The Issue Whether respondents' licenses as real estate brokers and salespersons should be disciplined for alleged misrepresentation, fraud, breach of trust, culpable negligence, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, violation of a duty imposed by statute and contract, and aiding and conspiring with other persons engaged in misconduct-- all in violation of Section 475.25(1)(b), Florida Statutes (1981).
Findings Of Fact On March 25, 1981, Elaine P. Stein, a licensed real estate salesperson, showed Mordechai and Nuti Antebi a house for sale at 1704 North 44th Avenue, Hollywood, Florida. The house was owned by Wayne L. and Gladys E. Hunter and listed with Murray Realty. The listing broker for Murray Realty was Warren Stein, and the salesperson directly involved in the listing was Alex Olson. Elaine Stein was a salesperson in the Emerald Hills office of Chinelly Real Estate, Inc.; the manager for that office was Frederick A. Lewis, a licensed real estate salesperson. (Testimony of Stein, Antebi, Olson, Lewis.) The Antebis, who were in the process of selling their present Pembroke Pines house through the Hollywood Hills office of Chinelly Real Estate, Inc., liked the house and expressed a desire to purchase it. They were told that if they assumed the existing mortgage on the Hunters' house, the interest rate would escalate on the day of closing. (Testimony of Olson, Stein.) The Antebis and Ms. Stein then returned to the Emerald Hills office where a written offer was prepared by Ms. Stein, Vilma Sardiello--a licensed real estate salesperson who frequently worked with her--and Alex Olson, the listing Murray Realty salesperson. Ms. Antebi told Ms. Stein and Ms. Sardiello that she had only $500 to place as an earnest money deposit. The purchase price was $106,000. Ms. Stein then spoke with Mr. Lewis, who advised her that the problem could be handled by executing an assignment of funds. Such an assignment would allow proceeds from the scheduled sale of the Antebis' Pembroke Pines house to be used in the Hunter-Antebi transaction. Ms. Stein, who was unfamiliar with assignments, then procured a written assignment of funds from Ms. Antebi for the sum of $19,500 and prepared a written offer. Ms. Antebi signed the offer and provided a $500 earnest money deposit. (Testimony of Stein, Olson, Sardiello, Antebi; P-1, R-1.) Immediately thereafter, Alex Olson, Murray Realty's listing agent, telephoned the offer to the Hunters in Ocala, Florida. He informed them that the Antebis were offering to purchase their house for $106,000, consisting of a $20,00 deposit, $15,000 at closing, and assumption of the current mortgage of approximately $43,000 at the prevailing interest rate. In addition, the Hunters were to take back a $28,000 purchase money mortgage at 12 percent for five years, with only interest payable monthly (He did not inform them that $19,500 of the $20,000 deposit was in the form of, an assignment of funds from the sale of the Antebis' Pembroke Pines house. He was unaware of the assignment, which Ms. Stein had inadvertently failed to disclose in the written offer.). The Hunters telegraphed their acceptance of the offer pursuant to Mr. Olson's instructions. (Testimony of Olson, W. Hunter, G. Hunter, Antebi, Stein; P-1, P- 4.) After receiving the Hunters' telegram, Ms. Stein realized that the phrase, "assignment of funds," had been mistakenly omitted from the written offer. She alerted Mr. Lewis, who, in turn, contacted Mr. Olson on March 26, 1981, and advised him that $19,500 of the deposit would come from an assignment of the proceeds from the sale of Antebis' Pembroke Pines house. Mr. Olson responded that he would not transmit another offer to the Hunters without a written letter from Chinelly Real Estate, Inc., verifying the amount of deposit held in escrow on the Hunter-Antebi transaction. (Testimony of Olson, Lewis, Stein.) Consequently, on March 26, 1981, Mr. Lewis telephoned Ann Shetter, bookkeeper and accounts supervisor at Chinelly Real Estate, Inc.`s main office. He asked her for the amount of money on deposit in the escrow account for the Antebi transaction. She replied that there was $8,000 held in escrow on the Antebi transaction; but she failed to indicate whether she was referring to the Hunter-Antebi transaction or the Antebi sale of their Pembroke Pine house which was being handled by another Chinelly Real Estate, Inc., office at that time. Mr. Lewis reasonably (although mistakenly) assumed that she was referring to the Hunter-Antebi transaction, the only Antebi transaction being handled by his office (He was unaware that the Antebis' Pembroke Pines house was being sold by another office of Chinelly Real Estate, Inc.). Instead, Ms. Shetter was referring to $8,000, which was being held in escrow, on the Antebis' sale of their Pembroke Pines house. (Testimony of Lewis, Shetter.) Mr. Lewis then in response to Mr. Olson's request, signed and delivered an escrow letter to Mr. Olson on March 26, 1981, verifying that Chinelly Real Estate, Inc., was holding $8,000 in escrow on the Hunter-Antebi transaction. (Testimony of Lewis; P-6.) Mr. Olson then telephoned the Hunters in Ocala on March 26, 1981, and told them that the deposit would be $8,000 instead of $20,000, and that $27,000 would be paid at closing instead of the agreed upon $15,000 (These changes did not affect the total purchase price.). He also told them that be felt an $8,000 deposit would be sufficient. The Hunters agreed to the changes and at Mr. Olson's request, sent a confirming telegram to the Emerald Hills office of Chinelly Real Estate, Inc. (Testimony of Olson, Hunter, Stein; P-5.) Shortly thereafter, Mr. Olson picked up the revised contract which had been prepared by Ms. Stein and signed by the Antebis; without reading it, he sent it to the Hunters for execution. This contract, fully executed by buyers and sellers, provided for a purchase price of $106,000, an initial $500 deposit, an additional deposit paid to Chinelly Real Estate, Inc.`s trust account on or before March 26, 1981, in the amount of $7,500, an assumption by buyers of an existing first mortgage held by American Savings and Loan at prevailing interest rate in the principle amount of $43,000, a $28,000 purchase money mortgage bearing interest at 12 percent for five years, interest only, payable monthly, balloon in five years, and approximately $27,000 due at closing, including $12,000 provided by assignment of funds from the sale of the Antebis' current house. (Testimony of Stein, Olson, W. Hunter, G. Hunter; P-2.) On April 9, 1981, Nancy Gooch, vice-president in charge of processing transactions for Chinelly Real Estate, Inc., discovered the discrepancy in the Hunter-Antebi transaction, that the contract indicated that $8,000 would be deposited in the firm's escrow account while, in fact, only $500 had been deposited. She alerted her boss, John Chinelly, Jr., a licensed real estate broker, who, upon further investigation, found the Lewis letter which mistakenly represented that $8,000 was held in escrow on the Hunter-Antebi transaction. (Testimony of Chinelly; P-9.) Mr. Chinelly, who was about to depart on a four-day religious retreat, called in Reginald D. Lucas, general sales manager and a licensed real estate broker, and instructed him to find out the facts surrounding the discrepancy and solve the problem. On April 9-10, 1981, Mr. Lucas called Mr. Lewis and obtained his explanation of the escrow discrepancy; after discussing alternative courses of action, Mr. Lucas told him to meet with Ms. Stein and Ms. Sardiello and decide how they would solve the problem. Various options discussed included: (1) canceling the transaction, (2) persuading the Antebis to place an additional $7,500 into escrow, and (3) depositing the personal funds of Mr. Lewis, Ms. Stein, and Ms. Sardiello to cover the escrow shortage. On Friday, April 10, 1981, and during the ensuing weekend, they discussed among themselves possible penalties, such as loss of their jobs and licenses, and what course of action would be ethical and proper. After Ms. Stein failed to persuade Ms. Antebi to place an additional $7,500 into escrow, the three real estate salespersons--Mr. Lewis, Ms. Stein, and Ms. Sardiello--reluctantly agreed to each loan the Antebis $2,500 to make up for the Hunter-Antebi escrow shortage (They obtained a promissory note dated April 10, 1981, from the Antebis requiring repayment when the Pembroke Pines house was sold.). (Testimony of Lucas, Stein, Lewis; R-5.) Mr. Lewis, Ms. Stein, and Ms. Sardiello acted on their belief that Murray Realty and the Hunters had been told of the escrow discrepancy and consented to their loaning money to the Antebis to make up for the difference. Mr. Lucas led them to believe that such was the case. Between April 10 and 13, 1981, he had telephoned Mr. Olson to tell him about the escrow shortage. Because Mr. Olson was out of town, he spoke with Warren Stein (unrelated to Elaine Stein), the listing broker for Murray Realty. He and Mr. Stein agreed that they should promptly notify the Hunters of the situation. (Testimony of Lewis, Stein, Sardiello, Lucas.) Shortly thereafter, on April 13, 1981, Mr. Lucas went to Mr. Stein's Murray Realty office for the purpose of jointly notifying the Hunters. In the ensuing telephone call, the Hunters were told of a problem with the escrow account, that the three sales persons--Ms. Stein, Ms. Sardiello, and Mr. Lewis- -had agreed to make up for the shortage by depositing $7,500 of their own money into escrow, and that the closing would be unaffected. The Hunters knew of and consented to the three salespersons contributing $7,500 into escrow (There is conflicting testimony on whether the Hunters were told of this $7,500 contribution. The Hunters deny it while Mr. Lucas insists they were told of and consented to the arrangement. Mr. Lucas's testimony on this question is accepted as persuasive. The Hunters' testimony conflicts with the statements contained in their complaint filed with the Department.). (Testimony of Lucas; R-7.) When Mr. Olson returned to Murray Realty on April 14, 1981, and learned of the events which had transpired in his absence, he requested written verification from John C. Chinelly, Jr., that the three real estate salespersons had placed the $7,500 in escrow. Mr. Chinelly verified that the money had been placed into escrow and wrote a letter to Murray Realty confirming that fact. At that time, Mr. Chinelly--based on his conversations with Mr. Lucas and Mr. Stein--also believed that the Hunters had consented to the salespersons depositing the additional $7,500 into escrow. (Testimony of Chinelly, Olson, Lucas; P-7.) Closing of the Hunter-Antebi transaction was scheduled for April 28, 1981. At closing, the Antebis complained about the condition of the roof, pool, and air conditioner. The Antebis also did not have sufficient funds to close the transaction. The transaction failed to close. (Testimony of Stein, Antebis, Olson.) Subsequently, the Antebis closed on the scheduled sale of their Pembroke Pines house. As a condition to this closing, $7,500 was placed into escrow pending a court decision on a complaint for interpleader filed in Broward County Circuit Court by Chinelly Real Estate, Inc., concerning the Hunter-Antebi transaction. At all times material to the proceeding, respondents John C. Chinelly, Sr., Richard M. Chinelly, Paul James Fleck, Nancy J. Gooch, Mary E. Hulsey, James A. Chinelly, John C. Chinelly, Jr., Shana Munden, Joseph Tresser, Reginald D. Lucas, Harold E. Whitter, Asa F. Brand, Josephine B. Shanefelt, Brett A. Slabe, William F. Kuemerle, Jr., and Marshall Feinsilber were the qualifying brokers for Chinelly Real Estate, Inc.
Recommendation Based on the foregoing, it is RECOMMENDED: That the two administrative complaints and all charges against respondents be dismissed, with prejudice. DONE AND RECOMMENDED this 14th day of June, 1982, in Tallahassee, Florida. R. L. CALEEN, JR., Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of June, 1982. COPIES FURNISHED: Harold M. Braxton, Esquire 45 Southwest 36 Court Miami, Florida 33135 Howard Todd Jaffe, Esquire 1915 Harrison Street Hollywood, Florida 33020 Rodger L. Spink, Esquire 6600 Taft Street, Suite 404 Hollywood, Florida 33024 Michael J. Garavaglia, Esquire 3111 Cardinal Drive Vero Beach, Florida 32960 Vilma Sardiello 5207 Hayes Street Hollywood, Florida 33020 Frederick H. Wilsen, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Carlos B. Stafford Executive Director Florida Real Estate Commission Post Office Box 1900 Orlando, Florida 32802 Samuel R. Shorstein, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
The Issue The issue is whether Respondents are guilty of misrepresentation or breach of trust and, if so, what penalty should be imposed.
Findings Of Fact In October 1993, Respondent Sylvester (Respondent) took his daughter, whose last name was Rodriguez by marriage, to a real estate sales office that was selling units of a new condominium building. Respondent's daughter was 42 years old at the time. Speaking to the qualifying broker for the selling broker, Respondent advised her that he was a real estate salesperson for Respondent Lyric Realty Group, Inc. and wanted to show a unit to his daughter. Respondent referred to his daughter by name, rather than as his daughter, and did not mention to the broker that his customer was his daughter. Respondent gave the qualifying broker his card and signed his name in a log to protect his interest in the cooperating broker's sales commission. After touring a model unit, Mrs. Rodriguez expressed sufficient interest that Respondent obtained a form contract from the qualifying broker before leaving the premises. Respondent completed the contract, but left negotiations to Respondent Mitulinsky because Respondent was going out of town. Respondent Mitulinsky is the qualifying broker for Respondent Lyric Realty Group, Inc. Her involvement with the transaction was limited to contact with the listing broker, transmitting prices between Mrs. Rodriguez and the seller. Respondent Mitulinsky did not disclose that Mrs. Rodriguez was Respondent's daughter. But the evidence fails to suggest that Respondent Mitulinsky was in any way aware that the seller's broker was ignorant of the relationship between Respondent and Mrs. Rodriguez. The evidence also fails to suggest that the nature and extent of the conversations between Respondent Mitulinsky and the qualifying broker were such as to support an inference of concealment of the relationship by Respondent Mitulinsky. Prior to agreeing upon a final price, the seller's qualifying broker agreed to increase the commission to be paid Respondent Lyric Group Realty, Inc. by one percentage point to three percent. The listing price for the unit was $285,000. Mr. and Mrs. Rodriguez submitted the contract with a price of $240,000. Following verbal negotiations, the seller returned the same contract with a price of $268,000, which the buyers accepted on October 29, 1993. A salesperson employed by the listing broker admits that she knew of the relationship between Respondent and his daughter prior to closing. After the contract was signed but prior to closing, Respondent, Mrs. Rodriguez, a home inspector, and the salesperson visited the unit. As the inspector worked, Mrs. Rodriguez and her father spoke freely, as they had in past visits, with Mrs. Rodriguez referring to Respondent as "dad" and he referring to her by her first name. The salesperson immediately informed her broker, who immediately reported the information to the seller. However, the seller elected to do nothing with the information because he was satisfied with the sales price and net proceeds. Mr. and Mrs. Rodriguez were purchasing the first unit to be sold at the seller's project. This makes the first transaction especially risky for both the seller and the buyers. The purchase price represented the fair market value for the unit. The unit appraised at $271,000 at the time of the sale to Mr. and Mrs. Rodriguez. On January 6, 1994, the parties closed on the unit pursuant to the provisions of the contract. The $16,080 sales commission was split evenly between the listing broker and Respondent Lyric Realty Group, Inc.
