The Issue The issue in the case is whether the allegations of the Administrative Complaint are correct and, if so, what penalty should be imposed.
Findings Of Fact At all times material to this case, Frederick L. Roberts (Respondent) was a licensed Florida mortgage broker, holding license number MB 316324569. In November 1993, a friend of the Respondent, Alan Petzold, introduced Tami Aaronson to him. Ms. Aaronson owned property in Maryland and was interested in securing a mortgage on the Maryland property to provide funding for a Florida home for herself and her son, Jarrett. According to Ms. Aaronson, Mr. Petzold is the father of a minor son, Jarrett Aaronson. The Respondent believed that such was the case at the time he met the family. The Respondent met several times with Ms. Aaronson. The Respondent gave a “Flagship Mortgage Company” business car to Ms. Aaronson. The business card had the Respondent’s name printed on it. The Respondent had been briefly employed by Flagship Mortgage Company, but apparently was not so employed at the time he met Ms. Aaronson. Frederick L. Roberts (Respondent) received check number 0170, dated November 22, 1993, from Tami Aaronson as “Custodian for Jarrett Aaronson” in the amount of three thousand dollars. The notation on the check states that it is for “refinancing.” Ms. Aaronson believed the check was payment for services the Respondent would render in obtaining refinancing of the Maryland property. There was no written agreement between the Respondent and Ms. Aaronson, or between the Respondent and Mr. Petzold. The Respondent completed no written documentation related to the Aaronson transaction. The Respondent did not place the Aaronson deposit into a segregated escrow account. The Respondent did not record the Aaronson deposit into an escrow transaction journal. During the period he held the Aaronson funds, the Respondent worked on unrelated business, and traveled to China for about thirty days. The Respondent performed no work on behalf of Ms. Aaronson, Mr. Petzold, or Jarrett Aaronson. There is no evidence that the Respondent intended to perform any work on behalf of Aaronson/Petzold. The Respondent asserted that he asked for a three thousand dollar “deposit” as a means of discouraging the couple from asking for his assistance. The assertion is not credible. The Respondent asserts that the three thousand dollars he received from Ms. Aaronson was a deposit against travel expenses he would incur during his examination of the property in Maryland. The assertion is not supported by credible evidence. In the spring of 1994, the Respondent received a telephone call from Ms. Aaronson. The Respondent asserts that he believed Ms. Aaronson to have called him from a mental hospital. For whatever reason, at that time he determined that he no longer wanted to be involved in the Aaronson/Petzold situation. Shortly after receiving the Aaronson phone call in spring 1994, the Respondent also received a call from a Department of Banking and Finance investigator, apparently looking into a complaint received from Ms. Aaronson. The Respondent thereafter contacted Mr. Petzold and made arrangements to return the funds to him. According to a notarized statement dated May 9, 1994, the Respondent returned the three thousand dollars to Jarrett R. Aaronson and Alan C. Petzold. The Respondent testified that the money had been returned on May 8, 1994 to Mr. Petzold. The Respondent offered into evidence a document dated May 8, 1994, purporting to be a receipt received from Mr. Petzold for return of the funds. The signature is not notarized. The Respondent did not return the Aaronson deposit to Tami Aaronson. There is no evidence that Ms. Aaronson authorized the return of the three thousand dollars to Mr. Petzold. There is no evidence that Ms. Aaronson authorized the return of funds to Jarrett. Ms. Aaronson has not received any part of the three thousand dollars allegedly refunded. There is no evidence that the funds have been redeposited into the minor child’s custodial account. The Respondent asserts that he was not acting as a mortgage broker and was merely investigating the property to determine whether the Aaronson property could be used as a source of funds for the purchase of Florida property. The Respondent asserts that had a refinancing situation arisen, he would have referred Ms. Aaronson to another licensed person who would assist in the actual refinancing. The assertion is not supported by credible evidence. The Respondent asserts that in the spring of 1994 he had reason to believe that Ms. Aaronson had been hospitalized in a mental facility, and therefore he returned the funds to Mr. Petzold. The rationale for the failure to return the funds to the appropriate party is not persuasive.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Insurance enter a Final Order suspending the mortgage broker license held by Frederick L. Roberts until the following conditions are met: Payment to Tami Aaronson of $3,000 plus appropriate interest calculated from November 22, 1993. Payment of an administrative fine in the amount of $5,000. After compliance with the above conditions, the license suspension shall be lifted, and a two-year probationary period shall begin RECOMMENDED this 22nd day of October, 1997, in Tallahassee, Leon County, Florida. WILLIAM F. QUATTLEBAUM 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 22nd day of October, 1997. COPIES FURNISHED: Clyde C. Caillouet, Esquire Department of Banking and Finance 4900 Bayou Boulevard, Suite 103 Pensacola, Florida 32503 Michael W. Carlson, Esquire Carlton Fields Ward Emmanuel Smith & Cutler, P.A. 215 South Monroe Street, Suite 500 Tallahassee, Florida 32301 Harry Hooper, General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350 Hon. Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350
Findings Of Fact At all times material hereto, Respondent, Milton I. Markowitz, was a licensed real estate broker doing business in the State of Florida. Respondent acted as the individual broker for Ford Realty, Inc. At some time, apparently in 1979, Respondent and Jack Arias discussed the possibility of forming a corporation to be known as Miltjack Investments, Inc., for the purpose of acquiring a piece of property (the property) in Pompano Beach, Florida, owned by Richard F. Brohamer. By Deposit Receipt dated December 10, 1979, an offer to purchase the property was submitted by Miltjack Investments, Inc. to the seller through Cronan Realty, another real estate broker. Respondent signed the Deposit Receipt as president of Miltjack Investments, Inc. The Deposit Receipt, by its terms, indicated that the sum of $10,000 had been placed in escrow with Ford Realty, Inc. as a deposit on the purchase price of $567,000. In fact, Respondent knew when he signed the Deposit Receipt and forwarded it to the seller that Miltjack Investments, Inc. was a non-existent corporation. In addition, Respondent also knew that he had been given a $10,000 check by Jack Arias, his coinvestor, with the knowledge that the check could not be covered by sufficient funds, and that it would not be placed in escrow by Ford Realty, Inc. At no time during the negotiations involved in this proceeding did Respondent ever communicate to the seller, or Cronan Realty, that the $10,000 deposit was not being held in escrow or that Miltjack Investments, Inc. was not an existing corporation. After the aforementioned Deposit Receipt was forwarded to the seller, the seller made a counter offer by Deposit Receipt Contract dated January 11, 1980. This instrument contained several changes, but was, in fact, at some point signed on behalf of Miltjack Investments, Inc. by Jack Arias, as secretary-treasurer, and Mr. Arias' signature was witnessed by Respondent. Like the initial Deposit Receipt, this latter agreement also recited that the $10,000 deposit was in escrow with Ford Realty, Inc. Unlike the initial agreement, however, the agreement of January 11, 1980, indicated that Cronan Realty, Inc. was to act as escrow agent. Pursuant to this agreement, Cronan Realty, Inc. made demand upon Ford Realty, Inc. for the $10,000 deposit, so that it could fulfill its obligation under the last mentioned agreement. Upon receipt of this demand, Jack Arias made demand upon Respondent to return the $10,000 check to him, which Respondent did, and apparently Mr. Arias destroyed the check some time thereafter. For reasons not clear from the record in this cause, the transaction involving the sale of the property never closed.
