The Issue Whether Petitioner violated the Florida Election Code as alleged in the Order of Probable Cause entered November 25, 2002.
Findings Of Fact Chapters 97 through 106 comprise the Florida Election Code (Code). Pursuant to the Code, the Commission is specifically empowered to enforce the provisions of Chapters 104 and 106, Florida Statutes. Mr. Smith is a principal in Smith Brothers Paint and Body Shop and runs the daily operations of the business. In addition to painting and repairing motor vehicles, he has a wrecker service. He ran for county commission in Escambia County in 1996 but was not elected. He ran again in 2000 and was successful. Allegations of impropriety surrounding the 2000 race caused the Commission to conduct an investigation into Mr. Smith's campaign practices. When Mr. Smith ran for the position of county commissioner in 1996, his campaign treasurer was Lance Simmons. Mr. Simmons was a certified public accountant and Mr. Smith's friend. Mr. Simmons provided this service at no charge. The campaign financing reports prepared by Mr. Simmons were correct and professional. Lynn Kowalchyk, Assistant Supervisor of Elections in Escambia County, who has worked for the Supervisor of Elections in Escambia County for 25 years, opined that the submissions for that campaign were some of the best the Supervisor of Elections has received. Because Mr. Smith lost the election, he felt too embarrassed to ask Mr. Simmons to serve as his campaign treasurer for the 2000 race. He decided that he would serve as his own treasurer. Mr. Smith ran for county commissioner in District 5, which is the largest district in Escambia County, Florida. The district comprised the northern part of the county, which is more sparsely settled than the other districts in the county. In fact, District 5 comprises about 70 percent of the landmass of Escambia County. A great distance must be traveled to get from Mr. Smith's business to most places in the district and from place to place in the district. Mr. Smith decided that it was more important to engage in person-to-person campaigning in his large district than to spend time doing the detailed work of learning the complexities of the election laws, complying with the laws, and submitting correct reports. Mr. Smith received the 2000 edition of the "Candidate Handbook on Campaign Financing," which was published by the Florida Department of State. He had previously received the 1996 handbook. He signed statements in 1995 and 1999 certifying that he had read and that he understood the material presented in the handbooks. His testimony that he did not read either of them is accepted as fact. Mr. Smith had worked on one of his own campaigns and on other campaigns and felt as though he already knew all he needed to know about election laws. He concluded that if he needed additional information, he could get it from staff in the Supervisor of Elections Office. Mr. Smith first filed as a candidate for the 2000 election on October 20, 1999. Subsequent to filing he received at least ten notices from the Supervisor of Elections Office that members of the office staff were available to advise him with regard to the rules governing elections. Mr. Smith's routine during the campaign was to work at his place of business in the morning and then to go to his district and conduct his campaign. He gave documentation recording contributions and expenditures to his elderly mother, a widow of 65 years. His mother kept notes on a legal pad and organized the documents so that they could be reported. Mr. Smith's mother had cancer, heart problems, and arthritis and this may have affected her accuracy in preparing reports. Mr. Smith was unaware of the serious nature of her illnesses during the time she was working on the campaign. Mr. Smith's mother died December 11, 2002. Mr. Smith's brother also helped with the campaign records. He was a schoolteacher, and each evening during the campaign he would help Mr. Smith. His brother died one week after Mr. Smith's electoral victory. Counts 1-4. Allegations involving Section 106.021(3) prohibiting expenditures from other than the campaign treasury (Counts 1-4). (Count 1). On October 10, 2000, Mr. Smith purchased stamps from the U. S. Post Office. A check in the amount of $495 was presented in payment. The check was drawn on the checking account of a company titled Environmentally Friendly Chemicals (EFC), of which Mr. Smith is a part owner. This occurred because Mr. Smith inadvertently picked up the EFC checkbook instead of the campaign checkbook. Mr. Smith's inattention was the cause of the error. The campaign subsequently reimbursed EFC. (Count 2). Campaign check 2088 was written to Frankie Peters in the amount of $50 to reimburse Ms. Peters who had paid for a sign at the Tate High School ballpark. Mr. Smith permitted this because the sign could not have been timely purchased if it had been paid with a check from the campaign treasury. (Count 3). Someone named Nacie Smith paid for postage in the amount of $150 on behalf of the campaign during October 2000. Campaign check number 2115 was used to reimburse Ms. Smith, and Mr. Smith signed this check. (Count 4). Mr. Smith had printing done for the campaign by a firm named Pengraphix pursuant to an order placed October 31, 2000. This order was placed immediately prior to the election. Part of the order was paid from the campaign account in the amount of $852.97. The balance was in dispute but was eventually compromised in the amount of $1,884.92. This amount was paid not from the campaign account, but rather, directly to Pengraphix by a friend named Donald "Mike" Murphy. The payment by Mr. Murphy was effected after the campaign had concluded. Mr. Murphy was a person to whom Mr. Smith had provided a loan several years prior to 2000. These four transactions are expenditures that were not paid from the campaign treasury. However, as will be discussed in the Conclusions of Law in more detail below, the accidental use of the EFC checkbook in Count 1, did not demonstrate willfulness. Count 5. Allegation involving Section 106.021(3) prohibiting a candidate from receiving contributions except through the campaign treasurer. This allegation is supported by the evidence recited above regarding Mr. Murphy, if one concludes that the money provided to Pengraphix represented a contribution as that term is defined in Chapter 106, Florida Statutes. Whether or not the facts support a finding that the cited statute prohibited this transaction is discussed in the Conclusions of Law, below. Counts 6-29. Allegations involving Section 106.05 requiring funds received to be deposited within five days of receipt. Mr. Smith reported 20 contributions on his Campaign Treasurer's Report (CTR), which covered the period October 20, 1999 through December 31, 1999. One of the contributions described by Mr. Smith as being a $500 check, was later reported, in an amended CTR, to be five separate $100 cash contributions. The campaign bank account was not opened until January 7, 2000, and the last contribution reported on the CTR was November 29, 1999. Therefore, 24 contributions were received but not deposited in the campaign account until more than five days subsequent to receipt. Mr. Smith was unaware of the statutory requirement that contributions must be deposited in the campaign treasury within five days of receipt. However, his willful ignorance of the requirement translates into willful violations. Counts 30-79. Allegations involving Section 106.07(5) prohibiting a candidate from certifying to the correctness of a campaign treasurer's report that is incorrect, false, or incomplete. Mr. Smith filed original CTRs for the following periods: (Count 30) October 20, 2000 to December 31, 1999. (Count 31) January 1, 2000 to March 31, 2000. (Count 32) April 1, 2000 to June 30, 2000. d. (Count 33) July 1, 2000 to July 31, 2000. (Count 34) July 29, 2000 to August 11, 2000. (Count 35) August 12, 2000 to August 31, 2000. (Count 36) September 1, 2000 to September 8, 2000. (Count 37) September 9, 2000 to September 28, 2000. (Count 38) September 29, 2000 to October 13, 2000. (Count 39) October 14, 2000 to November 