Recommendation It is RECOMMENDED that the Division of Real Estate enter a final order dismissing the administrative complaint against all respondents ENTERED on September 30, 1996, in Tallahassee, Florida. ROBERT E. MEALE, 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 September 30, 1996. COPIES FURNISHED: Henry M. Solares, Division Director Division of Real Estate 400 West Robinson Street 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, Senior Attorney Department of Business and Professional Regulation 400 West Robinson Street Orlando, Florida 32802 Peter Hobson, Esquire 606 East Madison Street Tampa, Florida 33602
Findings Of Fact In 1981, Barry Kandel, an employee of Allied Publishing Group, Inc., solicited Petitioners to purchase stock in Allied, a Florida Corporation. On May 1, 1981, Petitioners purchased one share of stock in Allied for $13,500. By mid-1982, Allied had gone out of business. Petitioners made unsuccessful demands for the return of their money on Brian E. Walker, the Secretary of Allied; on Thomas W. Kuncl, the President of Allied; and on Kandel. On November 19, 1984, Petitioners filed suit against Kandel, Kuncl, Walker, and Allied. The Civil Complaint filed in Case No. 84-6932 in the Circuit Court of the Fifteenth Judicial Circuit of Florida, in and for Palm Beach County, contained general allegations of fraud. On February 20, 1985, Petitioners obtained a default judgment against Allied only. No evidence was offered in this cause regarding the disposition of the litigation as to the individual defendants. The default judgment contains no factual determinations and does not specify a violation of either section 517.07 or section 517.301, Florida Statutes. Kandel currently resides in Fort Lauderdale, Florida, and Kuncl currently resides in the Gainesville, Florida, area. Kuncl was the last known person to have custody of and control over Allied's books and records. Petitioners filed a claim with Respondent, seeking reimbursement for $10,000 from the Securities Guaranty Fund, pursuant to sections 517.131 and 517.141, Florida Statutes. Their claim was denied by letter dated July 8, 1987, for failure to meet the statutory conditions. Neither Allied nor any individual associated with Allied who dealt with Petitioners was registered or licensed by the State of Florida pursuant to chapter 517, Florida Statutes, in any capacity. Petitioners did not cause a writ of execution to be issued against Allied nor the individuals associated with Allied. Petitioners did not attempt a reasonable search as to whether Allied possessed real or personal property or other assets which may be set off against a proposed claim to the Securities Guarantee Fund. Don Saxon, Director of the Division of Securities and Former Assistant Director, has been the only individual responsible for administering the Securities Guaranty Fund since 1983. The Department's interpretation of section 517.131(2), Florida Statutes, is that it requires a claimant to demonstrate findings of a violation of section 517.07 and/or section 517.301, Florida Statutes, by a licensed dealer, a licensed investment adviser or a licensed associated person. The Department's interpretation of section 517.131(3)(a), Florida Statutes, is that it requires a claimant to provide the Department with a certified copy of a judgment demonstrating a violation of section 517.07 and/or section 517.301, Florida Statutes. The Department's interpretation of section 517.131(3)(b), Florida Statutes, is that it requires a claimant to submit a copy of the writ of execution to the Department. During Saxon's tenure in administering the Securities Guaranty Fund, the Department has not waived any of the statutory requirements for claiming monies from the Fund. Section 517.131 and section 517.141, Florida Statutes, were enacted in 1978 and have remained virtually intact. The legislature did substitute the term "associated person" in place of the term "salesman" in section 517.131(2), Florida Statutes, without comment, although the order of licensed entities in that section was altered. The legislative intent behind the establishment of section 517.131, Florida Statutes, was to eliminate the bonding requirement for "individuals registered to be broker/dealers or investment advisers ... substituting therefor, a 'Security Guaranty Fund' to be funded through an assessment imposed upon them." The legislative intent behind section 517.141, Florida Statutes, was that disbursement from the Securities Guaranty Fund would be made to any person suffering monetary damages as a result of "some violation by a registrant."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a Final Order be entered denying Petitioners' claim for payment from the Securities Guaranty Fund. DONE and RECOMMENDED this 25th day of April, 1988, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of April, 1988. COPIES FURNISHED: Gerald Lewis, Comptroller Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350 Charles E. Scarlett, Esquire Office of the Comptroller Suite 1302, The Capitol Tallahassee, Florida 32399-0350 Richard O. Breithart, Esquire 818 U.S. Highway One, Suite 8 North Palm Beach, Florida 33408 Charles L. Stutts, Esquire Office of the Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350
The Issue The issue proposed in the Department's "Recommended Order" is: Whether the Department was substantially justified in bringing this action, or that special circumstances exist which would make an award of attorney's fees unjust, pursuant to Section 57.111, Florida Statutes (1983). As Respondent, the Department has not contested Ms. Fieber's allegations of standing as a "prevailing small business party" nor the reasonableness of the fees and costs claimed by Ms. Fieber.
Findings Of Fact Kimberlee M. Fieber is a licensed mortgage solicitor, having been issued license number HK 0008319 by the Department of Banking and Finance ("Department"). Ms. Fieber was employed by State Capital Corporation in the capacity of a mortgage solicitor commencing in 1983 and ending in August 1984. (Stipulation Agreement filed February 17, 1987; R 53, 132.) The Department began investigating State Capital Corporation in 1982, and in July of that year filed suit against the corporation, its directors, officers and certain named employees (not Kimberlee Fieber), charging eleven counts of securities and mortgage brokerage act offenses. (R 1-24, 160-161) The parties executed stipulations for final judgment, and judgment was entered on April 11, 1983, restraining the defendants from making certain representations to investors and from other specific violations of Chapters 494 and 517 F.S.. 25-28) Anthony Bernardo lives in Ft. Myers, Florida. Sometime in early 1983 he saw a State Capital Corporation advertisement regarding investment opportunities. He contacted the company and on June 27, 1983, Kimberlee Fieber came to his house to answer his questions. After about one hour Mr. Bernardo gave Ms. Fieber a check for $5,000.00 to invest as a loan yielding 18 percent interest, secured by a mortgage on commercial property. (R 30-32, 68-80) This was the first and only contact he had with Ms. Fieber. (R 74) Approximately two weeks later, the Bernardos received the papers related to their investment, including a Mortgage Deed, described in boldfaced print on the first page as a first mortgage of equal dignity with other first mortgages to be given in the total amount of $260,000.00, on a motel in Ft. Lauderdale. (R 32, 73) The Bernardos began receiving their $75.00 per month interest payments; in November 1983, they exercised an option to continue the investment for an additional twelve months at the same interest rate. (R 38) After reading some adverse articles about State Capital Corporation in the newspaper, Anthony Bernardo decided not to continue his loan beyond the term ending December 31, 1984. He informed the company in writing. (R 50, 83-85) When he did not receive his $5,000.00, he began calling the company on January 7, 1985. (R 84) He sent a letter dated January 16, 1985, to Gary Allen at State Capital Corporation demanding the return of his $5,000.00 with interest from January 1, 1985. He sent a copy of that letter to Gerald Lewis, State Comptroller. (R 50) On January 31, 1985, John Willard, an investigator for the Office of the Comptroller, interviewed Anthony Bernardo by telephone. The investigator's notes of that interview reflect the facts described in paragraphs 3 and 4, above, but also note that during Ms. Fieber's explanation of the investment, she did not explain to the Bernardos what equal dignity mortgages were, nor did she disclose that the Comptroller's Office had taken action against State Capital Corporation. The investigator noted that Bernardo told him that Ms. Fieber suggested he call the Comptroller's Office as a reference. (R 51-52) On February 14, 1985, Anthony Bernardo received his $5,000.00 from State Capital Corporation along with full interest. (R 85-86) John Willard never interviewed nor contacted Anthony Bernardo again, nor did he ever interview Ms. Fieber or anyone else regarding the Fieber case. He conducted interviews with other investors. He had some general discussion with an attorney in the Comptroller's Office about solicitors who had been employed by State Capital Corporation who may have committed misrepresentations regarding the sale of equal dignity mortgages. (R 170-173) He told the attorney, John Root, that the only thing they had in the file on Ms. Fieber was the memorandum