The Issue Whether Petitioner's application for licensure as a life, variable annuity, and health agent should be approved.
Findings Of Fact Based upon the evidence adduced at the final hearing and the record as a whole, the following findings of fact are made: Petitioner was formerly a Florida-licensed real estate broker. On September 20, 1995, the Florida Department of Business and Professional Regulation issued an Administrative Complaint against Petitioner and others, including Ian Law and Florida Home Finders Realty, Inc. Petitioner, Mr. Law, and Florida Home Finders Realty, Inc., disputed the charges against them and requested an evidentiary hearing. The matter was referred to the Division of Administrative Hearings and assigned to Judge Michael Parrish, who, on October 22, 1996, conducted the hearing Petitioner, Mr. Law, and Florida Home Finders Realty, Inc., had requested. Prior to the hearing, the parties filed a prehearing stipulation, in which they stipulated to the following facts: Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular Section 20.165, Florida Statutes, Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent Robert Ian Law is and was at all times material hereto a licensed real estate broker pursuant to Chapter 475, Florida Statutes, having been issued license number 3000835. The last license issued was as a broker in care of Law Property Services, Inc., t/a Century 21 Law Realty, 190 Malabar Road Southwest 120, Melbourne, Florida 32907. Respondent Benjamin Schiff is and was at all times material hereto a licensed real estate broker pursuant to Chapter 475, Florida Statutes, having been issued license number 0449353. The last license issued was as a broker at 9771 Northwest 41st Street, Miami, Florida 33178. Respondent Florida Home Finders Realty, Inc., is and was at all times material hereto a licensed real estate brokerage corporation pursuant to Chapter 475, Florida Statutes, having been issued license number 1003632. The last license issued was at 1648 Southeast Port St. Lucie Boulevard, Port St. Lucie, Florida 34952. At all times material hereto, Selma Del Carmen Schevers, Cheryl Ann Atwood, Lynn Marie Lake, Barbara Kay Davidson, Carol Ann Chandler, and Beverly J. Klemzak were licensed and operating as qualifying brokers and officers of Respondent Florida Home Finders Realty, Inc. On or about April 18, 1995, the real estate brokerage corporate license (former license number 0027454) of Florida Home Finders, Inc., was voluntarily dropped by Florida Home Finders, Inc. Simultaneously, Florida Home Finders Realty, Inc., submitted documents for and received a real estate brokerage corporate license effective April 18, 1995, from the Florida Division of Real Estate. Benjamin Schiff and Ian R. Law are directors of both Florida Home Finders, Inc., and Florida Home Finders Realty, Inc. Benjamin Schiff is the Chief Financial Officer for both Florida Home Finders, Inc., and Florida Home Finders Realty, Inc. Ian R. Law is the Chief Executive Officer for both Florida Home Finders, Inc., and Florida Home Finders Realty, Inc. On or about May 5, 1995, Selma Schevers and Cheryl Atwood notified various banking institutions of the authorized officers/directors and account signatories for Florida Home Finders, Inc., and Florida Home Finders Realty, Inc. On or about June 14, 1995, at the request of Benjamin Schiff, Selma Schevers and Cheryl Atwood authorized various banking institutions to transfer $2,492,000.00 in security deposits and rental trust funds to an account entitled "Florida Home Finders, Inc.," account number 3603969464 at NationsBank of Florida. At no time material did the Respondents obtain the authorization or permission of the owners of the trust funds to transfer the funds. Subsequent to the transfer referenced in paragraph 10 herein, the funds were used to purchase a certificate of deposit (No. 012897). After the purchase of the certificate of deposit, Cheryl Atwood, at the request of Ian Law, signed a document which placed the certificate of deposit as collateral for a commercial loan (No. 018002410263) from loan officer F. Larry Robinette of County National Bank of South Florida. The terms of the loan were: $2,000,000 principal; Benjamin Schiff and Ian Law as borrowers; proceeds payable to Atlantic Gulf Communities, Corp., as partial payment for the stock of Florida Home Finders, Inc., and two related companies. On or about August 21, 1995, Respondent Law instructed Barnett Bank to transfer $65,000.00 from Florida Home Finders, Inc., Rental Receipts Account No. 2274002335 to Florida Home Finders, Inc., Operating Account No. 2274027149.[1] After this transfer Respondent Law instructed the bank to transfer the $65,000.00 from the operating account to Atlantic Gulf Communities Corporation, the former owner of Florida Home Finders, Inc., a formerly licensed real estate brokerage company and predecessor to Respondent Florida Home Finders Realty, Inc. On or about June 14, 1995, the following bank funds transfers were requested to be made to Florida Home Finders, Inc., (FHFI) account No. 3603969464 at NationsBank of Florida from the following accounts: Barnett Bank Acct Name- FHFI Rental Receipts Escrow Acct; Acct No.- 1700027712; Date- 6/22; Amt.- 138,000 Barnett Bank Acct Name- Rental Security Deposit Acct; Acct No.- 1700027810; Date- 6/22; Amt.- 398,000 Barnett Bank Acct Name- FHFI Rent Receipts Acct; Acct No.- 3388072440; Date- 6/21; Amt.- 38,000 Barnett Bank Acct Name- FHFI Security Deposit Acct; Acct No.- 3388072558; Date- 6/21; Amt.- 158,000 Barnett Bank Acct Name- FHFI Rent Receipts Escrow Acct; Acct No.- 2274002335; Date- 6/15; Amt.- 179,000 Barnett Bank Acct Name- FHFI Rental Security Escrow; Acct No.- 2274002343; Date- 6/15; Amt. 609,000 SunBank Acct Name- FHFI Escrow-Rental Receipts; Acct No.- 0809000005795; Date- 6/16; Amt.- 87,000 SunBank Acct Name- FHFI Escrow-Rental Security; Acct No.- 0809000005806; Date- 6/16; Amt.- 285,000 1st Union Nat. Bank Acct Name- FHFI Rental Receipts-Escrow Acct; Acct No.- 2161006787374; Date- 6/14; Amt.- 152,000 1st Union Nat. Bank Acct Name- FHFI Rental Security Escrow Acct; Acct No.- 2161006724586; Date- 6/14; Amt.- 406,000 1st Bank Acct Name- FHFI Rental Receipts- Escrow Acct; Acct No. 20-116845-06; Date- 6/15; Amt.- 8,000 1st Bank Acct Name- FHFI Rental Security Escrow; Acct No. 20-116888-06; Date- 6/15; Amt.- 34,000 Following the hearing, on April 22, 1997, Judge Parrish issued his Recommended Order. In his Recommended Order Judge Parrish made the following findings of facts to supplement the parties' factual stipulations: Prior to April of 1995, Florida Home Finders, Inc., then a licensed real estate brokerage corporation, engaged in soliciting, obtaining, and leasing to tenants the real property of others, pursuant to contracts between Florida Home Finders, Inc., and the property owners. A substantial majority of the money, probably more than 75 percent of the money, contained in the security deposit accounts and rental receipts accounts that was transferred in mid-June of 1995 was money collected from tenants on behalf of property owners while Florida Home Finders, Inc., was a licensed real estate brokerage corporation.