discrepancies, as opposed to a total shortage, between the total reconciliations and the escrow account's bank statement. Likewise, there were no discrepancies on the individual ledger accounts. There were no discrepancies because everything was added and subtracted out according to the records being kept and the bookkeeping method used in maintaining those records. Importantly, Respondents' CPA never criticized or commented on Respondents' method of accounting and maintenance of negative balances in Respondents' escrow account. As indicated earlier, the temporary negative balances were maintained for the convenience of the customer in order to obtain better service from repairmen. In reality, Respondents' clients probably never thought about the intricacies and inner workings of the trust account in which that client's money was maintained. Given the desires of Respondents' customers, such payments and the maintenance of a negative balance on behalf of that individual client were impliedly authorized by those respective customers. However none of the clients expressly authorized Respondents to use that client's money to pay another client's repair bills. The clients' general desires on getting prompt payment of repair bills is, by itself, insufficient to establish express authorization for one client to use another client's escrow money. Without such express authority Respondents made improper disbursements from the property management escrow account in violation of Section 475.25 (1)(k), Florida Statutes. However, because of the client's general desires regarding their repair bills, the record keeping utilized by Respondents, the manner of billing and the obvious lack of any intent to defraud on the part of Respondents, there was no evidence of any fraud, misrepresentation, trick, scheme or device, or breach of trust or culpable negligence on the part of Respondents in the maintenance of their property management escrow account.
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 that Respondents are guilty of one violation of Section 475.25(1)(k), Florida Statutes, and issuing a letter of guidance to Respondents for the violation. It is further recommended that the Florida Real Estate Commission enter a final Order dismissing the Counts of the Administrative Complaint charging Respondents with violations of Section 475.25(1)(b), Florida Statutes. RECOMMENDED this 28th day of December, 1990, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER 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 28th day of December, 1990.
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.
The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact The Petitioner is the state agency charged with the responsibility of regulating real estate licensees in the State of Florida. At all times material to the allegations of this case, Respondent was licensed as a real estate broker, license number 0333239, doing business at 120 East Oakland Park Boulevard, Suite 105, Fort Lauderdale, Florida, as Vaca Realty. On or about February 12, 1996, Respondent obtained a contract for sale and purchase on a property owned by Daryl Cohen. The purchasers, Donald H. Wilker and Patricia C. Wilker, executed the contract and tendered an initial deposit of $100. Respondent held the listing on the Cohen home and upon receipt of the signed contract, placed the initial deposit as well as a second deposit in the amount of $1,900 into the Vaca Realty operating account. The $2,000 deposit was never placed into a real estate escrow account or other proper depository. The contract between the Wilkers and Cohen was scheduled to close April 1, 1996. Prior to closing, the Wilkers notified Respondent that they were canceling the contract due to the condition of the roof. The parties were unable to agree as to the condition of the roof and the buyers announced their intention to not accept the home with the defects depicted in the roof inspection they had received. On April 2, 1996, Respondent sent a release of deposit form to the Wilkers, which they refused to execute. Such release would have authorized Respondent to release the deposit with $1,000 going to the Seller, Mr. Cohen, and $1,000 going to Vaca Realty. Thereafter, the Respondent was aware that the parties retained legal counsel with regard to the contract dispute. Despite her knowledge of the ongoing disagreement, Respondent did not notify the Florida Real Estate Commission regarding the deposit issue. On or about August 23, 1996, the Seller executed a Release and Cancellation of Contract form that directed Respondent to disburse $1,500 to the Wilkers and $500 to Daryl Cohen. This agreement had been signed by the Wilkers on August 13, 1996. Notwithstanding the terms of the foregoing agreement, on September 18, 1996, Respondent issued two checks from her operating account: one to the Wilkers in the amount of $1,500 and the other to Cohen in the amount of $250. Respondent is currently on a suspension as a result of a Final Order entered in DBPR Case No. 94-82411, which was affirmed by the Fourth District Court of Appeals, Case No. 97-1069, on December 17, 1997, mandate issued January 5, 1998.