of his interview with Anthony Bernardo. (R 174) Nothing in the record suggests that any other investigation of Ms. Fieber was done. On April 2, 1986, the Department served Kimberlee M. Fieber, as individual Respondent, a Notice of Intention to Suspend and Administrative Charges and Complaint which provided, in pertinent part: * * * STATEMENT OF FACTS Under the Provisions of Chapter 494, Florida Statutes (1983), the Department is charged with the responsibility and duty of administering and enforcing the provisions of the ACT, which includes the duty to suspend the licenses of those persons registered under the ACT for violations of the terms therein, as set forth in Section 494.05, Florida Statutes (1983). Kimberlee M. Fieber is a mortgage solicitor, who has been issued license number HK 0008319 by the DEPARTMENT. Formerly, Respondent was a mortgage solicitor for State Capital Corporation. As authorized by Section 494.071(1), Florida Statutes (1983), the DEPARTMENT conducted an investigation of the affairs of State Capital Corporation under the ACT. During that investigation, the DEPARTMENT took a statement from A. G. Bernardo. Mr. Bernardo stated that he had first heard of State Capital Corporation through its advertisements in the newspaper, to which he responded. After Mr. Bernardo contacted State Capital in answer to the advertisements, Respondent went to his home to attempt to persuade him to invest. During her sales talk, Respondent failed and neglected to explain the concept of equal dignity mortgages to Mr. Bernardo. Respondent also failed and neglected to disclose to Mr. Bernardo that the DEPARTMENT had taken legal action against State Capital and, in fact, suggested that Mr. Bernardo call the Department as a reference. Based on Respondent's representations, Mr. Bernardo invested $5,000.00 with State Capital Corporation. In return for his investment, Mr. Bernardo received an equal dignity first mortgage on a small motel. Mr. Bernardo's note became due after six months, and he renewed his investment for another period, this time of a year. When the one year renewal period had expired, Mr. Bernardo had decided not to renew his investment because of newspaper articles telling of State Capital's financial difficulties, and he notified State Capital of his decision and made demand on it for the return of his investment. Said mortgage note was due to be paid in December, 1984. However, payment was not made to Mr. Bernardo at that time, nor within a reasonable time thereafter.
Findings Of Fact By Joint Prehearing Stipulation filed at the time of hearing, the parties agree that bids for contract No. E-4450, the contract in issue here, were opened by the Respondent in Fort Lauderdale on October 11, 1991. Bids were received from five bidders including the Petitioner, Power, and the low bidder, Certified. Based on its evaluation of the bids submitted, on October 18, 1991, Respondent posted an intent to award the contract to Power Sweeping Services, Inc., Petitioner herein. However, thereafter, on October 22, 1991, the Department received a formal protest from the low bidder, Certified, challenging the intent to award. After review of the substance of Certified's protest, Respondent notified all bidders that it would be reposting its intent to award on November 5, 1991, and on that date, did repost, indicating an intent to award the contract in question to Certified, the low bidder. Thereafter, on November 14, 1991, Petitioner timely filed its formal protest, having filed its initial intent to protest on November 6, 1991. The bid blank, which was issued to all prospective bidders at the pre- bid conference held in this matter for a contract to involve mechanical sweeping on Interstate Highway 595 from its eastern terminus to Southwest 136th Avenue, including interchange ramps at I-95, I-595, and State Road 84, contained as a part thereof a notice to contractors which, at page 1 of 4, (page 1 of the 36 page bid package), contained a notation that for contracts of $150,000.00 or less, the bidder would be required to submit, as proof of ability to acquire a performance and payments bond: a notarized letter from a bonding company, bank or other financial institution stating they intend to issue a performance and payment bond in the amount of your bid, should your firm be awarded the project; in lieu of a notarized letter the following may be substituted: a bid guarantee of five percent (5%); or a copy of the contractor's certificate of qualification issued by the Department. This note specifically states that "failure to provide the following required evidence of bonding", as indicated above, with the bid proposal would result in rejection of the contractor's bid. Petitioner submitted a notarized "letter of commitment to issue bond" dated October 8, 1991, by Burton Harris, attorney in fact and resident agent for American Bonding Company. Certified submitted with its bid an un-notarized letter from Mark A. Latini, bond manager with Bonina - McCutchen - Bradshaw Insurance to the effect that "Amwest Surety Insurance Company is the surety for the above referenced contractor and stands ready to provide the necessary performance and payment bond for the referenced bid should CPM be low and awarded the referenced contract." Five bidders submitted bids. Certified was the low bidder with a bid price of $61,474.85. Florida Sweeping, Incorporated was second low bidder with a bid of $67,388.16, but that bid was rejected because an addendum was not noted. Petitioner was third lowest bidder with a bid of $72,290.65. Because Certified's bid as initially submitted did not contain the required notarized letter from the bonding company, its bid was initially rejected. Thereafter, however, Certified's president, Mr. Hanousek, who prepared Certified's bid, and who attended the pre-bid meeting, called the Department's District office the day the bids were opened and was informed that his company's bid was low, but was rejected because its bond commitment letter was not notarized. As a result, he submitted a notice of protest and a subsequent protest to the denial of Certified's bid. A hearing on Certified's protest was not held. When Joseph Yesbeck, the District's director of planning and programs, who was at the time serving as acting district secretary in the absence of the appointed secretary, was contacted by Mr. Hanousek. He reviewed the file and met with Ms. Martin, the District's contract administrator for construction and maintenance contracts and the contracting staff to see what was happening. At that point Ms. Martin explained why Certified's bid had been disqualified, and the matter was thereafter discussed with the District and Department attorneys. When the District secretary came back, Mr. Yesbeck briefed him and recommended that based on the information he had received from the District and Department attorneys, the failure to submit the notarized letter should be considered a non-material deviation and the Certified bid be determined the low responsive bidder. The reasons for this were that the absence of the notary did not really give any competitive advantage to Certified and that ordinarily defects of this nature are routinely allowed to be cured. When the District secretary, on the basis of the information provided by Mr. Yesbeck, decided to repost the contract, Mr. Yesbeck prepared a joint letter of reposting which removed Certified's disqualification and left it as the low bidder. None of the other rejected bidders, including Florida Sweeping and bidder Number 5, which was rejected because its bond proposal was not of a proper character, were advised that they could come in and correct the defects with their bond letters. According to Ms. Martin, the notice to contractors requiring a notarized letter from a bonding company as an alternative to the requirement to post a 5% bid guarantee was designed to promote participation in state contracting by small business and minority business enterprise applicants, so that the bidder does not actually have to post the bond in question. The notarization requirement was put in by the Department but neither Ms. Martin nor any other witness testifying on behalf of the Department was able to indicate why the bond certification had to be notarized. Historically, when the Department has gotten a bid without a notarized bond letter it has been rejected, and in Ms. Martin's experience, she has never known of a protest based on such a denial since she began working with contracts in July, 1988. When she reviews the bids, she reviews the bonding letter for its content as well as seeing whether it is notarized. Here, her reason for initially rejecting certified's bid was solely that the bond commitment letter was not notarized. The decision to reject was not hers alone, however, since she also checked with the District General Counsel who initially advised her that Certified's bond commitment letter was no good. Apparently, counsel changed his position upon discussion of the matter with Mr. Yesbeck and the Department's General Counsel since, according to Mr. Yesbeck, both counsel recommended subsequently that the absence of the notarization not be a disqualification. Further, according to Ms. Martin the requirement for the notarization has been utilized by District 4 since 1987 with all bids requiring it notwithstanding Mr. Hanousek's testimony that he has never seen the requirement before in any of the 6 successful contract's he has had with the Department before. In that regard, however, he admits this is the only contract he has had with District 4. Ms. Martin does not know if the notarization requirement is used in other Districts and no evidence as presented by any party to clarify that issue.