[2] Subsequent to the transfers of funds in mid-June of 1995, there was on at least one occasion insufficient funds in some of the security deposit and rental receipts trust accounts to meet disbursement demands. On that occasion the bank paid a number of checks for which Florida Home Finders, Inc., did not have sufficient funds on deposit and requested that Florida Home Finders, Inc., make an immediate transfer of funds to cover the insufficiencies. Shortly thereafter a transfer was made to cover the insufficiencies. Subsequent to the transfers of funds in mid-June of 1995, on some occasions funds that had been collected from new clients after those transfers took place were paid out to meet the demands of clients who were owed money that had been paid to Florida Home Finders, Inc., prior to the mid-June transfers. At the end of March of 1995, Respondents Schiff and Law purchased Florida Home Finders, Inc., a real estate brokerage corporation licensed pursuant to Chapter 475, Florida Statutes, (license number 0027464) from Atlantic Gulf Communities Corporation. The purchase price was three and a half million dollars, with the Respondents to pay $500,000.00 down and the three million dollar balance within three months. One aspect of the business plan of the Respondent's Schiff and Law was to create a separate company to conduct real estate brokerage activities and to continue to engage in property management activities with the existing corporation, Florida Home Finders, Inc. Respondents Schiff and Law met with all managers and employees of Florida Home Finders, Inc., during the first week of April of 1995 to explain the business plan to them. At that time they also explained that they intended to utilize the provisions of Section 83.49(1), Florida Statutes, to hold security deposits in a manner which would allow them to pay interest to tenants. Respondents Schiff and Law were not involved in the day to day operations of either Florida Home Finders, Inc., or Florida Home Finders Realty, Inc. At the time the Respondents Schiff and Law purchased Florida Home Finders, Inc., the corporation maintained at least three types of accounts for deposits received from its operations: sales escrow accounts, rental receipts accounts, and security deposit accounts. Each of the seven offices of Florida Home Finders, Inc., maintained its own separate set of accounts. The sales escrow accounts maintained by Florida Home Finders, Inc., contained money derived from purchasing and leasing transactions. The rental receipts accounts maintained by Florida Home Finders, Inc., contained money received from tenants for the payment of rent. The use of these funds was governed by the property management agreements with the landlords. Typically, the funds in these accounts would be used to pay for such things as maintenance and repairs to the rental properties, mortgage payments due on the rental properties, and/or property management fees, with any excess funds being periodically paid to the respective landlords. The security deposit accounts maintained by Florida Home Finders, Inc., contained money received from tenants for security deposits to be held to guarantee the tenants' performance under their respective rental agreements. Shortly after the formation of Florida Home Finders Realty, Inc., and its licensure as a real estate brokerage corporation, the sales escrow accounts of Florida Home Finders, Inc., were transferred to Florida Home Finders Realty, Inc. There were no irregularities in any of the sales escrow accounts while they were under the control of either of these two corporations. Following the creation of Florida Home Finders Realty, Inc., Florida Home Finders, Inc., did not engage in any licensed real estate brokerage activities. All such activities were conducted by Florida Home Finders Realty, Inc., after it was licensed as a brokerage corporation. On or about June 27, 1995, Florida Home Finders, Inc., posted a security deposit bond in the amount of $250,000.00 with the Florida Secretary of State in an effort to comply with Section 83.49(1)(c), Florida Statutes. None of the landlords and none of the tenants were ever provided with notice that money had been transferred from the security deposit accounts and from the rental receipts accounts. None of the landlords and none of the tenants were ever provided with notice that Florida Home Finders, Inc., had posted a bond with the Florida Secretary of State and intended to rely on the provisions of Section 83.49(1)(c), Florida Statutes. Subsequent to the transfer of the $2,492,000.00 to the NationsBank account, the funds were used to purchase three separate certificates of deposit. One certificate of deposit in the amount of $242,000.00 was purchased from NationsBank and secured a loan of the same amount. The second certificate of deposit in the amount of two million dollars was purchased from County National Bank in Miami in the name of Florida Home Finders, Inc., and was used to secure a personal loan to Respondents Schiff and Law in the amount of two million dollars. The third certificate of deposit in the amount of $250,000.00 was purchased from NationsBank in the name of Florida Home Finders, Inc., and was used as security for the bond posted with the Florida Secretary of State. The loan proceeds secured by two of the certificates of deposit described above, plus $100,000.00 from the operating account of Florida Home Finders, Inc., at Barnett Bank, were used to pay Atlantic Gulf Communities Corporation against the balance of the purchase price of Florida Home Finders, Inc. Between the time of the mid-June transfer of funds from the accounts of Florida Home Finders, Inc., and the freezing of the assets of Florida Home Finders, Inc., in September of 1995, Florida Home Finders, Inc., was able to pay all current demands for funds from tenants and landlords. As of September 21, 1995, all funds transferred from the various security deposit and rental receipt accounts of Florida Home Finders, Inc., remained in accounts and financial instruments in the name of Florida Home Finders, Inc. However, $2,242,000.00 of those financial instruments in the name of Florida Home Finders, Inc., were pledged as security for personal loans of the Respondents Schiff and Law and were not available to Florida Home Finders, Inc., while those personal debts remained unpaid. Judge Parrish's Recommended Order contained the following conclusions of law, among others: Petitioner seeks to impose discipline which includes the possibility of suspension or revocation of Respondents' licenses to practice real estate brokerage. Therefore, Petitioner must prove its allegations by clear and convincing evidence. See, Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); Nair v. Department of Business and Professional Regulation, 654 So. 2d 205 (Fla. 1st DCA 1995). Recent amendments to the Administrative Procedures Act have codified the burden of proof set forth in Ferris v. Turlington and its progeny. Section 120.57(1)(h), Florida Statutes (1996 Supp.), now provides that: "Findings of fact shall be based upon a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise provided by statute, and shall be based exclusively on the evidence of record, and on matters officially recognized." [Emphasis added.] The nature of clear and convincing evidence has been described as follows in Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983): "We therefore hold that clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of facts a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established." See also, Smith v. Department of Health and Rehabilitative Service, 522 So. 2d 956 (Fla. 1st DCA 1988), which, at page 958 quotes with approval the above-quoted language from Slomowitz. The Smith case also includes the following at page 958: "'Clear and convincing evidence' is an intermediate standard of proof, more than the 'preponderance of evidence' standard used in most civil cases, and less than the 'beyond a reasonable doubt' standard used in criminal cases. See State v. Graham, 240 So. 2d 486 (Fla. 2nd DCA 1970). Pursuant to Section 475.25(1), Florida Statutes (1994 Supplement), the Florida Real Estate Commission