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 suspending Respondent's license for six months, require Respondent to complete additional courses in escrow management, and direct that Respondent's escrow account be audited, at Respondent's expense, for at least one year after the reinstatement of her license. DONE AND ENTERED this 30th day of June, 1998, in Tallahassee, Leon County, Florida. J. D. Parrish 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 30th day of June, 1998. COPIES FURNISHED: Henry M. Solares Division Director Division of Real Estate Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Laura McCarthy, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32801-1772 Lloyd H. Falk, Esquire 600 Southwest 4th Avenue Fort Lauderdale, Florida 33315
Findings Of Fact The Respondent licensee, Martin County Properties, Inc., was at all times material registered with the Commission as a real estate corporate broker and the Respondent licensee, Jackson L. Smith, was at all times material registered with the Commission as a real estate broker. On May 8, 1974, the G. H. I. Inc., as purchaser, offered to purchase property described as: "132 plus or minus lots, Parcel #1, and 154 plus or minus acres, Parcel #2, in the County of Okeechobee" for a purchases price of $567,600.00 from Nachman Tevlo, et al., seller. Accompanied with this officer, the corporation submitted a $10,000.00 security deposit to be held in trust by the Respondent, Martin County Properties, Inc. In count one of the complaint, it is alleged that the Respondents failed to place that deposit in a trust or escrow account and that on December 31, 1974, Respondent Smith issued a check to the buyer for $7,700.00, which was drawn from its escrow account and that said check was returned for insufficient funds. The complaint alleges that at the time of issuing this check, the Respondent Smith overdrew the firm's escrow account by $402.80 and that by reason thereof, Respondents are guilty of failing to immediately place upon receipt the monies received from persons they dealt with as brokers in an escrow account in violation of Section 475.25(1)(i), Florida Statutes. Robert F. Cochran, Secretary-Treasurer of G.H.I., Inc., the corporate purchaser, acknowledged tendering the deposit in connection with the above referenced transaction. The proposed offer was conditioned on acceptance by two undisclosed partners of which the corporate purchaser had no knowledge of and Respondent Smith was advised to retain the deposit check until such time as the two undisclosed partners accepted the terms of the contract. Respondent Smith was unable to obtain such approval from the undisclosed partners and when the transaction fell through, Respondent returned the original deposit check within one week of the time that he advised the purchasers that the proposed offer was not accepted. Mr. Cochran had no recollection of Respondent Smith ever tendering him a check drawn in the amount of $7,700.00 as alleged in count one of the administrative complaint. (See Commission's Exhibit #1). In count five of the administrative complaint, the Commission alleges in pertinent part that Respondent Smith issued Dwight L. Clemons a check from his trust account drawn in the amount of $4,842.95, which created a deficit in his escrow account of $1,202.20. By such act, it is alleged that the Respondent failed to maintain sufficient monies in his escrow or trust bank account, monies received and entrusted to them by persons dealing with them as brokers until disbursements are properly authorized in violation of Subsection 475.25(1)(i), F.S. Mr. Clemons acknowledged the transaction with Respondent Smith in which he received a return of an escrow deposit in the amount of $4,842.95 which was received in the form of a check which was returned by the bank for "uncollected funds." Mr. Clemons testified that he presented the check to the bank and knowing Respondent Smith, tendered the necessary funds to cover the deficiency and that Respondent Smith returned his money approximately one week later. (See Commission's Exhibit 2). In count six of the administrative complaint, it is alleged that William A. and Agnes Foster, as buyers, made an offer to purchase one half of a duplex in Jensen Beach, Florida, and to secure such offer, they made a security deposit of $1,000.00 to Respondent Smith. It is alleged that Respondent Smith failed to deposit the $1,000.00 in his escrow account and on October 10, 1974, he deposited only $500.00 in his account from this transaction. By reason thereof, it is alleged that the Respondent failed to immediately place in his escrow or trust bank account, upon receipt, monies etc. entrusted to him until disbursements thereof were properly authorized in violation of Subsection 475.25(1)(a), F.S. William Foster acknowledged the subject transaction and his tender of the $1,000.00 deposit. He testified that the seller, Miriam Fell, accepted his offer on or about November 8, 1974, and