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law it is, therefore: RECOMMENDED that a Final Order be entered setting aside the determination that Certified Property Maintenance's bid on Contract No. E4450, Job No. 869069108 was the low responsive bid. RECOMMENDED in Tallahassee, Florida this 28th day of January, 1992. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 91-7592BID The following constitute my ruling on all Proposed Findings of Fact pursuant to Section 120.59(2), Florida Statutes submitted by the parties hereto. FOR THE PETITIONER: None submitted. FOR THE RESPONDENT: 1. & 2. Accepted and incorporated herein. Accepted and incorporated herein except for the finding that Certified's bid complied in every respect except the notarization. The assurance by the bonding company was not unqualified but conditioned upon Certified being awarded the contract. Accepted and incorporated herein. & 6. Accepted and incorporated herein. Accepted. Accepted and incorporated herein. Accepted and incorporated herein except for last sentence regarding which see 3., supra. Accepted and incorporated herein. FOR THE INTERVENOR: None submitted. COPIES FURNISHED: Bruce M. Cease, Esquire 2720 West Flagler Street Miami, Florida 33135 Susan P. Stephens, Esquire Department of Transportation 605 Suwannee Street, MS 58 Tallahassee, Florida 32399-0458 Ray Hanousek President Certified Property Maintenance 3203 Robbins Road Pompano Beach, Florida 33062 Ben G. Watts Secretary Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton J. Williams General Counsel Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0458
Findings Of Fact Respondent has been employed in the securities industry since approximately 1957. He has worked for a number of broker/dealers over the years and is familiar with the procedures involved in transferring employment from one broker to another. It is the custom in the securities industry that when a securities salesperson changes employment, forms U-4 and U-5 are filed with the National Association of Securities Dealers. As registration is approved by that organization and by the various states involved, the states give that information to the National Association of Securities Dealers, which in turn gives that information to the securities firm which employs the associated person seeking registration, and that brokerage firm in turn notifies the applicant. Respondent began to work at Alison Baer Securities, Inc., in September, 1988, and remained employed there until February, 1989. When he associated himself with Alison Baer, Respondent applied for registration as an associated person with that company. As is the proper procedure, he submitted a U to the National Association of Securities Dealers. While waiting for his registration to be approved, Respondent maintained telephone and personal contact with his own clients. He did not, however, sell or offer to sell securities until after he was sure his registration was approved. Respondent's application for registration as an associated person with Alison Baer Securities, Inc., was approved by the National Association of Securities Dealers and was also approved by the states of New York, Texas, Georgia, Florida, and Oklahoma. In late October of 1988, Jeffrey Britz, the President and Chief Executive Officer of Alison Baer Securities, told Respondent that his registration as an associated person with Alison Baer Securities had been approved by the state of Florida. In fact, Respondent was not registered as an associated person by the state of Florida until December 7, 1988. Respondent did not attempt to directly confirm with the Department of Banking and Finance his registration as an associated person with Alison Baer Securities. Respondent has applied for registration with the Department as an associated person with Shamrock Partners, Ltd. The Department denied that application based solely on the allegations which are the subject matter of this proceeding.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent not guilty of the allegations contained in the Administrative Complaint, dismissing the Administrative Complaint filed against him in this cause, and granting his application for registration with the Department as an associated person with Shamrock Partners, Ltd. DONE and ENTERED this 14th day of February, 1992, at Tallahassee, Florida. LINDA M. RIGOT 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 14th day of February, 1992. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed finding of fact numbered 27 has been adopted in this Recommended Order. Petitioner's proposed findings of fact numbered 1-5, 11-14, 16-18, 23- 26, 28, 29, and 31-34 have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel, or recitation of the testimony. Petitioner's proposed findings of fact numbered 6-10, 15, 19, and 30 have been rejected as being subordinate to the issues involved in this proceeding. Petitioner's proposed findings of fact numbered 20-22 have been rejected as not being supported by any competent evidence. COPIES FURNISHED: Deborah Guller, Esquire Assistant General Counsel Office of the Comptroller Suite 211 111 Georgia Avenue West Palm Beach, Florida 33401 Richard Doggett, Esquire 808 Northeast 3rd Avenue Fort Lauderdale, Florida 33304 Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 William G. Reeves, General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0350
Findings Of Fact By Prehearing Stipulation entered into by the parties on August 30, 1990, the parties agreed, and it is so found, that: Petitioner, Edward T. Strehlau, is President and control person of Deerfield Securities, Inc. On or about February 3, 1989, Petitioners filed an application, (Form BD), for registration as a broker/dealer, which was signed by Mr. Strehlau. On or about March 15, 1989, Petitioners filed with the Division an amendment to that Form BD. On or about April 19, June 22, and July 20, 1989, Petitioners filed additional amendments to the Form BD initially signed and submitted on behalf of the Petitioners by Mr. Strehlau. All of the Forms BD and amendments filed by Petitioner, Strehlau, with the Division were represented by him as true and complete. On February 3, 1989, Petitioner, Strehlau, also filed the Articles of Incorporation of Deerfield Securities, Inc., with the Florida Secretary of State. These Articles listed Edward T. Strehlau, Patericia O'Dell, William Manger, and Patricia Strehlau as Directors. The Division of Securities requires the filing of the Articles of Incorporation along with the dorm BD. This requirement is outlined in Section 517.12, Florida Statutes. Neither William Manger nor Patricia Strehlau were listed as Directors of Deerfield Securities, Inc., on the Form BD or on any amendments thereto which were filed with the Division. Mr. Manger is the subject of a complaint relating to securities violations committed by Eiffel Securities, Inc., Mr. Manger, a Mr. Riddle, and a Mr. Ashbee, in the State of Tennessee. On or about February 23, 1989, Mr. Strehlau, as President of Deerfield, withdrew the application for registration of Deerfield Securities, Inc., as a broker dealer with the State of Tennessee, and further agreed not to reapply for registration as a broker/dealer in that State, and not to sell Deerfield Investments, Inc.'s investment units in Tennessee. Deerfield Securities, Inc. is a wholly owned subsidiary of Deerfield Investments, Inc. Edward T. Strehlau is a control person and President of Deerfield Investments, Inc. The principal place of business of Deerfield Securities, Inc. is Sarasota, Florida. William Manger, at all times pertinent hereto, was President and a control person of the aforementioned Eiffel Securities, Inc., a Tennessee corporation. Petitioner, Edward T. Strehlau, was a control person of Eiffel Securities, Inc., during the period June 1, 1988 through September 21, 1988. Eiffel Securities, Inc. was a wholly owned subsidiary of Tennessee Investments Marketing Enterprises, (TIME), and Edward T. Strehlau was vice-president of TIME between June, 1988 and September, 1988. On February 3, 1989, Petitioner Strehlau paid $200.00 in filing fees for Deerfield Securities, Inc. with the Florida Division of Securities. On February 10, 1989, The Division of Securities notified Deerfield of several deficiencies in its application for registration as a securities dealer. These deficiencies included a requirement for: the officer or partner names of the parent firm; registration as a foreign corporation or a legal opinion indicating no need therefor;+ a clearing agreement from a dealer in Florida signed by both firms; Articles of Incorporation or partnership agreement; proof of securities effectiveness and compliance with SIPC (Securities Investors Protection Corporation). Thereafter, on February 27, March 16, April 20, June 22, and July 18, 1989, Mr. Strehlau sent letters to the Division of Securities in which he attempted to convince the Division of his compliance with the requirements set forth in the February 10, 1989 deficiencies letter. The Petitioner's efforts, however, were not supported by facts in some particulars. For example, the clearing agreement with OTRA, to be signed by both parties, was signed only by Petitioner Strehlau as President of Deerfield Securities, Inc., and