is empowered to revoke or suspend real estate brokerage licenses or otherwise discipline real estate brokerage licensees upon a determination that any of the acts set forth in that Section were committed, which include a determination that the licensees: "(b) Has been 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 this state or any other state, nation, or territory; has violated a duty imposed upon him by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme. It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee or was an identified member of the general public. * * * (k) Has failed, if a broker, to immediately place, upon receipt, any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as a broker in escrow with a title company, banking institution, credit union, or savings and loan association located and doing business in this state, or to deposit such funds in a trust or escrow account maintained by him with some bank, credit union, or savings and loan association located and doing business in this state, wherein the funds shall be kept until disbursement thereof is properly authorized; or has failed, if a salesperson, to immediately place with his registered employer any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as agent of his registered employer. The commission shall establish rules to provide for records to be maintained by the broker and the manner in which such deposits shall be made." [Emphasis added.] Section 475.01(1)(c), Florida Statutes, defines the term "broker" as follows, in pertinent part: ". . . a person who, for another, and for a compensation or valuable consideration directly or indirectly paid or promised, expressly or impliedly, or with an intent to collect or receive a compensation or valuable consideration therefor, appraises, auctions, sells, exchanges, buys, rents, or offers, attempts or agrees to appraise, auction, or negotiate the sale, exchange, purchase, or rental of business enterprises or business opportunities or any real property or any interest in or concerning the same, including mineral rights or leases, or who advertises or holds out to the public by any oral or printed solicitation or representation that he is engaged in the business of appraising, auctioning, buying, selling, exchanging, leasing, or renting business enterprises or business opportunities or real property of others or interests therein, including mineral rights, or who takes any part in the procuring of sellers, purchasers, lessors, or lessees of business enterprises or business opportunities or the real property of another, or leases, or interest therein, including mineral rights, or who directs or assists in the procuring of prospects or in the negotiation or closing of any transaction which does, or is calculated to, result in a sale, exchange, or leasing thereof, and who receives, expects, or is promised any compensation or valuable consideration, directly or indirectly therefor; and all persons who advertise rental property information or lists." Florida law imposes a high standard of ethical conduct upon real estate brokers. In Zichlin v. Dill, 25 So. 2d 4 (Fla. 1946), for example, the Florida Supreme Court stated: "The broker in Florida occupies a status under the law with recognized privileges and responsibilities. The broker in this state belongs to a privileged class and enjoys a monopoly to engage in lucrative business . . . The state, therefore, has prescribed a high standard of qualifications and by the same law granted a form of monopoly and in doing so the old rule of caveat emptor is cast aside. Those dealing with a licensed broker may naturally assume that he possesses the requisites of an honest, ethical man." In a similar vein, the Florida Supreme court, in Ahern v. Florida Real Estate Commission, 6 So. 2d 857 (Fla. 1942), stated that "the real estate broker is now the confidant of the public in much the same manner as the lawyer or the banker. His relation to the public exacts the highest degree of trust and confidence. " Any person or entity engaging in activity set out in Section 475.01(1)(c), Florida Statutes, must be licensed by the State of Florida as a real estate salesperson, broker, or brokerage corporation and must comply with Chapter 475 of the Florida Statutes and rules enacted pursuant thereto. Sections 475.15 and 475.42(1)(a), Florida Statutes. Florida Administrative Code Rule 61J2- 14.008(1)(a) defines a "deposit" as "a sum of money, or its equivalent, delivered to a real estate licensee, as . . . a payment, or a part payment, in connection with any real estate transaction . . . or such sum delivered in escrow, trust or on condition, in connection with any transaction conducted, or being conducted, by such licensee within the scope of Chapter 475, Florida Statutes." Florida Administrative Code Rule 61J2- 14.010(1) provides that "every broker who receives from . . . persons interested in any real estate transaction, any deposit . . . shall immediately place the same in a bank, savings and loan association, trust company, credit union or title company having trust powers, in an insured escrow or trust account. " Florida Administrative Code Rule 61J2- 14.011 provides that a broker who receives a deposit "shall not have any right to or lien upon said deposit, except upon the written agreement or order of the depositor so long as the depositor has sole control of said deposit, until the transaction involved has been closed. " Prior to April 1995, Florida Home Finders, Inc., was leasing property to tenants, and thereby brokering pursuant to Section 475.01(1)(c), Florida Statutes. Florida Home Finders, Inc., collected security deposits and rental payments in conjunction with that brokering activity. Therefore, Florida Home Finders, Inc., and those acting on its behalf, were required to comply with Chapter 475 of the Florida Statutes and the rules enacted pursuant thereto. Florida Home Finders, Inc., and those acting on its behalf, were required to maintain the security deposits and rental receipts collected prior to April of 1995 in an escrow or trust account until disbursement of those funds was properly authorized by the parties to the leasing transactions. Turning first to the charges against the individual Respondents, in Counts VII and VIII (7 and 8) of the Administrative Complaint, Respondents Law and Schiff are each charged with having violated Section 475.25(l)(b), Florida Statutes. Both of these individual Respondents violated Section 475.25(l)(b), Florida Statutes, by reason of the following conduct.[3] They caused the transfer of $2,492,000.00 of security deposits and rental receipts from various separate bank accounts into a single Florida Home Finders, Inc., account at NationsBank, the vast majority of which funds had been collected while Florida Home Finders, Inc., was a licensed real estate brokerage corporation engaging in brokerage activities. They then caused that money to be used to purchase certificates of deposit. Thereafter, they caused $2,242,000.00 of that money in the form of two certificates of deposit to be pledged as collateral for personal loans to the two individual Respondents. Additionally, on or about August 21, 1995, the Respondent Law caused a series of transfers to take place by means of which $65,000.00 of money from the rental receipts account of Florida Home Finders, Inc., was paid to Atlantic Gulf Communities Corporation. Neither of the individual Respondents, nor anyone else on their behalf or on behalf of Florida Home Finders, Inc., obtained authorization or permission of the tenants or the property owners to transfer the funds, purchase the certificates of deposit, pledge the funds as collateral for personal loans to Respondents Law and Schiff, or disburse some of the funds to Atlantic Gulf Communities Corporation. Respondents' pledging of the security deposits and rental receipts funds of others to secure their personal loans was inconsistent with the trust which had been placed in them,[4] particularly since the Respondents are licensed real estate brokers governed by the high ethical standards of Florida law. Such failure breached the Respondents' agreements to hold those funds in escrow and subjected the tenants and property owners involved, undoubtedly without their knowledge, to the risk that the Respondents may not have been able to timely disburse the security deposits and rental trust funds to the appropriate parties, due to some unforeseen contingency rendering the Respondents unable to fulfill their obligation to the lenders holding the trust funds as collateral.