2, 2000. (Count 40) November 2, 2000 to December 31, 2000. He filed amended CTR's on January 12, 2000 (Count 41), April 19, 2000 (Count 42), and August 16, 2000 (Count 43). When a complaint that Mr. Smith had violated the laws governing campaign financing was filed against him in September 2001, he became motivated to try to correct CTR's that he had filed. He filed amended CTRs on September 24, 2001, October 18, 2001, April 2, 2002, April 24, 2002, and June 5, 2002 (Counts 44-79). He filed a total of 11 CTRs and 39 amendments. The parties stipulated, and it is found as a fact, that all of the original CTRs he filed, and all of the amendments he filed, were incomplete or incorrect. Mr. Smith worked diligently with Ms. Kowalchyk to correct the reports, once he discovered in September 2001, that he had been accused of wrongdoing. Ms. Kowalchyk worked on Mr. Smith's CTRs on her own time. Even Bonnie Jones, the Supervisor of Elections, attempted to correct his CTRs, but all were frustrated in the attempt. His reports were in complete disarray. Ms. Jones suggested in a letter dated October 8, 2001, that Mr. Smith refer this matter to his accountant, believing that an accountant might bring order to the chaotic records. He did not act on this advice. As noted above, Mr. Smith relied on his mother and his brother, and perhaps other family members to prepare accurate reports. Nevertheless, he was the campaign treasurer and he personally signed each CTR beneath bold face type which recited, "It is a first degree misdemeanor for any person to falsify a public record (ss.839.13 F.S.)" and despite the words over the signature line, where he placed his signature, which stated, "I certify that I have examined this report and it is true, correct and complete." It is specifically found that Mr. Smith's submission of incorrect CTRs was not motivated by an intention to hide any wrongdoing. His dereliction was due, rather, to a cavalier attitude with regard to complying with the technical aspects of the laws addressing campaign financing. This attitude continued until a complaint was filed. For reasons more fully explained in the Conclusions of Law, it is found as a fact that Mr. Smith is guilty of Counts 30-43, and not guilty of Counts 44-79. Counts 80-81. Allegations involving Section 106.11(3) prohibiting a candidate from incurring an expense for the purchase of goods or services without sufficient funds on deposit in the primary campaign depository. Although the Order of Probable Cause indicates that Mr. Smith was charged under Section 106.11(4), he should have been charged under Section 106.11(3) the Code in effect during the alleged misconduct. The wording of Section 106.11(4), Florida Statutes (2002), is identical to that found in Section 106.11(3). Because all parties understood the nature of the charge, the citation to a later version of the Florida Statutes does not mean that Mr. Smith may not be found to be in violation of it. Reference to the Statement of Findings reveals that the two counts alleged refer to services provided by Pengraphix, which is a printing house. The CTR for the period November 2, 2000 to December 31, 2000, reported two expenditures made to Pengraphix. One was for $864.49 and the other was for $1844.19, and both were reported on the CTR to have been made December 1, 2000. Subsequently, an amended CTR was filed September 24, 2001, which reported only an expenditure of $864.49 to Pengraphix. On June 5, 2002, in the fifth amendment to the termination CTR, Mr. Smith reported an expenditure on December 1, 2000, of an additional $1844.19, to Pengraphix. It is concluded from these reports that two obligations of $864.49 and $1844.19, for a total of $2708.68, were incurred in favor of Pengraphix. Because the bank records of the campaign account subsequent to December 1, 2000, reflect no expenditure in either individual amount, or in the aggregate amount, it may be concluded that the debt was not paid from the campaign account at all. The bank statement for the campaign treasury for the months of December 2000 and January 2001 never had a balance greater than $613.97 in it, so there was no money available from that source to pay the two expenditures. Mr. Smith addressed the foregoing by stating that there was a disputed bill from Pengraphix in the amount of about $2,600, and that he spent almost three months attempting to reach a settlement. The amount was compromised at $1,850. Mr. Smith further stated that when the printing was ordered the cost was not revealed. It must be concluded that until the amount was liquidated, Mr. Smith could not pay the bill. However, Mr. Smith must have known by December 1, 2000, that the liquidated amounts for the two jobs were $864.49 and $1844.19. At the time the jobs were ordered, which cannot be determined from the evidence, funds sufficient to pay the invoices may have been available. The evidence was insufficient to demonstrate with any certainty that the funds were not available. Accordingly, is not found by clear and convincing evidence that the money due and owing Pengraphix was not available in the campaign treasury at the time the debt was incurred. Accordingly, Mr. Smith is not guilty of Counts 80 and 81. Counts 82-83. Allegations involving Section 106.11(3), requiring a candidate to pay for previously incurred expenses for the purchase of goods and services upon delivery and acceptance of the goods and services. Reference to the Statement of Findings reveals that these two counts address the two orders for printed matter placed at Pengraphix. It is clear that these purchases were not paid at the time of delivery and acceptance. However, the proof adduced at the hearing failed to demonstrate when the amounts were liquidated. It is clear, however, that at some point prior to December 1, 2000, the amounts were known, or at least discoverable, and therefore payable. It is found by clear and convincing evidence that Mr. Smith violated the charged portion of Section 106.11(3). Accordingly, he is guilty of Counts 82-83. Count 84. Allegation involving Section 106.141(1) condemning the failure of a candidate to properly dispose of surplus campaign funds subsequent to being elected. The general election that resulted in Mr. White's victory was held November 7, 2000. The ending balance shown on the campaign treasury bank statement on November 30, 2000, was $613.97. The ending balance shown on the campaign treasury bank statement on December 29, 2000, was $597.97. The ending balance shown on the campaign treasury bank statement on January 31, 2001, was $4.78. The imposition of bank fees on February 9, 2001, resulted in a zero balance in the account that was reflected on the February 2001 statement. The ninetieth day following Mr. Smith's election was February 5, 2001. Though de minimis, a violation of the statute occurred, and he is guilty of Count 84. Counts 85-87. Allegations involving Section 106.141(1) prohibiting a candidate from accepting a contribution subsequent to being elected. Bank records of the campaign treasury indicate that a deposit to the account was made on January 2, 2001, in the amount of $187, and on January 3, 2001, in the amount of $100, almost two months after the election. An amendment to the CTR for the period November 2, 2000 to December 31, 2000, which was filed April 24, 2002, indicates that the candidate loaned the campaign $287. Mr. Smith explained that the two deposits were made so that a campaign debt could be paid. The sum of the two contributions plus the amount remaining in the account, $597.97, totaled $884.97 that was sufficient to cover a check for $864.19, which was, in Mr. Smith's words, ". . .payment of the substantial debt, $864.19." To what substantial debt he refers cannot be determined from the evidence of record but it is within 30 cents of the amount of the smaller of the two Pengraphix amounts reported as expenditures on December 1, 2000. In January 2001, a sum of money remained to be paid to Pengraphix. As noted above, this debt was compromised in the amount of $1,850. Mr. Smith did not have personal funds available to pay that amount, or money in the campaign treasury sufficient to