attested by Patericia O'Dell of the firm. No signature from any responsible party of OTRA appears on the document. By letter dated December 2, 1988, Mr. Strehlau submitted this unilaterally executed clearing agreement. By letter dated February 22, 1989, the vice- president for finance of the SIPC attested that Deerfield Securities, Inc. was, as of that date, registered with the Securities and Exchange Commission, (SEC), as a securities broker under Section 15(b), of the 1934 Securities Investor Protection Act, and by operation of that Act, the corporation would be a member of SIPC unless its business consisted exclusively of various activities which are not pertinent to this hearing. It would appear, therefore, that Deerfield Securities, Inc. was, at the time of application at least, a member of SIPC. It is also found, however, that the application for registration submitted by Mr. Strehlau on behalf of himself and Deerfield Securities, Inc. contained what appears to be a material misrepresentation of fact in that it did not list Mr. Manger and Mrs. Strehlau as Directors. Mr. Manger had a disciplinary history in the industry in Tennessee and his omission was material. Article VI of Deerfield Securities' Articles of Incorporation filed with the Florida's Secretary of State's office listed Mr. Manger as one of the original Directors of Deerfield Securities, Inc. as of February 3, 1989. However, when Mr. Strehlau submitted the application for registration for Deerfield, (Form BD), neither that form nor any of the subsequent amendments listed Manger as a Director or affiliated person even though the form required that all Directors be listed. Mr. Strehlau contends that Manger and Mrs. Strehlau were omitted because neither were to take an active part in the management of Deerfield's operations. The Division, however, considered the omission to be a false material statement since the Directors of an applicant are considered to be pertinent to its operation. In this, the Division is correct. The Division also took the position that the pending Tennessee disciplinary action against Mr. Manger was significant. It surmised that Manger, seeing he could not be licensed in Florida on his own, was attempting to achieve this end through Mr. Strehlau, and the Department was concerned there was still a relationship between Manger and Deerfield. There is no evidence, direct or otherwise, to support that suspicion. When an application form is sent to an applicant, upon the applicant's request, an instruction sheet is sent with it which outlines the basic requirements for filing. These instructions are not, however, all inclusive or controlling. The statutes and Rules of the Department, pertinent to criteria for application and registration, constitute the ultimate guidelines over who is approved for registration. When Division analysts review an application, they check it against a requirements check list to insure that all requirements are met. If required information is not included with the application, the Division must notify the applicant of the omitted information within 30 days. If the requested information is received within 60 days, the Division then has an additional 90 days in which to rule on the application. If the omitted information is not timely received, however, the Division can deny the application for incompleteness or approve it if appropriate. On the other hand, when all required information is received timely, if the Division does not act on the application within 90 days, the application is automatically approved and if a discrepancy is thereafter noted, corrective action must be through disciplinary action rather than denial. The Division's denial action here was based on two grounds. The first was the failure to list Mr. Manger as a Director on the original Form BD or any of the amendments thereto. The second was Mr. Manger's prior and pending disciplinary record. Even if the pending action were not considered, the Division would still have denied the Petitioner, Deerfield's, application based on the prior, completed disciplinary actions against Mr. Manger in Tennessee. Petitioner claims that the Division did not request a second time those items listed on the initial deficiency letter and which were not thereafter provided by him. It is the Division's policy that once the initial deficiency letter is sent, calling for additional information, if the applicant submits only a part of those items identified, it will not send out another notification reminding the applicant of the still- missing items. It is not required that such follow-up notification be sent. If, however, the applicant calls and inquires if its application is complete, the Division will advise the applicant which of the previously noted deficiencies have not yet been corrected. Here, no such inquiry by the Petitioner was made. In this case, the Division took the position that Petitioner's application was never complete since there was no clearing agreement signed by the required parties prior to approval. Further, Mr. Strehlau's application as a principal failed to include a proper copy of his personal disciplinary history regarding a dismissed charge of felonious pointing a fire arm in Oklahoma in 1981. Under Florida law, every securities dealership must have a registered principal and Mr. Strehlau was to fill that capacity for Deerfield. Since his application could not be deemed complete because of the failure to provide all the required information, neither could Deerfield's be deemed complete. The State of Florida will not approve the application of a broker/securities dealer without approval of the National Association of Securities Dealers, (NASD). It is normal practice for NASD and Florida approval to be at the same time. There is an attempt at coordination, but Florida cannot approve a dealer for registration without the approval of the SEC and NASD. As of March 8, 1989, the state had been advised that NASD was prepared to approve Deerfield Securities, Inc., though it had some reservations about the firm which were insufficient to support denial. Even had NASD granted approval, however, NASD registration and membership does not guarantee Florida registration. The standards for registration are different. No doubt Mr. Strehlau made many phone calls to the Division in an effort to get approval of these applications. Without question he submitted numerous amendments to the Form BD in an effort to provide that information that the Division asked for in a timely and proper manner. His claims that neither Mr. Manger nor Mrs. Strehlau were listed as Directors on any of the forms because they were not involved in the operation of the business, and that had it been intended for them to work in an operational capacity, they would have been listed are not persuasive, however. Notwithstanding his argument that if the Division had any questions about that, it should have inquired, clearly, that is not the Division's responsibility to do.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore recommended that the application of Deerfield Securities, Inc. to be registered as a broker/dealer, and the application of Edward T. Strehlau to be registered as an associated person/principal of Deerfield Securities, Inc., in Florida be denied. RECOMMENDED this 5th day of October, 1990, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of October, 1990. COPIES FURNISHED: Edward T. Strehlau, pro se 13122 Woodington Drive Houston, Texas 77038 R. Beth Atchison, Esquire Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 The Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 William G. Reeves General Counsel The Capitol Plaza Level, Room 1302 Tallahassee, Florida 32399-0350
The Issue Whether the petitioner's application for registration as an associated person of Hardman Financial Services, Inc., should be granted or denied.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and the entire record of this proceeding, the following findings of fact are made: The Department is the state agency charged with the administration of chapter 517, Florida Statutes (Florida Securities and Investor Protection Act), and is responsible for registering associated persons. The Division of Securities and Investor Protection carries out this function. In January 1995, Mr. Northern applied to the Department for registration as an associated person of Hardman Financial Services, Inc., pursuant to section 517.12, Florida Statutes. Mr. Northern is currently registered with the National Association of Securities Dealers and with the State of California. On November 24, 1992, the Commodity Futures Trading Commission ("CFTC") filed a Complaint and Notice of Hearing charging Mr. Northern with fraudulent allocation, that is, with cheating or defrauding or attempting to cheat or defraud his customers with respect to trades in the purchase and sale of commodities, a violation of section 4b of the Commodity Exchange Act, title 7, section 6b, United States Code. 1/ Specifically, the CFTC alleged in the complaint that, from "at least December 1987 to May 1989," Mr. Northern, "fraudulently allocated profitable trades to the Northern account and unprofitable or less profitable trades to his customers' accounts." The CFTC based the fraudulent allocation charge on an inference drawn from two facts alleged in the complaint. First, the CFTC alleged that, during the period extending from December 1987 to May 1989, 180 out of 184 trades on Mr. Northern's personal trading account were profitable, producing a profit of $53,517, while his customers' accounts lost $696,889. Secondly, the CFTC alleged that Mr. Northern's name was included by Paine Webber's Compliance Department on lists variously known as "ACL lists", "Discretionary Broker lists", and "Account Number Later lists", which meant that Mr. Northern was allowed to batch his orders and telephone them directly to the Paine Webber clerks on the floors of the exchanges, who then accepted and executed the orders even though Mr. Northern did not provide account identification at the time the orders were placed. Mr. Northern presented the CFTC with an offer of settlement dated June 1, 1994, and, on July 19, 1994, the CFTC entered an Opinion and Order Accepting Offer of Settlement of Lovell Braxton Northern, III. In the Opinion, the CFTC found that "[s]olely on the basis of the consent evidenced by the Offer, and without any adjudication on the merits, the Commission finds that Northern has violated section 4b of the [Commodity Exchange] Act." The CFTC noted in footnote 2 of the Order that Mr. Northern neither admitted nor denied the allegations against him and that he "stipulates that the record basis on which this Opinion and Order . . . is entered consists of the Complaint and the findings consented to in the Offer, which are incorporated in this Order." 