that the transaction closed without difficulty. However, an examination of Martin County Properties, Inc., trust account statement for the month ending October 1, 1974, reveals that on October 10, 1974, a $500.00 credit was entered on the subject trust account and an examination of the September 4, 1975, check drawn in the amount of $1,000.00 and issued by William A. Foster revealed that the check was deposited in Martin County Properties' trust account on October 10, 1974, the same date that the $500.00 deposit appears on the October trust account statement. Count eight alleges in pertinent part that Respondent Smith received an escrow deposit of $2,500.00 from Jansje Welm, toward the purchase of the "Gideon Property" on Indian River Drive in Jensen Beach. It is further alleged that approximately eight (8) days later, without permission of Jansje Welm, Respondent issued to Martin County Properties, Inc., a check in the sum of $1,000.00 which left a balance in his escrow account of approximately $1,597.00 and that by reason thereof, Respondent Smith is guilty of failing to maintain in an escrow or trust bank account monies received from persons dealing with him as a broker, where such funds should have been kept until properly disbursed or otherwise authorized, in violation of Subsection 475.25(1)(i), F.S. Mrs. Welm testified that she advanced Respondent Smith, a $2,500.00 deposit to secure an offer which she was led to believe consisted of a syndication of approximately six or either others who were interested in purchasing the "Gideon Properties." The transaction did not close and as of the hearing date she had not received a refund or her escrow deposit. An examination of Respondent Martin Counties, Inc., trust account for the month ending December 31, 1974, reveals that a $2,500.00 deposit was made on approximately December 12, 1974, and that for the month ending December 31, 1974, the account was overdrawn by $402.80. This of course covers the time period in which Mrs. Welm had tendered her $2,500.00 deposit toward the "Gideon Properties" and at no time during the period December 6 through December 31, did the statement reveal that Mrs. Welm's deposit was returned. It was noted that a deposit was made during the period December 23 through 27, in the amount of $5,000.00, however, this deposit apparently failed to clear based on insufficient funds. (See, Commission's Exhibit #9). It was also noted that the $2,500.00 check issued by Mrs. Welm was honored by her bank on December 16, 1974, and that during the period in which she drew her check i.e., December 9 through December 23, 1974, the firm's trust account at no time had a balance in excess of $2,297.20. (See, Commission's Exhibit #6). In count ten it is alleged that Respondent Smith also received from his salesman, Jack K. Follrath, a check in the amount of $2,500.00 to be held in escrow toward the purchase of the Gideon Properties. This check was issued by Jerry Warwin and was made payable to the firm's trust fund. It is alleged that on January 8, 1975, Respondent Smith exchanged that check for a cashier's check at the First National Bank and Trust Company which he placed in his personal account. It is further alleged that on March 18, 1975, Warwin's attorney demanded the return of the $2,500.00 which Warwin received on June 18, 1975. By this act it is alleged that the Respondents are guilty of failure to maintain in their escrow account funds entrusted to them in violation of Subsection 475.25(1)(i), F.S.; and are guilty of forming an intent, design or scheme to defraud, appropriate or otherwise convert properties entrusted to them in violation of Subsection 475.25(1)(a), F.S. Warwin testified that while he gave the Respondents no specific instructions to place the money in an escrow account, he was led to understand that the deposit would be escrowed until the sales transaction for the property closed. He testified that after making repeated demands for the return of his deposit, first by himself and ultimately through his attorney, it was returned. Jack Follrath, a salesman for Jackson County Properties, acknowledged receipt of the $2,500.00 check from Jerry Warwin and expressed his opinion that the money was not to be deposited until sufficient escrow deposits were received to effect the closing. The check representing the deposit made by Jerry Warwin was introduced and an examination thereof reveals that it was drawn on January 5, 1975, in the amount of $2,500.00 and was paid by his bank on January 8, 1975. An examination of the firm's trust account statement reveals that on January 8 a $2,500.00 deposit was in fact made, however, on January 13 the account balance was $293.20 which was the same amount remaining in the account as of January 31, 1975. And, of course, at no time during the period of January 8 through January 31, 1975, was Mr. Warwin's $2,500.00 deposit returned. In count eleven, it is alleged in pertinent part that on February 6, 1975, Respondent