pay that amount, so he prevailed upon his friend, Mr. Murphy, to pay the amount for him, and promised to repay Mr. Murphy with interest. Mr. Murphy did in fact pay Pengraphix $1884.92 to settle the debt owed by Mr. Smith. The difference between $1850 and the $1884.92 actually paid, most likely represents accrued interest. This payment was made, according to the Stipulation, on January 11, 2001. Mr. Smith repaid Mr. Murphy, by check in February 2002 in the amount of $1990. The exact day in February was not written on the date line on the check, but it cleared the bank on February 25, 2002. Whether or not these allegations of Counts 85-87 are supported by the cited statute, will be discussed in the Conclusions of Law, below. Count 88. Allegation involving Section 106.19(1)(a), prohibiting a candidate from accepting a contribution in excess of $500. This count addresses the payment by Mr. Murphy to Pengraphix discussed above. Whether or not the cited statute supports these allegations will be discussed in the Conclusions of Law, below. Count 89. Allegation involving Section 106.19(1)(b), condemning the failure of a candidate to report a contribution. This count addresses the payment by Mr. Murphy to Pengraphix discussed above. The transaction was not reported on any CTR with Mr. Murphy's name connected to it. Whether or not the cited statute supports these allegations will be discussed in the Conclusions of Law, below. Count 90. Allegation involving Section 106.19(1)(c), condemning the failure of a candidate to report a contribution. This count addresses the payment by Mr. Murphy to Pengraphix discussed above. The transaction was not reported on any CTR. Whether or not these allegations are supported by the cited statute will be discussed in the Conclusions of Law, below. Counts 91-94. Allegations involving Section 106.19(1)(d), prohibiting a candidate from making an expenditure prohibited by Chapter 106. These counts address the same facts pertinent to the events discussed in paragraphs 11-15, above. These facts support three violations of Section 106.021(3), as well as the three violations of Section 106.19(1)(d), as alleged. They are, however, multiplicious with three of the allegations recited as Counts 2-4. Mr. Smith's assets. Mr. Smith reported a net worth of $707,609, on his "Full and Public Disclosure of Financial Interests 1999." He testified that as a result of criminal charges and the current litigation, his net worth has decreased since 1999. He currently owns two parcels of real property worth more than $200,000 that is subject to mortgages in an unknown amount. He owns several vehicles including a 1995 Chevrolet Tahoe that he drives, and a new Chevrolet Yukon that his wife drives. He also owns a tow truck that is used in his business. His net worth cannot be determined by the evidence before the Administrative Law Judge. However, it is determined that he is not impecunious.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered which finds that Mr. Smith committed 44 of the violations alleged in the Order of Probable Cause and that he should be assessed a civil penalty of $5,000. DONE AND ENTERED this 25th day of June, 2003, in Tallahassee, Leon County, Florida. HARRY L. HOOPER 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, 2003. COPIES FURNISHED: Robert R. Kimmel, Esquire Kimmel & Batson Post Office Box 12266 Pensacola, Florida 32581-2266 Eric M. Lipman, Esquire Florida Elections Commission 107 West Gaines Street The Collins Building, Suite 224 Tallahassee, Florida 32399-1050 Barbara M. Linthicum, Executive Director Florida Elections Commission 107 West Gaines Street The Collins Building, Suite 224 Tallahassee, Florida 32399-1050 Patsy Ruching, Clerk Florida Elections Commission 107 West Gaines Street Collins Building, Suite 224 Tallahassee, Florida 32399-1050
Findings Of Fact The Respondent, Lydia Miller, ran for election to the Hillsborough County Commission, District 4, in 1992. It was her first campaign for election to public office. She declared her candidacy in September, 1991, and appointed her husband as her campaign treasurer and herself as deputy campaign treasurer. She ran as a Republican and had several Republican opponents in the primary. She did not have the backing of the Republican Party and had difficulty attracting financial support, especially at first. Of necessity, she ran a "grass roots" campaign and spent countless hours going door-to-door in her district asking for support and, when possible, making public appearances. She also tried to capitalize on the "grass roots" nature of her campaign. Trying to emulate a campaign technique that worked for Governor Lawton Chiles, she pledged that she would not accept financial contributions in excess of $100 (versus the $500 statutory maximum) and would not accept financial contributions (or endorsements) from "special interests." To substantiate the strength of her "grass roots" campaign, the Respondent saw value in her campaign treasurer's reports showing as large a number of relatively small contributions from individuals. In all, the Respondent raised less than $14,000. Yet, she was able to survive the first primary, win the second primary, and beat her Democrat opponent in the general election. Cash Not Deposited or Reported The Respondent admitted that she accepted a $20 cash contribution from Irene Herring and put it in her campaign's petty cash without reporting it in her campaign treasurer's reports. Herring made two other cash contributions to the Respondent's campaign- -one in the amount of $20 and another in the amount of $30. Neither contribution was reported. Both contributions were given to Susie Farmer, a campaign worker. Similarly, David Gill contributed between $50 and $100 cash to the Respondent's campaign, but the contribution was not reported. This contribution also was given to Susie Farmer. The Respondent denied specific knowledge of the two other cash contributions from Herring and the cash contribution from Gill. The only evidence which could support a finding that the Respondent knew of them was testimony of Larry Sweat, an aide the Respondent hired after her election but fired three months later. From an evaluation of the testimony of the Respondent and Sweat, taking into account all of the relevant evidence as well as their demeanor and overall credibility, and it is found that Sweat's testimony was not sufficient to overcome the Respondenet's denials by a preponderance of the evidence. By her own admission, however, it would not have been unusual for the Respondent to use small cash contributions (or allow and approve their use) to replenish her campaign's petty cash without reporting them in her campaign treasurer's reports. It certainly is possible that the other two cash contributions from Herring and the cash contribution from Gill were handled in that manner. The Respondent was aware that all contributions had to be deposited in her campaign account and reported in her campaign treasurer's report. Yet, for reasons not fully explained in her testimony, the Respondent also thought that it was permissible to use small cash contributions to replenish her campaign's petty cash. It is possible that the Respondent misread or misunderstood the election campaign financing laws dealing with petty cash and the reporting of expenditures from petty cash. See Conclusions of Law 79 through 81, below. The Respondent certainly was not handling the small cash contributions that way to "beef up" her campaign treasurer's reports. Cash Deposited and Reported But Donor Allegedly Unknown The Respondent's campaign treasurer's reports show the following cash contributions: $100 from Phillip Preston on August 17, 1992 $ 90 from Robert Preston on August 17, 1992 $100 from Kelley Preston on August 22, 1992 Robert, Kelley, and Phillip are the minor children of Allen and Rosina Preston, aged 16, 4, and 2. It is possible but improbable that Robert donated $100 of his own cash to the Respondent's campaign; it is all but impossible that Kelley or Phillip did. The Prestons were supporters of the Respondent and contributors to her campaign. The Respondent's Sun City Center campaign