2/ The CFTC, in accordance with the terms of Mr. Northern's offer, denied Mr. Northern trading privileges on any contract market for a period of seven years and ordered him to liquidate all futures and options positions in which he had any beneficial interest. In addition, the CFTC directed Mr. Northern to "comply with his undertakings" never to seek registration with the CFTC or to act in any position requiring registration or requiring him to hold customer funds. This Opinion was the basis for the CFTC's Order of Dismissal, dated July 19, 1994, which finally resolved the action brought against Mr. Northern and his former employer, Paine Webber. 3/ Mr. Northern explained that he offered to settle the CFTC case only because he could not travel to California for the hearing. At the time, his father was gravely ill with cancer, and he feared losing his job. Mr. Northern maintains that he did not fraudulently allocate any commodity trades, although he concedes that he placed orders by telephone without simultaneously providing account identification numbers to the floor clerks. He claims that he was required by Paine Webber's Compliance Department to place orders and provide account numbers after the orders were executed; he considers himself an innocent victim, whose only fault was adhering to Paine Webber's policy with regard to order entry. In response to a request by the National Futures Association, Paine Webber reported in a letter dated August 15, 1989, that, as a result of several consumer complaints, it had done a thorough analysis of Mr. Northern's trades and that the analysis had shown that orders were entered by Mr. Northern without proper account identification. It reported that, although purchases and sales in Mr. Northern's personal account were all profitable and purchases and sales in Mr. Northern's customer accounts were primarily unprofitable, it had found no conclusive evidence that Mr. Northern had fraudulently allocated trades. Paine Webber also notified the National Futures Association in the August 15, 1989, letter that Mr. Northern did not explain the transactions in his account to the satisfaction of Paine Webber and that he was permitted to resign on May 26, 1989. In a report dated August 19, 1993, an expert hired by Mr. Northern to examine several commodity order slips concluded that, in his opinion, his examinations failed to prove that the account numbers were written at the same time as the other information on the slips or at a different time. Six slips were examined, five of which were time-stamped in 1989 and one of which was time-stamped in 1988. Mr. Northern had approximately fifteen customer complaints filed against him during the period from 1985 through 1992. All but one of the complaints arose out of Mr. Northern's activities as an associated person of Paine Webber in California, and all of the complaints were related to commodity trading. Two of these complaints were resolved in Mr. Northern's favor, one was resolved adverse to Mr. Northern, and ten were settled by Paine Webber. Mr. Northern attributes most of the complaints to customer panic following the October 1987 stock market crash. Mr. Northern has failed to prove by a preponderance of the evidence that he is entitled to be registered as an associated person of Hardman Financial Services, Inc.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is: RECOMMENDED that the Department of Banking and Finance enter a Final Order denying the application of Lovell B. Northern, III, for registration as an associated person of Hardman Financial Services, Inc. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 1st day of May 1996. PATRICIA HART MALONO, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of May 1996.
The Issue Whether Respondents committed the offenses described in the administrative complaint? If so, what disciplinary action should be taken against them?
Findings Of Fact Based upon the record evidence and the stipulations entered into by the parties, the following Findings of Fact are made: Murray Wieder (Respondent Wieder) is now, and was at all times material hereto, a real estate broker licensed in the State of Florida pursuant to license number 0303130. His last license was issued c/o Wieder Realty, Inc., 900 S. Pompano Parkway, Pompano Beach, Florida 33069. Wieder Realty, Inc. is now, and was at all times material hereto, a corporation licensed in the State of Florida as a real estate broker pursuant to license number 0254413. Its last license reflects its address as 900 S. Pompano Parkway, Pompano Beach, Florida 33069. Respondent Wieder is now, and was at all times material hereto, the President of Wieder Realty, Inc., and its qualifying broker. Margaret Hoskins has been an investigator with the Department of Professional Regulation for the past year and a half. As part of her responsibilities, she conducts audits of escrow accounts maintained by real estate brokers licensed in the State of Florida. On April 27, 1989, Hoskins conducted a routine audit of Respondents' escrow accounts. Her investigation revealed that, on that date, Respondents maintained at Bank Atlantic in Fort Lauderdale, Florida, a noninterest-bearing escrow account (number 005-50199 0-3) with a balance of $14,577.39 and an interest- bearing account (number 005-175922-1) with a balance of $32,955.50. Respondents' "trust liability" with respect to these two accounts was $41,856.50. The $5,676.39 difference between the total balance of these two escrow accounts and Respondents' "trust liability" represented accrued interest on the monies deposited in the interest-bearing account. Respondents used the accrued interest to cover their incidental operating expenses. Hoskins further discovered as a result of her investigation that on March 13, 1989, Respondents had deposited $50,000.00 into the noninterest- bearing account, which prior to the transaction had had a balance of $950.58, and that on March 30, 1989, Respondents had withdrawn $25,000.00 from the interest-bearing account and had deposited $25,000.00 in the noninterest-bearing account. During the course of her investigation, Hoskins spoke with Respondent Wieder, who indicated to her that it was his practice to transfer funds from one of the Bank Atlantic escrow accounts to the other. Of the fully executed sales contracts and lease agreements Respondents' had on file, only one, the Kutner-Fox contract, contained a provision authorizing Respondents to place escrow monies in the interest-bearing account and to use the accrued interest for incidental operating expenses. The remaining contracts and leases were silent regarding the matter. Hoskins, in her conversation with Respondent, therefore attempted to find out from him if the escrow monies in the interest-bearing account, other than those attributable to the Kutner-Fox contract, had been deposited in the account with the permission of all interested parties. Wieder, who was otherwise very cooperative, failed to provide Hoskins with a direct answer to her question. Hoskins did not thereafter make any effort to contact these parties and ask them if they had given Respondents permission to place monies held in escrow in an interest- bearing account and to use the accrued interest to cover incidental operating expenses. Later on April 27, 1989, after Hoskins had completed her visit to their office, Respondents withdrew all of the funds from the interest-bearing account and deposited them in the noninterest-bearing account. They then closed the interest- bearing account. Respondents then transferred from the noninterest- bearing account to their operating account $5,676.39, the amount of interest that had accrued on the monies that had been in the interest-bearing account.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Florida Real Estate Commission issue a final order in this matter finding the proof insufficient to establish Respondents' guilt of the offenses charged and dismissing the instant administrative complaint. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 22nd day of August, 1990. STUART M. LERNER 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 22nd day of August, 1990.