[5] In Counts XVII and XVIII (17 and 18) of the Administrative Complaint, Respondents Law and Schiff are each charged with having violated Section 475.25(l)(k), Florida Statutes. Both of these individual Respondents violated Section 475.25(l)(k), Florida Statutes, in that they caused the removal of $2,492,000.00 in security deposits and rental receipts funds from the escrow and trust accounts of Florida Home Finders, Inc., and ultimately used those funds to purchase certificates of deposit which they then caused to be pledged as collateral to secure their own personal loans. The vast majority of the $2,492,000.00 in security deposits and rental receipts were "deposits" within the meaning of Florida Administrative Code Rule 61J2- 14.008(l)(a), which had been collected by Florida Home Finders, Inc., from or on behalf of tenants and property owners while Florida Home Finders, Inc., was a licensed real estate brokerage corporation engaged in real estate brokering, as defined in Section 475.01(l)(c), Florida Statutes. Therefore, the individual Respondents and Florida Home Finders, Inc., had an obligation to maintain those funds in an escrow or trust account, unencumbered and available for immediate disbursement. In reaching the foregoing conclusions regarding the violations of Sections 475.25(l)(b) and 475.25(l)(k), Florida Statutes, I have not overlooked the Respondents' arguments to the effect that, by operation of Section 83.49, Florida Statutes, they were excused from compliance with various requirements of Chapter 475, Florida Statutes, and, therefore, were not in violation of any provision of Chapter 475, Florida Statutes. At the time of the various transfers of funds in 1995, Section 83.49, Florida Statutes, read as follows in pertinent part: "(1) Whenever money is deposited or advanced by a tenant on a rental agreement as security for performance of the rental agreement or as advance rent for other than the next immediate rental period, the landlord or the landlord's agent shall either: "(a) Hold the total amount of such money in a separate non-interest-bearing account in a Florida banking institution for the benefit of the tenant or tenants. The landlord shall not commingle such moneys with any other funds of the landlord or hypothecate, pledge, or in any other way make use of such moneys until such moneys are actually due the landlord; Hold the total amount of such money in a separate interest-bearing account in a Florida banking institution for the benefit of the tenant or tenants, in which case the tenant shall receive and collect interest in an amount of at least 75 percent of the annualized average interest rate payable on such account or interest at the rate of 5 percent per year, simple interest, whichever the landlord elects. The landlord shall not commingle such moneys with any other funds of the landlord or hypothecate, pledge, or in any other way make use of such moneys until such moneys are actually due the landlord; or Post a surety bond, executed by the landlord as principal and a surety company authorized and licensed to do business in the state as surety, with the clerk of the circuit court in the county in which the dwelling unit is located in the total amount of the security deposits and advance rent he or she holds on behalf of the tenants or $50,000, whichever is less. The bond shall be conditioned upon the faithful compliance of the landlord with the provisions of this section and shall run to the Governor for the benefit of any tenant injured by the landlord's violation of the provisions of this section. In addition to posting the surety bond, the landlord shall pay to the tenant interest at the rate of 5 percent per year, simple interest. A landlord, or the landlord's agent, engaged in the renting of dwelling units in five or more counties, who holds deposit moneys or advance rent and who is otherwise subject to the provisions of this section, may, in lieu of posting a surety bond in each county, elect to post a surety bond in the form and manner provided in this paragraph with the office of the Secretary of State. The bond shall be in the total amount of the security deposit or advance rent held on behalf of tenants or in the amount of $250,000, whichever is less. The bond shall be conditioned upon the faithful compliance of the landlord with the provisions of this section and shall run to the Governor for the benefit of any tenant injured by the landlord's violation of this section. In addition to posting a surety bond, the landlord shall pay to the tenant interest on the security deposit or advance rent held on behalf of that tenant at the rate of 5 percent per year simple interest. The landlord shall, within 30 days of receipt of advance rent or a security deposit, notify the tenant in writing of the manner in which the landlord is holding the advance rent or security deposit and the rate of interest, if any, which the tenant is to receive and the time of interest payments to the tenant. Such written notice shall: Be given in person or by mail to the tenant. State the name and address of the depository where the advance rent or security deposit is being held, whether the advance rent or security deposit is being held in a separate account for the benefit of the tenant or is commingled with other funds of the landlord, and, if commingled, whether such funds are deposited in an interest-bearing account in a Florida banking institution. Include a copy of the provisions of subsection (3). Subsequent to providing such notice, if the landlord changes the manner or location in which he or she is holding the advance rent or security deposit, he or she shall notify the tenant within 30 days of the change according to the provisions herein set forth. This subsection does not apply to any landlord who rents fewer than five individual dwelling units. Failure to provide this notice shall not be a defense to the payment of rent when due. (3)(a) Upon the vacating of the premises for termination of the lease, the landlord shall have 15 days to return the security deposit together with interest if otherwise required, or in which to give the tenant written notice by certified mail to the tenant's last known mailing address of his or her intention to impose a claim on the deposit and the reason for imposing the claim. The notice shall contain a statement in substantially the following form: This is a notice of my intention to impose a claim for damages in the amount of upon your security deposit, due to . It is sent to you as required by s. 83.49(3), Florida Statutes. You are hereby notified that you must object in writing to this deduction from your security deposit within 15 days from the time you receive this notice or I will be authorized to deduct my claim from your security deposit. Your objection must be sent to (landlord's address)____. If the landlord fails to give the required notice within the 15-day period, he or she forfeits the right to impose a claim upon the security deposit. (b) Unless the tenant objects to the imposition of the landlord's claim or the amount thereof within 15 days after receipt of the landlord's notice of intention to impose a claim, the landlord may then deduct the amount of his or her claim and shall remit the balance of the deposit to the tenant within 30 days after the date of the notice of intention to impose a claim for