Smith issued check no. 259 on his trust account made payable to Commercial Trend Development, Inc., for $750.00 and marked "refund - Carter"; that on February 18, 1975, Respondent Smith deposited from the firm's operating account $457.00 in the said trust account and that on February 23, 1975, the check for $750.00 written previously cleared, leaving a total balance of $18.20 in Respondent Smith's trust account. It is alleged that based on the foregoing, Respondents failed to maintain trust funds in their escrow account until such were properly disbursed in violation of Subsection 475.25(1)(i), F.S. Roy Glancy, the real estate salesman who was involved with the Respondent in connection with the Carter transactions, testified that he intended to purchase a piece of property from the Carters which is located in the Dixie Park Subdivision of South Stuart. He acknowledged payment of the $750.00 deposit and indicated that when the transaction did not close, he received a refund of his deposit. It is alleged in count four that on July 15, 1974, Respondent Smith received a deposit of $2,200.00 to be held in trust on the purchase of property known as the "Krueger" property by C & D Contractors, which he (Smith) deposited in his escrow account; that on July 16, 1974, without the permission of C & D Contractors, issued check no. 236 from his escrow account in the amount of $900.00 payable to Martin County Properties, Inc., leaving a balance in his escrow account of $1,360.83 as of July 31, 1974, which amount represented the closing balance for the firm's escrow account for the month of July. It is further alleged that on September 6, Respondent Smith issued a check drawn on his trust account to C & D Contractors in the amount of $2,200.00 marked "deposit refund on Krueger Property" which was returned for uncollected funds. Thereafter on September 23, 1974, Respondent Smith paid C & D Contractors by cashier's check, the sum of $2,200.00 which represented the earnest money deposit placed on the Krueger property. Robert Coy, President of Coy and Deggeller Construction Co. of Stuart, Florida, testified that he made an offer to purchase the Krueger properties to Respondent Smith which offer was accompanied by an earnest money deposit of $2,200.00. Mr. Coy testified that his offer was tendered to Respondent Smith on July 16, 1974, and that when he did not receive any notification from Respondent Smith regarding whether or not his offer had been accepted, he demanded the return of the deposit which occurred during early September 1974. Commission's Exhibit #15 reveals that the $2,200.00 deposit above referred to was deposited into Respondent's trust account on the same date on which the check was drawn, i.e., July 16, 1974. (See, Commission's Exhibits #15 and #11). On that same day, a $900.00 check and/or debit was made to the account leaving a balance of $1,360.83. The firm's account statement reveals that this balance ($1,360.83) was constant throughout the period from July 17 to July 31. During the period July 17 through July 31, Mr. Coy did not receive a refund of his $2,200.00 deposit. Mrs. Betty White, the head bookkeeper of Jensen Beach Bank, the banking institution in which the Respondent Martin County Properties, Inc., maintains its trust account, testified that she provided the firm's account statements pursuant to subpoena and that the account's statements were under her custody and control, and that they were kept and maintained during the normal course of the bank's business. While the Respondent's counsel objected to the introduction of copies of the firm's trust account statements, Mrs. White creditably testified that the original of such account statements were forwarded to the firm (depositor) at the end of each month and that the bank has at its disposal, only microfilm of the originals. Based thereon, Respondent's counsel's objection to the introduction of copies was overruled.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby recommended as follows: That the Respondents be found not guilty of the allegations contained in counts one, two, three, seven, nine and eleven of the administrative complaint and, therefore, that they be dismissed. That the Respondents be found guilty of the allegations contained in counts four, five, six, eight, ten, twelve and thirteen of the administrative complaint filed by the Petitioner. That the Respondent Smith's registration with the Florida Real Estate Commission as a real estate broker be revoked. That the Respondent Martin County Properties, Inc.'s, registration as a real estate corporate broker with the Florida Real Estate Commission be revoked. DONE AND ENTERED this 30th day of March 1977 in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of March 1977. COPIES FURNISHED: Frederick H. Wilsen, Esquire 2699 Lee Road Winter Park, Florida 32789 R. J. Randolph, Sr., Esquire R. Jerry Randolph, Jr., Esquire Randolph and Randolph, P.A. 201 East Osceola Street Stuart, Florida 33494