headquarters was in office space donated by Allen Preston. The offices of Preston's business also was in the same building. Allen Preston often visited the campaign headquarters and helped with the campaign, in addition to his financial contributions. Yet, Preston denied donating $290 cash in the names of his children. Preston does not think his wife would have done so without telling him, but his wife did not testify. The Respondent denies any specific knowledge concerning the $290 in cash contributions attributed to the Preston children. But it would not have been unusual for Susie Farmer or other campaign workers to leave cash contributions with "Post-It" notes attached to identify the donors. The campaign treasurer's reports normally would be prepared using the information on the "Post-It" notes. Especially in the days leading up to the three elections, the campaign headquarters became hectic and confused, and it is possible that incorrect information inadvertently was placed on the "Post-It" notes for these cash contributions. When the Respondent saw cash contributions from the Preston children in preparing or reviewing reports, she would not have questioned the accuracy of the information. She would have assumed that the Prestons had made the donations in the names of their children. She did not think there was anything wrong with adults making campaign contributions in the names of their minor children. She denies intentionally misreporting the contributions in order to hide contributions from Allen and Rosina Preston, or their businesses, or artificially to "beef up" the number of small contributions reflected in her campaign treasurer's reports. The evidence was not sufficient to overcome the Respondenet's denials by a preponderance of the evidence. The Respondent's campaign treasurer's reports also show a $25 cash contribution from Evelyn Ackerman on October 14, 1992. The parties stipulated in their Joint Prehearing Stipulation that Ackerman is an elderly woman on a fixed income and that Ackerman denies making the contribution. But the Respondent has a specific recollection that Ackerman offered the contribution, that the Respondent tried to decline in view of Ackerman's meager financial means, and that Ackerman insisted. It is found that the Respondent's testimony outweighs the statements from Ackerman, who has been know to hallucinate and whose memory may not be trustworthy. The Respondent's campaign treasurer's reports also showed a $100 cash contribution from Henry Farmer on October 18, 1992. Henry Farmer denies making the contribution and does not believe that his wife, Susie, would have donated $100 cash in his name without telling him. Susie did not testify, but she was an enthusiastic supporter, campaign worker and fund-raiser for the Respondent's campaign, and it certainly is possible that she donated the cash in her husband's name without his knowing it. Regardless of the actual source of the cash, the Respondent testified to her recollection of seeing a $100 cash contribution with a "Post-It" notes attached indicating that it was from Henry Farmer. She indicated that she had no reason to think it was not a contribution from Susie's husband, and it would not have been unreasonable for the Respondent to believe, without question, that the information on the "Post-It" note was accurate. The evidence was not sufficient to overcome the Respondent's testimony by a preponderance of the evidence. The evidence did not prove that the Respondent knew her campaign treasurer's report of the $100 cash contribution from Henry Farmer was not accurate. The Respondent's campaign treasurer's reports also showed a $100 cash contribution from Marie Schrag on October 18, 1992. Neither she nor her husband made the contributions. The Respondent did not testify to any specific recollection about the Schrag contribution. But Schrag was Allen Preston's bookkeeper and worked in the same building of Preston's where the Respondent's Sun City Center campaign headquarters was. Although she was not an active campaign worker for the Respondent, she did type one letter for the campaign, and her husband stuffed envelopes for the campaign on at least one occasion. In addition, she had been friends with Susie Farmer, one of the Respondent's most successful fund-raiser, for over 20 years. If the Respondent saw a $100 cash contribution with a "Post-It" notes attached indicating that it was from Marie Schrag, she would have had no reason not to believe, without question, that the information on the "Post-It" note was accurate. The evidence did not prove that the Respondent knew her campaign treasurer's report of the $100 cash contribution from Marie Schrag was not accurate. Alleged Business Contributions Allegedly Falsely Reported From Individuals The Respondent's campaign treasurer's reports listed a June 1, 1992, contribution in the amount of $25 from "Phil Boggs, Occupation (if over $100), Boggs Jewelry," when the check was written on the account of Boggs Jewelry, and signed by Phil R. Boggs. The Respondent reasonably did not think there was anything wrong with the way the Boggs contribution was reported. When the Respondent pledged not to take financial contributions or endorsements from "special interests," she did not intend to indicate that she would not accept financial support from any businesses or corporations. (In her mind, "special interests" meant political action committees, not any and all businesses and corporations.) The Respondent does not know Phil Boggs, and Boggs Jewelry had no business before the County Commission during the Respondent's term. The Respondent reasonably did not perceive the Boggs contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Boggs contribution or make it look like it was coming from Boggs, individually, instead of the business, Boggs Jewelry. The Respondent's campaign treasurer's reports listed a contribution on June 2, 1992, in the amount of $25 from "Charles Hostetter, Occupation (if over $100), Fisher Beauty Salon," when the check was written on the account of Fisher's Beauty Salon, and signed by Charles Hostetter. The Respondent reasonably did not think there was anything wrong with the way the Hostetter contribution was reported. The Respondent reasonably did not perceive the Hostetter contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Hostetter contribution or make it look like it was coming from Hostetter, individually, instead of the business, Fisher's Beauty Salon. The Respondent's campaign treasurer's reports listed a contribution on June 22, 1992, in the amount of $25 from "Charles Bingham, Occupation (if over $100), c/o Floral Decor Florist," when the check was written on the account of Floral Decor Florist, and signed by Charles Bingham. The Respondent reasonably did not think there was anything wrong with the way the Bingham contribution was reported. Bingham is a personal friend of the Respondent and personally gave the check to the Respondent. The Respondent reasonably did not perceive the Bingham contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Bingham contribution or make it look like it was coming from Bingham, individually, instead of the business, Floral Decor Florist. The Respondent's campaign treasurer's reports listed a contribution on June 24, 1992, in the amount of $100 from "John Williams Coppes Kitchen, Occupation (if over $100), Owner," when the check was written on the account of Williams Kitchens & Baths, Inc. The Respondent reasonably did not think there was anything wrong with the way the John Williams contribution was reported. The Respondent knows Williams's business as "John Williams Coppes Kitchens," the name on the business's signage. (Coppes is the name of the brand Williams sells.) The Respondent reasonably did not perceive the John Williams contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the John Williams contribution or make it look like it was coming from Williams, individually, instead of the business, whether known as Williams Kitchens & Baths, Inc., or as John Williams Coppes Kitchens. The Respondent's campaign treasurer's reports listed a contribution on August 16, 1992, in