damages. * * * (d) Compliance with this subsection by an individual or business entity authorized to conduct business in this state, including Florida-licensed real estate brokers and salespersons, shall constitute compliance with all other relevant Florida Statutes pertaining to security deposits held pursuant to a rental agreement or other landlord-tenant relationship. Enforcement personnel shall look solely to this section to determine compliance. This section prevails over any conflicting provisions in chapter 475 and in other sections of the Florida Statutes." [Emphasis added.] In 1996, several months after the actions which led to the charges in these consolidated cases, the Florida Legislature enacted an amendment to paragraph 3(d) of Section 83.49, Florida Statutes. As amended in 1996, paragraph 3(d) of Section 83.49, Florida Statutes, reads as follows: "(d) Compliance with this section by an individual or business entity authorized to conduct business in this state, including Florida-licensed real estate brokers and salespersons, shall constitute compliance with all other relevant Florida Statutes pertaining to security deposits held pursuant to a rental agreement or other landlord-tenant relationship. Enforcement personnel shall look solely to this section to determine compliance. This section prevails over any conflicting provisions in chapter 475 and in other sections of the Florida Statutes and shall operate to permit licensed real estate brokers to disburse security deposits and deposit money without having to comply with the notice and settlement procedures contained in s. 475.25(1)(d)." The Respondents' argument to the effect that their reliance on Section 83.49, Florida Statutes, insulates them from liability under Chapter 475, Florida Statutes, fails for several reasons. In this regard it is first noted that the language of paragraph (3)(d) of Section 83.49, Florida Statutes, as of the date of the 1995 conduct at issue in these consolidated cases referred to "compliance with this subsection," which was a reference to subsection (3) of Section 83.49, Florida Statutes. The plain and ordinary meaning of that statutory language as it existed in 1995 was that real estate brokers who made refunds of security deposits in the manner described in subsection (3) of the statute were excused from compliance with any conflicting provisions in Chapter 475 regarding the procedure for making refunds of security deposits. The terms of the statute limiting its scope to "compliance with this subsection" could not be logically read as authorizing a real estate broker to take advantage of any of the three alternatives in subsection (1) of the statute and thereby be excused from compliance with any conflicting provisions in Chapter 475 regarding the manner in which deposits received by licensed real estate brokers must be held. Under the 1996 amendments to paragraph (3)(d) of Section 83.49, Florida Statutes, (which included substituting the term "this section" in place of the earlier term "this subsection") it now seems clear that a real estate broker is authorized to take advantage of any of the three alternatives in subsection (1) of the statute and thereby achieve exemption from compliance with any conflicting provisions of Chapter 475, Florida Statutes, with respect to the manner in which security deposits and advance rental payments must be held. The Respondents argue that the 1996 amendments were intended by the Florida Legislature to be retrospective. The Legislative intent in that regard is far from clear. But even assuming that retrospective effect was intended, for the reasons set forth below, the Respondents' arguments still fail. If retrospective effect is given to the 1996 amendments to paragraph (3)(d) of Section 83.49, Florida Statutes, in order to be eligible for the benefits of paragraph (3)(d), as amended, the Respondents must be in compliance with the requirements of Section 83.49, Florida Statutes. They failed to comply in several ways; the most obvious failure being their failure to give the notice required by subsection (2) of the statute. That subsection requires the landlord to advise the tenant of various specified details regarding the manner in which any security deposit and advance rent is being held, including the name and address of the depository where the funds are being held. That subsection also states: "[I]f the landlord changes the manner or location in which he or she is holding the advance rent or security deposit, he or she shall notify the tenant within 30 days of the change according to the provisions herein set forth." No such notice was ever provided to any tenant following the transfer of the security deposit money. The Respondents also appear to have failed to comply with the requirements of Section 83.49(1)(c), by filing a bond of doubtful efficacy, inasmuch as the status of Florida Home Finders, Inc., is incorrectly described in the bond filed with the Florida Secretary of State. In the second paragraph of the bond document Florida Home Finders, Inc., described itself as a "Landlord" in several specified counties in Florida. Florida Home Finders is not a landlord in those counties, or in any other counties; it is the agent for numerous landlords in several counties. This misdescription of the status of Florida Home Finders, Inc., casts serious doubts as to the extent to which the bond could be enforced. Finally, the Respondents appear to have failed to comply with the requirements of Section 83.49(1)(c), Florida Statutes, because the statute does not appear to be susceptible to an interpretation which would allow one agent to file one bond as security for the obligations of numerous landlords. Throughout paragraph (1)(c) of the statute, as well as throughout all other paragraphs of the statute, all references to "landlord" are in the singular; the references are all in terms of "the landlord" or "a landlord." There is nothing in paragraph (1)(c) or anywhere else in Section 83.49, Florida Statutes, that purports to authorize a group of landlords, either on their own behalf or through an agent, to post a single bond covering the liabilities of numerous landlords. In sum: Inasmuch as the Respondents failed to comply with Section 83.49, Florida Statutes, when they transferred the $2,492,000.00 out of the several trust and escrow accounts, the Respondents fail to come within the scope of the provisions of paragraph (3)(d) of Section 83.49, Florida Statutes, as amended. Based upon the foregoing, Judge Parrish recommended that the Florida Real Estate Commission "[c]onclud[e] that the Respondent Schiff is guilty of violations of Sections 475.25(1)(b) and 475.25(1)(k), Florida Statutes, as charged in Counts VIII and XVIII (8 and 18)" of the Administrative Complaint and "[i]mpos[e] a penalty against the Respondent Schiff consisting of the revocation of his real estate broker license and an administrative fine in the amount of two thousand dollars." Exceptions were filed to Judge Parrish's Recommended Order. In a Final Order issued July 16, 1997, the Florida Real Estate Commission rejected these exception and adopted Judge Parrish's findings of fact, conclusions of law, and recommended penalty. As of October 23, 2001, Petitioner was a certified public accountant holding license number AC-0015803 issued by the Florida Department of Business and Professional Regulation. By letter dated November 17, 1998, the Florida Department of Business and Professional Regulation notified Petitioner's attorney of the following: The above-stated case [Benjamin Schiff, Case No. 98-06763] has been reviewed by the Probable Cause Panel of the Board of Accountancy and closed without a finding of probable cause to believe your client violated the provisions of Chapter 473, Florida Statutes, and/or Rule 61-H1, Florida Administrative Code. Accordingly, all materials will remain confidential.