The Issue The issue is whether Respondents are guilty of 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); failing to maintain trust accounts in an escrow account until disbursement is authorized, in violation of Section 475.25(1)(k); operating as a broker without holding a valid broker's license, in violation of Sections 475.42(1)(a) and 475.25(1)(e); failing to prepare the required written monthly escrow-statement reconciliations, as required by Rule 61J2-14.012(2) and (3), and thus Section 475.25(1)(e); failing to give written notice to a party to a transaction, before the party signs a contract, that the broker is a representative of another party, in violation of Rule 61J2-10.033 and Section 475.25(1)(q); failing to comply with Section 475.25(1)(q), and thus Section 475.25(1)(e); and, as to Respondent Dume, engaging for a second time in misconduct that warrants his suspension or engaging in conduct or practices that show he is so incompetent, negligent, dishonest, or untruthful that clients and their money cannot safely be entrusted to him, in violation of Section 475.25(1)(o). If either Respondent is guilty of any of these alleged violations, an additional issue is what penalty should be imposed.
Findings Of Fact Respondent Dume has been licensed in Florida as a real estate broker, and Respondent Southwest Florida Home Realty, Inc. has been licensed in Florida as a corporate broker. Petitioner did not file licensing documentation as an exhibit. Petitioner's witness testified that the licenses expired on September 30, 1995, for Respondent Dume and March 31, 1995, for Respondent Southwest Florida Home Realty. This testimony is hearsay and does not establish the licensing status of Respondents. In their proposed recommended order, Respondents propose a finding that they are now and have been at all material times licensed real estate brokers in Florida. The evidence does not support this assertion. However, the pleadings of the parties establish that Respondents were licensed at least up to the dates alleged by Petitioner. The Administrative Complaint alleges that Respondent Dume's license expired on September 30, 1995, and Respondent Southwest Florida Home Realty's license expired on March 31, 1995. The obvious inference from these allegations is that Respondents were licensed up to those dates. Combining these inferred allegations in the Administrative Complaint with the assertion of Respondents in their proposed recommended order that they are now and have been at all material times licensed, it is clear that the parties do not dispute that Respondents were licensed at least up to the dates set forth in the Administrative Complaint. The only real dispute as to licensing is whether Respondents were licensed after these dates, and the record supplies no answer to this question. By final order filed August 8, 1994, the Florida Real Estate Commission found both Respondents guilty of violating Sections 475.25(1)(b), (e), and (k) and Rule 61J2-14.012(2) and (3). The final order is based on an administrative complaint alleging, as of February 1 and 2, 1994, a shortage of about $6000 in one escrow account and an overage of about $400 in another escrow account. The administrative complaint alleges that Respondent Dume prepared written monthly escrow-account reconciliation statements. The final order reprimands each Respondent. As to Respondent Dume only, the final order imposes a $300 fine, suspends his license until the fine is paid, and places Respondent Dume's license on probation for one year, during which time he was required to "enroll in and satisfactorily complete a 30-hour broker management course." The final order states that a failure to complete all conditions of probation may result in the filing of a new complaint. The final order establishes that Respondents have been licensed brokers in Florida, but does not establish their licensing status as of anytime after the expiration of Respondent Dume's probation, which ended on September 8, 1995. In mid-September 1995, an investigator employed by Petitioner contacted Respondent Dume to determine whether he had complied with the final order of August 8, 1994. Respondent Dume admitted that he had not undertaken the required education. The investigator set up an office audit for November 1, 1995. On November 1, 1995, the investigator visited Respondents' office to conduct the audit. She had access to all relevant documents and found that Respondent Southwest Florida Home Realty, Inc. maintained an escrow account for real estate rental deposits. The investigator audited the period from January 31, 1995, through September 30, 1995. The investigator found that neither Respondent conducted written reconciliations of the escrow account during this period of time. The investigator found checks drawn on the escrow account improperly paid to another corporation owned by Respondent Dume and, in one case, paid to Respondent Dume personally. Two of the checks payable to the other corporation, which was not a licensed corporate broker, were dated September 30 and October 31, 1994. The investigator did not testify as to the date of the check paid personally to Respondent Dume. The investigator asked Respondent Dume about these disbursements. As to the check made to him personally, he explained that a bank would not cash his check and he needed funds. All of the checks paid to the other corporation or Respondent Dume personally were unauthorized and an improper use of escrow funds. Petitioner proved that the two checks to the corporation owned by Respondent Dume related to a time period not covered in the case resulting in the August 8 final order. When the investigator attempted to reconcile the escrow account for the period from January 31 through September 30, 1995, she found a shortage of about $31,500. Respondent Dume told her that he had repaid the escrow account about $20,000, but this was in January 1994. There is no evidence that any client has suffered any losses due to Respondents' failure to maintain the escrow account in the manner required by law. As already noted, the parties in effect agree that Respondents were licensed until certain dates in 1995, but the evidence fails to establish that Respondents' licenses expired after that time. But even if the evidence had proved the alleged expiration dates, the evidence would still be less than clear and convincing that Respondents conducted real estate business after those dates. There is even less evidence that Respondents failed to make required written disclosures in real estate transactions, as Petitioner has failed to prove any real estate transactions or the absence of any such disclosures.
Recommendation It is RECOMMENDED that the Florida Real Estate Commission enter a final order revoking the licenses of Respondent Dume and Respondent Southwest Florida Home Realty, Inc. ENTERED on December 2, 1996, in Tallahassee, Florida ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of December, 1996. COPIES FURNISHED: Steven D. Fieldman Chief Attorney Department of Business and Professional Regulation Division of Real Estate Hurston Building, North Tower 400 West Robinson Street Orlando, Florida 32801-1772 Frederick H. Wilsen Gillis and Wilsen 1415 East Robinson Street, Suite B Orlando, Florida 32801 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Henry M. Solares Division Director Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32802-1900