the amount of $100 from "Ann Williams, Guys & Dolls," when the check was written on the account of Guys 'N Dolls of Brandon, Inc., and signed by Ann Williams. The Respondent reasonably did not think there was anything wrong with the way the Ann Williams contribution was reported. Ann Williams is the Respondent's regular hairdresser and personally gave the check to the Respondent at the beauty parlor. The Respondent reasonably did not perceive the Ann Williams contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Ann Williams contribution or make it look like it was coming from Ann Williams, individually, instead of the business, Guys 'N Dolls of Brandon, Inc. The Respondent's campaign treasurer's reports listed a contribution on September 12, 1992, in the amount of $50 from "Martha Simmons, Tropical Fish Farms," when the check was written on the account of Gerald Simmons Tropical Fish Farm, and signed by Martha Simmons. The Respondent reasonably did not think there was anything wrong with the way the Simmons contribution was reported. The Simmonses were neighbors of the Farmers. The Respondent reasonably did not perceive the Simmons contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Simmons contribution or make it look like it was coming from Martha Simmons, individually, instead of the business, Gerald Simmons Tropical Fish Farm. The Respondent's campaign treasurer's reports listed a contribution on September 23, 1992, in the amount of $50 from Tommy Brock, when the check was written on the account of Brock Farms, and signed by Tommy Brock. The Respondent reasonably did not think there was anything wrong with the way the Tommy Brock contribution was reported. The Respondent reasonably did not perceive the Brock contribution to have come from a "special interest," and it was not proven that the Respondent was trying to hide the true source of the Brock contribution or make it look like it was coming from Tommy Brock, individually, instead of the business, Brock Farms. The Respondent's campaign treasurer's reports listed a contribution on October 15, 1992, in the amount of $100 from William Stearns, when the check was written on the account of F.E. Stearns Peat Co., Inc., and signed by William Stearns. If the Respondent had carefully compared check to the report, she probably should have known that the Stearns contribution was not reported properly. The check arrived in the mail, and there was no reason to think it was not from the F.E. Stearns Peat Co., Inc. Nonetheless, the Respondent reasonably did not perceive the Stearns contribution to have come from a "special interest," and it was not proven that the Respondent intentionally was trying to hide the true source of the Stearns contribution or make it look like it was coming from Williams Stearns, individually, instead of the business, F.E. Stearns Peat Co., Inc. It just as easily could have been a mistake or oversight. The Respondent's campaign treasurer's reports listed a contribution on October 15, 1992, in the amount of $100 from "William Bishop, c/o L.L. Corporation," when the check was written on the account of Leslie Land Corporation, signed by William Bishop, with the "memo": "William L. Bishop." If she had carefully compared check to the report, the Respondent probably should have known that the Leslie Land Corporation contribution was not reported properly. However, the "memo" on the check indicated "William L. Bishop," and the report gave Bishop's address as "c/o L. L. Corporation." It was not proven that the Respondent intentionally was trying to hide the true source of the Leslie Land Corporation contribution or make it look like it was coming from William Bishop, individually, instead of the business, Leslie Land Corporation. It is just as possible that the intention was to include all of the information on the check for full disclosure and that the initials "L. L." were used instead of the full name of the Leslie Land Corporation by mistake or oversight, or to compress all of the information into the limited space allotted on the report form. The Respondent's campaign treasurer's reports listed a contribution on October 22, 1992, in the amount of $100 from the "Bill Kincaid Company," when the check was written on the account of the Kincaid Company, and signed by William F. Kincaid. The Respondent reasonably did not think there was anything wrong with the way the Kincaid contribution was reported. All the report did was provide the additional information of Kincaid's first name, along with the company name. It was not proven that the Respondent was trying to hide the true source of the Kincaid contribution or make it look like it was coming from Kincaid, individually, instead of from the Kincaid Company. The Respondent also reasonably did not perceive the Kincaid contribution to have come from a "special interest." The Respondent's campaign treasurer's reports listed a contribution on October 29, 1992, in the amount of $50 from Kenneth Wetherington, when the check was written on the account of the Morgan and Wetherington Chiropractic, and signed by Kenneth Wetherington. The Respondent did not think there was anything wrong with the way the Wetherington contribution was reported. She thought that a chiropractor in partnership with other chiropractors acted in his own behalf when making a political contribution, even when writing a partnership check. Although the Respondent probably incorrectly reported this contribution, the Respondent reasonably did not perceive the Wetherington contribution to have come from a "special interest," and it was not proven that the Respondent intentionally was trying to hide the true source of the Wetherington contribution or make it look like it was not coming from the partnership of Morgan and Wetherington Chiropractic. The Respondent's campaign treasurer's reports listed a contribution on October 28, 1992, in the amount of $100 from Paul Rozeman, when the check was written on the account of the McCaw Communications of Florida, Inc., and signed by someone other than Rozeman. (The signature was illegible, and it could not be identified through testimony.) However, the check was delivered by Rozeman, who worked in McCaw's local office, and who introduced himself to the Respondent. Although McCaw Communications is a large corporation, the Respondent was not familiar with it and was willing to assume that the contribution was from Rozeman's company and to decided err on the side of using his name. Obviously, her assumption was incorrect, and the report was in error. In any event, the Respondent probably should have known that the contribution was not reported properly. (See Finding of Fact 36, above.) But the evidence did not prove that the Respondent was lying, and that she actually perceived McCaw Communications to be a "special interest," and intentionally was trying to hide the true source of the contribution and make it look like it was coming from Rozeman, individually, instead of from McCaw Communications. In all, the Respondent's campaign treasurer's reports that were admitted in evidence listed 216 separate contributions. ($3,052 in cash and check contributions and $1615.80 of in-kind contributions would have been listed in earlier reports that were not admitted in evidence.) Of the 216 separate contributions, 31 (aside from the ones discussed in paragraphs 15 through 43, above) unambiguously and properly listed the contributions as coming from corporations, businesses or organizations. Contributions Allegedly Over $100 And Falsely Reported As Several $100 Contributions On or about October 5, 1992, the Respondent's campaign received a $500 check on the account of, and signed by Allen Preston, with explicit instructions to consider it and report it as being a $100 contribution from each of the five family members: Allen; his wife, Rosina; and their three children, Robert, Kelley, and Phillip. On or about September 3, 1992, the Respondent's campaign received a $300 check on the account of Aquarius Water Refinery, Inc., and signed by Joe Gaskill, with explicit instructions to consider it and report it as being a $100 contribution from him, another $100 