[6] Petitioner was admitted to The Florida Bar in 1981. On November 29, 1999, The Florida Bar sent Petitioner the following letter regarding a complaint (The Florida Bar File No. 98-51,683(17D)) that had been considered by the Seventeenth Judicial Circuit Grievance Committee "G":7 Please be advised that Seventeenth Judicial Circuit Grievance Committee "G" (which is composed of lawyer and non-lawyer members) considered the above-referenced complaint during its November 10, 1999, meeting and entered a finding of no probable cause with letter of advice. The grievance committee's finding is reflected on your copy of the enclosed notice. The original notice will be maintained in The Florida Bar's file. Predicated upon the grievance committee's no probable cause finding, The Florida Bar's file has been closed. On July 31, 2001, Petitioner filed with the Department his application for licensure as a life, variable annuity, and health agent. By letter dated August 22, 2001, the Department requested additional "information" from Petitioner. The letter read as follows: This is in reference[] to your pending application for licensure as a life, health and variable annuity agent. The following information is needed. Certified copies of the Administrative Complaint. A written statement from you indicating whether or not you have had any civil and or administrative action taken against you relative to insurance. If so, we will need certified copies of appropriate documentation. A written statement from you indicating whether or not you are the owner, partner or employee of any insurance agency. If so, we will need the name and location of the agency. You have (60) days to either furnish the information and documents or show cause in writing why the information cannot be supplied within (60) days. Please send all correspondence [to] the undersigned at the Bureau of Agent and Agency Licensing, 200 East Gaines Street, Larson Building, Tallahassee, Florida 32399-0319. Petitioner sent the requested "information" to the Department by United State Priority Mail on September 4, 2001. The Department received the requested "information" on September 6, 2001. Thereafter, Petitioner sent the following letter, dated November 19, 2001, to the Department: I have not yet received a response regarding my application for a Life Insurance License. I successfully completed the life insurance examination on July 30, 2001 (copy attached). You had requested additional information on August 22, 2001, which was forwarded to your office and received in your office on September 6, 2001. We spoke on November 7, 2001 and you advised me that my paperwork was "in review." I have heard nothing since that time. Please advise me as to the current status of my application. Thank you in advance for your assistance. Please call me if you should require any further information. Petitioner sent a second letter, dated December 14, 2001, to the Department inquiring about his application. The letter read as follows: I have not received a response to my letter of November 19, 2001 regarding the status of my license application. It has been over 90 days since your last information request. Pursuant to Regulation 4-211.0035(10),[8] I am entitled to a response within ninety days of receipt of the information which makes my application complete. Please advise as to the current status of my application. Thank you in advance for your assistance. The Department denied Petitioner's application on December 20, 2001.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department issue a final order approving Petitioner's application for licensure. DONE AND ENTERED this 25th day of June, 2002, in Tallahassee, Leon County, Florida. STUART M. LERNER 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 25th day of June, 2002.
The Issue Has Petitioner, Unlimited Financial Services, LLC (Unlimited), conducted the unlicensed business of insurance in violation of section 626.112(7), Florida Statutes (2011)?1/ Has Unlimited engaged in an unfair or deceptive act or practice, false advertising, as prohibited by section 626.9541(1)(b)?
Findings Of Fact The Department is a state agency charged with administering chapters 624 and 626, Florida Statutes, governing the business of insurance. Unlimited is not a licensed Florida insurance agency. Matthew Dilday, its owner, is not a licensed Florida insurance agent. In the pre-hearing stipulation, Unlimited described itself as "an advertiser who obtains qualified leads for licensed Florida insurance agents." In its advertising materials directed at insurance agents, Unlimited describes itself as "the Nation's most sought after company for advisors in need of new marketing strategies" and "the Nation's No. 1 Annuity Leads and Preset Appointment Program." Unlimited promotes itself on its website as "No. 1 Annuity Lead Provider." Beneath that heading, Unlimited represents: When we talk with our annuity and investment lead prospects, our professionally trained call center staff is adamant about confirming that they have investment assets. When you purchase preset investment or annuity appointments from UFS Marketing [Unlimited], you also receive access to our highly recommended training programs that explain to you the best way to convert leads and appointments into sales. Unlimited's materials say: We provide annuity leads to financial professionals who sell deferred annuities, many who work for insurance companies. We also provide pre-qualified annuity leads programs to independent agents of the insurance companies who collect a commission from the insurance company when they sell an annuity. This commission is usually a a [sic] percentage of the total premium paid by the annuity investor. Unlimited's services facilitate contact between an agent and a potential client in several ways. According to the promotional materials, Unlimited's "Annuity Leads and Preset Appointment Programs are essential to insurance agents and financial advisors." Again, according to the materials, Unlimited sets "thousands of qualified appointments every month for agents nationwide." The program saves agents valuable time in prospecting for qualified prospective customers. Unlimited enters into marketing services agreements with Florida insurance agents and agencies designed to facilitate the marketing of life insurance products to Florida consumers. Unlimited is in the advertising and marketing business and operates a telemarketing call center. Although Mr. Dilday repeatedly testified that Unlimited was simply a "printing company," it is not. It is a direct mail and telemarketing marketing organization focused on developing customer leads for insurance agents.2/ In 2011, Unlimited entered into a contract with Florida Insurance Agent Andy Heygate titled, "Marketing Services Agreement" (Agreement). The "General Purpose" paragraph of the Agreement states: This Agreement will establish a business relationship among and between the aforementioned parties whereby UFS Marketing will supply fulfillment services on behalf of the Customer [Agent Heygate]. Marketing materials will be mailed to the general public on behalf of the Customer in accordance with the instructions received from the Customer and calls will be taken from the general public on behalf of the Customer in accordance with the Customer's instructions. The Agreement details marketing services and the parties' responsibilities. Among other things, it provides: Unlimited will send a mass mailing developed by the customer targeted at individuals who meet a demographic profile selected by the customer. The profile for the Agreement targeted homeowners aged 58-75 who had an annual income of over $30,000 and a home worth $150,000 or more. Unlimited will make a telephone bank available to accept responses from consumers following a script developed by the customer to screen the responses to make appointments or develop leads. Unlimited will make leads available and/or set appointments with consumers resulting from the inquiries generated from the marketing materials. The Agreement defines "Lead" as "a consumer who contacts an UFS Marketing representative in response to the Customer's marketing materials and agrees to be contacted by the Customer." The Agreement defines "Appointment" as "a consumer who contacts UFS Marketing in response to the Customer's marketing materials and schedules an appointment with the Customer for the purpose of discussing the Customer's products or services and is defined by [enumerated criteria]." The criteria include that the consumer has indicated "they are receiving regular statements for an investment or retirement plan," and the consumer has "indicated they will have their statements available at the time of the review." The Agreement requires the agent to pay Unlimited a fee. The "[f]ees are based upon the number of marketing pieces sent and resources required to take inbound calls, schedule appointments and develop leads on behalf of the [agent]." The fees are for the full range of services provided for in the Agreement, not just printing and mailing the postcards. The marketing materials and mass mailing the Agreement refers to are a postcard, which is an exhibit to the Agreement. The front address side of the postcard in very small print reads: Privacy Law Notice: This notice is provided in accordance with Federal Privacy Laws. The Policy of this agency is to protect the privacy rights of all consumers who respond to this notice. This agency DOES NOT POSSESS OR DISCLOSE NON-PUBLIC PERSONAL INFORMATION TO THIRD PARTIES IN ANY INSTANCE. If you choose to have an existing policy or contract reviewed by a licensed agent, that agent is also required to adhere to the state and federal consumer and privacy protection laws. Important information: This notice is being sent to you as a possible holder of an in-force annuity contract. This agency does not have a direct affiliation with the insurance carrier through which you are currently contracted. The agency is contracted with agents licensed to conduct insurance business in your state. This notice should be disregarded if you do not currently have an in-force annuity contract. The word "agency" evokes the concept of a government or insurance agency. Unlimited is not an agency. The description of Unlimited as an agency is false. The back side of the postcard in larger print states: This communication is to inform you that you may have an annuity that has reached the end of its surrender period. The end of a surrender period is a positive event that means an owner may cash in an annuity or make withdrawals without incurring a surrender charge. A surrender charges is a fee levied by an insurance company on an annuity contract for withdrawals before the end of the time set by the contract (the surrender period). Please contact the Annuity Department to discuss your options. (877) 836-2333 The first sentence on the back side of the postcard creates the impression that the sender has some knowledge of the financial circumstances and holdings of the addressee. The statement in the text box is an accurate statement. The overall import of the postcard, including the "Privacy Law Notice," the reference to Unlimited as an "agency," and references to the recipient having an annuity, create the impression that the sender has financial information about the recipient and some formal relationship with the recipient. This is so despite the disclaimers "may have" and "possible holder." It is also so despite the sentence stating the "agency" does not have a "direct" affiliation with the recipient's insurance carrier. Use of "direct" necessarily implies a relationship of some sort. The script is also an exhibit to the Agreement. The script calls for the operator to tell the caller: [I]f you've held an annuity for some time and you're due for a quick service review. This review will cover important contract features and make sure you are receiving all the benefits you are entitled to. The review will also cover information on how to stop paying taxes on your retirement investments. Have you been getting your statements on a regular basis? The script directs the operator to make sure the statement is a statement for an investment, not for social security. It also directs the operator to ensure that the amount of the last statement exceeded $20,000. The script calls for the operator to schedule an appointment with the agent and emphasize the importance of bringing the account statement. It does not provide for the recipient bringing the annuity contract, which is the document that would have terms such as the surrender period. After covering the annuity information and appointment conversation, the script goes on to lead the operator through similar questioning about an IRA or 401K and life insurance. The script is attached to this Recommended Order as Exhibit A. The Agreement requires Unlimited to provide the agent with recordings of every call resulting in an appointment or lead. The Agreement also contains several disclaimers. For instance it states: "UFS Marketing shall not participate in any sales activity or other business conducted by the Customer." It also states that "UFS Marketing shall not supervise or monitor the sales activity or other business activities of the Customer." The Agreement provides for the agent/customer to approve both the postcard and the script. The Agreement also includes several assertions by the agent/customer that they are properly qualified and licensed in the states where the appointments will be scheduled. In 2011, Unlimited mailed marketing postcards to Phyllis Sukut and Angie Perez Cabrera in Florida. The postcards were part of Unlimited's fulfillment of its Agreement with Mr. Heygate. Unlimited mailed approximately 240,000 of the postcards to Florida addresses. A copy of the postcard sent to Ms. Sukut pursuant to the Agreement is attached to this Recommended Order as Exhibit B. The postcard is identical to the Agreement's sample, except that it asks her to contact the "Scheduling Department," instead of the "Annuity Department" and includes the statement, "[w]ithdrawals may, however, still be subject to tax consequences." Before mailing the postcards, Unlimited did not know the insurance, investment, or financial circumstances of Ms. Sukut and Ms. Perez Cabrera. The postcard confused Ms. Sukut because it did not come from her insurance company, and she did not understand the references to "agency" and "surrender period." She called the number and spoke to a gentleman who wanted to schedule an appointment to discuss her "expiring" annuity. She declined. The gentleman gave her a number to call and Mr. Heygate's name, if she changed her mind. Ms. Sukut contacted her insurance agent, Ed Ludden, about it. Ms. Perez Cabrera also sent the card that she received to Mr. Ludden. Mr. Ludden forwarded the postcards to Prudential, who held the women's policies. He was concerned that somehow Prudential's confidential information about Ms. Sukut and Ms. Perez Cabera had been compromised. Even an experienced insurance agent like Mr. Ludden received the impression that the sender of the postcard had information about the recipients. Mr. Ludden also contacted the Department and provided the postcards to it.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final Cease and Desist Order: (1) finding that Unlimited Fulfillment Services, LLC, has engaged in the unlawful transaction of insurance; (2) finding that Unlimited Fulfillment Services, LLC, has engaged in a misleading or deceptive trade practice; and (3) ordering Unlimited Fulfillment Services, LLC, to cease and desist all written and oral insurance marketing or advertising efforts in Florida by means of direct mail, use of the internet, or telemarketing, unless and until it is properly licensed in the State of Florida. DONE AND ENTERED this 28th day of June, 2013, in Tallahassee, Leon County, Florida. JOHN D. C. NEWTON, II Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of June, 2013.