contribution from his wife, and another $100 contribution from his company, Aquarius Water Refinery, Inc. On or about September 3, 1992, the Respondent's campaign received a $200 check on the account of Care Animal Hospital, Inc., and signed by Richard Kane, a veterinarian and the corporation's president, with explicit instructions to consider it and report it as being one $100 contribution from him and another $100 contribution from his corporation. The Respondent did not specifically request that the Preston, Gaskill and Kane contributions be considered and reported as being several contributions of $100. Preston, Gaskill and Kane all were aware of the Respondent's campaign pledge to limit contributions to $100, and it was their desire and intention not to cause the Respondent to violate the pledge. The Respondent did not think it was improper or illegal or inaccurate to reports the Preston, Gaskill and Kane contributions as requested. It appears that the Petitioner has issued an advisory opinion that contributions in excess of the statutory maximum by check drawn on a joint account only can be divided into smaller contributions from more than one account holder if all of the donors sign the check. (The Petitioner's investigator testified to the existence of such an advisory opinion, but none was admitted in evidence at the hearing. The Petitioner attached to its proposed recommended order a copy of what purports to be its advisory opinion on the subject, designated DE 93-10, but technically the advisory opinion still is not in evidence in this case.) But there is no evidence that the advisory opinion was furnished to the Respondent or that she was aware of it. If the Respondent were aware of the advisory opinion, she should at least have been on notice to inquire whether it was permissible to report the contributions as she did. But it still would not have been clearly impermissible. Allegedly False Termination Report And Improper Disposition of Surplus Funds The deadline for submission of the Respondent's termination campaign treasurer's report was 90 days after the general election, or Monday, February 1, 1993. As the deadline approached, the Respondent reasonably thought she needed two things in order to file the termination report: first, the January, 1993, bank statement on the campaign account; and, second, the resolution of a dispute she had with the phone company (GTE of Florida, Inc., or GTE) about charges on bills she received after having the campaign headquarters phone disconnected. On the weekend before the termination report was due, the Respondent attempted to obtain the bank statement but was told that it just had been put in the mail and could not be regenerated by the bank's computer at that time. The bank personnel advised the Respondent to wait until the statement arrived in the mail. Without the bank statement, the Respondent reasonably could not prepare the termination report before the deadline. She asked officials at the local elections supervisor's office for advice and was told to write a note explaining the reasons why she could not meet the deadline. She wrote a note dated February 1, 1993, stating that she "could not report on the closing of my campaign account until I received the final Banking Statement." It is found that the note was truthful and that she did not have the January, 1993, bank statement at the time she wrote it. Testimony from Larry Sweat to the effect that the Respondent came into her office that day and gave him the bank statement to hide in a drawer is rejected as false or mistaken. The Respondent did not receive the bank statement in the mail until later that week. It is possible, as testified by Sweat, that he and the Respondent had a discussion to the effect that it was to the Respondent's advantage that her termination report would not be available for public scrutiny on the deadline, along with the reports of other candidates (assuming they were filed on time). But it is as likely, or more likely, that Sweat thought of the fortuitous side- benefit of filing late. In any event, it is found that the Respondent did not intentionally file late in order to reap the perceived side-benefit that might have been discussed. It is possible that, when the January, 1993, bank statement was received in the mail, the Respondent brought it into the office and gave it to Sweat to keep in his desk drawer until she was in a position to prepare the termination report. (The dispute with the telephone company still was not resolved.) But it is found that, contrary to Sweat's testimony, the Respondent did not give the bank statement to Sweat to "hide" in his desk drawer. On February 18, 1993, the Respondent filed the termination report. It showed a January 6, 1993, check on the campaign account (check number 1070) in the amount of $88.45, made out to cash. The check memo stated, "petty cash reimbursement," but the report clarified that the cash actually was paid to the Respondent and two others for the purchase of party goods for the celebration of the Respondent's victory in the general election. The February 18, 1993, termination report also showed that a February 16, 1993, check for $48.95 to GTE of Florida (check number 1072) "on account, balance due in dispute" was written on the campaign account on the day of the report. The report also showed a zero balance in the account. Check number 1072 never was presented to the bank, and its whereabouts is not known. The Petitioner contends that check number 1072 and the disputed telephone bill were fabrications to cover the improper disbursement of $48.95 of surplus to the Respondent. But the check just as easily could have been lost or, for some reason, simply not presented to the bank for payment. Besides, as reflected in the following Findings of Fact, the evidence was clear both that there was in fact a dispute regarding the GTE bill and that the $48.95 was not disbursed to the Respondent in February, 1993. The Petitioner presented the GTE telephone records for the Respondent's campaign office telephone account in an apparent attempt to prove that, as of November 10, 1992, there was only a $1.02 balance on the account and that GTE was not pursuing collection of the $1.02. But, while only a $1.02 balance appeared on the campaign telephone account as of November 10, 1992, approximately $154.68 was transferred at that time from the campaign telephone account to the Respondent's personal home telephone account. It was the transferred charges that the Respondent was disputing. For reasons not apparent from the record, on or about December 10, 1992, GTE reduced the balance transferred to the Respondent's home phone bill to $131.37. Apparently, GTE further reduced the transferred balance to $84.09 on December 19, 1992; again, no explanation for the further reduction is apparent. The $84.09 charge remained on the GTE records at least until an entry on one of the records indicating that GTE wrote it off as uncollectible on or about February 12, 1993. Although the records include the notation dated February 12, 1993, indicating that GTE was writing off the $84.09 charge as being uncollectible, the Petitioner did not call a witness from GTE to explain the GTE records, and the records presented at the hearing do not go beyond the February 12, 1993, entry. It is not clear from the records that GTE stopped soliciting payment of the charge at that time. On May 12, 1993, the Respondent filed an amended termination report showing a March 30, 1993, disbursement to the Respondent in the amount of $36.95 for reimbursement for partial payment of the campaign's GTE bill. It also attached a copy of the March 31, 1993, bank statement on the campaign account showing a beginning balance as of March 1, 1993, in the amount of $36.95 and one withdrawal/debit in the same amount during the month, for a zero balance at the end of the month. The Respondent testified that she paid the $84.09 charge in June, 1993. Unfortunately, the Respondent's testimony was not corroborated by any records. But the GTE records presented by the Petitioner did not go beyond February 12, 1993, and without testimony from a witness from GTE, they were insufficient to disprove the Respondent's contention that she paid the charge in June, 1993. If the June, 1993, payment date is correct, the amended termination report filed on or about May 12, 1993, would indicate that the Respondent disbursed the $36.95 balance of the campaign account (representing the $48.95 she thought she had paid to GTE on or about February 16, 1993, less a $12 bank service charge for February, 1993) to herself on or about March 30, 1993, believing that there still was a disputed $84.09 charge to GTE, and that she held the money pending resolution of the disputed charge. When she paid the GTE charge, she considered the March 30, 1993, disbursement to herself to be reimbursement for her payment of the GTE charge. The Respondent knew or should have known that it was improper to disburse surplus from the campaign account to herself, except to reimburse her own contributions to her campaign. But, according to the Respondent's testimony, she did not consider the $36.95 payment to herself to be "surplus" since she considered there to be an outstanding disputed liability to GTE.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Elections Commission enter a final order dismissing the charges against the Respondent, Lydia Miller. RECOMMENDED this 6th day of April, 1995, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 6th day of April, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-6612 To comply with the requirements of Section 120.59(2), Fla. Stat. (1993), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. 1. First sentence, accepted but subordinate and unnecessary. The rest is conclusion of law. 2.-3. Last two sentences, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Last two sentences, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. Rejected as not proven. (Rather, she complied with the donors' instructions as to the source of the donations and how to report them.) First sentence, rejected as argument. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven that the Respondent willfully filed false reports. As to Ackerman, rejected as not proven that the report was inaccurate. Otherwise, accepted and incorporated. First sentence, rejected as not proven that he admitted his wife did not make the contribution. (He said it was possible that she made it but he does not think she did.) Second sentence, rejected as not proven as to Ackerman but otherwise, accepted and incorporated. Third sentence, rejected as not proven that she said Suzie Farmer was responsible; the Respondent admitted to handling the Ackerman contribution and testified that said that someone, quite possibly Farmer, attached an explanatory "Post-It" note to the other cash contributions. Last sentence, rejected as not proven. Third, fifth and last sentences, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Rejected as not proven that the Respondent willfully made false reports. Otherwise, accepted and incorporated. First, sixth penultimate and ultimate sentences, accepted but subordinate and unnecessary. The rest is rejected as not proven. (A review shows that she usually followed Barr's advice although not in each and every case.) Penultimate sentence, rejected as not proven as to petty cash. Otherwise, accepted and incorporated. Rejected as not proven. Last sentence, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. Third sentence, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Penultimate and ultimate sentences, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. First and last sentences, ejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. First, sixth, seventh and eighth sentences, rejected as not proven. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Last sentence, rejected as not proven as to petty cash. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Respondent's Proposed Findings of Fact. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary or argument. Third paragraph, fourth sentence (that the small size of the individual alleged "masked" cash donations makes the allegation "absurd"), rejected as contrary to the greater weight of the evidence. (The point of the Petitioner's argument that a single fairly large cash contribution--which could have been in addition to reported contributions--could have been "masked" by fabricating many small cash contribution.) Otherwise, accepted and incorporated to the extent not subordinate or unnecessary or argument. Second paragraph, first sentence (that the dispute concerned check #1072), rejected as contrary to the greater weight of the evidence. Third paragraph, first sentence, rejected in part (omission of January, 1993, bank statement as a cause of initial delay) as contrary to the greater weight of the evidence and in part (the Respondent's first campaign and the amounts involved) as irrelevant on the issue whether she willfully violated the law. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary or argument. COPIES FURNISHED: David R. Westcott, Esquire Assistant General Counsel Department of State, Division of Elections The Capitol, Room 2002 Tallahassee, Florida 32399-0250 Ralph C. Stoddard, Esquire Hampton, Stoddard, Griffin & Runnells 915 Oakfield Drive, Suite F Brandon, Florida 33511 Carlos Alvarez, Chairman Florida Elections Commission Room 1802, The Capitol Tallahassee, FL 32399-0250
The Issue The issues to be resolved in this proceeding concern whether the Respondent willfully violated Section 106.07(5), Florida Statutes, by filing a campaign treasurer's report which was allegedly incorrect, false or incomplete, and whether the Petitioner agency had jurisdiction to proceed against the Respondent.
Findings Of Fact The Respondent, Catherine King, was Clerk of the Circuit Court in Walton County, Florida, from her first elected term of office beginning January 1, 1981, continuously until December 31, 1996, when she was deposed in an election. The Respondent is a member of the Democratic party and ran for re-election for the office of Clerk of the Court in the 1996 elections. She was opposed by one Newton Peters in the Democratic party primary. On August 29, 1996, a political advertisement supporting the Respondent appeared in the DeFuniak Herald newspaper. Photographs and comments of thirteen employees of the clerk's office appeared in that advertisement in support of the Respondent. A Mr. Harry Riley saw that advertisement in the newspaper and accosted the Respondent at two separate political functions concerning the content and import of the newspaper advertisement, as he perceived it. He told the Respondent that he intended filing a complaint against her based on this advertisement. Mr. Riley apparently has a penchant for filing numerous complaints against public officials in Walton County, all of whom are members of the Democratic party. Mr. Riley is a Republican. He did not express any complaint or concern to the Respondent about any matter other than the advertisement in question. On September 2, 1996, Mr. Riley indeed filed a Sworn Complaint against the Respondent with the Florida Elections Commission, the Petitioner, and a similar complaint with the Florida Ethics Commission. In the complaints he alleged that the employees whose photographs and comments appeared in the August 29, 1996 political advertisement in the newspaper had been coerced into participating in the advertisement. His complaint was investigated by both commissions and both the Florida Ethics Commission and the Petitioner, the Florida Elections Commission, found his complaint to be unfounded. In fact, all of the evidence showed that the employees whose photographs and comments were used in the advertisement participated freely and voluntarily and that Mr. Riley never spoke to any of them concerning their participation in the advertisement. On October 7, 1996, Mr. Riley sent an un-sworn letter to the Petitioner agency in which he referenced the Respondent's campaign treasurer's report of July 1, 1996 through July 26, 1996. He suggested that that report might contain a violation of campaign finance laws. The issue raised in this report was the reporting of an "in-kind contribution" of T-shirts. Prior to sending this letter to the Petitioner, Mr. Riley had not spoken to any persons about their involvement in the production, purchase or sale of the T-shirts, nor the circumstances in which it was done. He had not spoken with the Respondent even to voice a complaint about that activity, nor to any individual who participated in the concept of purchase of campaign T-shirts or their production. Mr. Riley, nor any other person, has ever filed any sworn complaint with the Petitioner agency concerning any campaign treasurer's report filed by the Respondent or the Respondent's campaign treasurer. The specific item or items in the campaign treasurer's report at issue because of Mr. Riley's un-sworn letter to the commission involved the reporting of $562.14, for payment for campaign T-shirts and another $71.16, for additional campaign shirts. All the evidence is clear and consistent to the effect that a group of supervisors in the Clerk of Court's office, including Martha Ingle, Janice Anderson, Cindy Reddick and Louise Pippen, had a meeting in which they discussed ways to assist in the Respondent's campaign. They had seen individuals wearing T- shirts supportive of other candidates at political rallies and concluded among themselves that it would be a good idea for their group to show their support for the Respondent by obtaining such T-shirts. Janice Anderson volunteered to follow-up on the concept by contacting a silk screen T-shirt production shop near her residence. The Respondent did not attend that meeting of supervisors concerning the T-shirt issue and had no role in the conceptualization or acquisition of the T-shirts, nor the circumstances under which they were acquired. In fact, Janice Anderson went to James King Sr. of Westville, Florida (no relation to the Respondent), and ordered the T-shirts. Mr. King then billed Ms. Anderson $562.14 for the T-shirts. Ms. Anderson subsequently ordered several more shirts from Mr. King which were of a different type, and Mr. King billed her $71.16, for these shirts. The Respondent was unaware at the time of either of the shirt orders, or the whole concept. The T-shirts were ultimately delivered to the Walton County Courthouse. Employees were advised by Ms. Anderson, or Martha Ingle that they were there and that the employees could pick up their T-shirts. Ms. Anderson collected the money from those employees who wished to purchase T-shirts. The Respondent had no involvement in the ordering, receiving, selling, or payment for any of the T-shirts. The Respondent neither collected nor received any money for T-shirts. The Respondent did not sell any of her employees a shirt or T-shirt during her re-election campaign in 1996. After the supervisors ordered, received, paid for and distributed the T-shirts for those employees who wished to purchase them, it became apparent to them that they would have to report their activity in some manner pursuant to the provisions of Chapter 106, Florida Statutes. These employees approached the Respondent concerning their belief that their activity needed to be reported. The Respondent told the employees she would report the T-shirts on her campaign treasurer's report form. When she filled out her treasurer's report form (exhibit 3), she first listed the amount Janice Anderson collected, the $562.14, as cash and showed a corresponding expenditure to King Enterprises, the maker of the T-shirts. Respondent was uncertain that this was the correct way to report the item, however, because she had had no involvement in the T-shirts being ordered, paid for or sold and had never actually received the $562.14, as cash in her campaign. Additionally, she had never had any situation arise before similar to this one in any earlier election she was involved in. Because of this she sought the advice of the Supervisor of Elections, Miss Nellie Thompson, concerning how to properly account for and report the T-shirts effort. The Respondent knew that Miss Thompson had been Supervisor of Elections for fourteen years and felt that she had the knowledge and expertise to advise her if she had entered these items on her campaign treasurer's report correctly. The Respondent went to Miss Thompson's office shortly after lunch on August 22, 1996, showed Miss Thompson the report she had prepared and explained what the employees in the clerk's office had done with respect to the issue of T-shirts. Near the end of that day Miss Thompson called the Respondent who returned to Miss Thompson's office. Miss Thompson advised the Respondent to strike through the letters "CAS" (meaning cash) in column (9) of "itemized contributions" and insert "T-shirts" in column (10). She also advised the Respondent to strike through "King Enterprises" and its address in column (7) of itemized expenditures. The Respondent then suggested to Miss Thompson that she would take her report back upstairs to her office and rewrite it. Miss Thompson told her to just mark through it and leave it like it was. Miss Thompson concedes that her memory of the conversation with the Respondent and the sequence of events concerning submittal of the report, when it was "stamped in" and when the corrections or adjustments to the report were done at her suggestion by the Respondent is unclear. She believes that she did not talk to the Respondent until after 4:18 o'clock that afternoon because the report shows, according to Miss Thompson's testimony, that it was stamped in at 4 o'clock, and that such reports are always stamped in immediately upon their receipt. She professed to not have any recollection of the nature and time of any conversation had with Miss King, the Respondent. The Respondent, on the other hand, appeared to have a clear memory of events that day surrounding her contact and communication with Miss Thompson and testified in a clear, logical, forthright fashion about them. The Respondent's testimony was not contradicted by any other evidence and by her own admission, Miss Thompson's recollection of events that day is either non-existent or not clear. Accordingly, the Respondent's testimony in these particulars is fully credited and accepted in making the foregoing Findings of Fact. It can thus be inferred that the fact that the document in question was stamped as received after 4:00 p.m., that day could just as easily have resulted from the document not being considered "filed" and not "stamped in" until Miss Thompson's suggested adjustments had been made. It can easily be inferred that when the Respondent made the change in Miss Thompson's presence and then handed the report back to her that it would have logically been then stamped as filed in final form. The evidence is clear and uncontradicted that the Respondent never intended to submit an inaccurate or incomplete report nor did she intend to submit a false report. There is no evidence to show that the Respondent willfully submitted an inaccurate, incomplete or false report. On the contrary, the Respondent clearly intended to disclose all facts concerning her campaign finances and events, for the time period to which the report related. In fact she did fully disclose them in terms of reporting the T-shirts on her report form and the value of the campaign contribution they represented. Even if the report is technically incorrect for the Respondent's failure to itemize an individual dollar amount per T-shirt per employee contributing that amount instead of simply giving the total amount involved in the T-shirt "in kind contribution" there was no intent to submit a false, inaccurate or misleading report and the Respondent did not willfully do so. The Respondent did not report the expenditure of $71.16, for the collared campaign shirts because she had no knowledge of that expenditure. She could not have reported the expenditure when she was unaware that it had occurred. There was no evidence adduced to indicate that the Respondent intended to evade, avoid or conceal any campaign contribution or expenditure. No evidence was offered to say that she intended to submit an inaccurate, false or incomplete report and all of the evidence shows that she made an extra effort to be sure that she reported the T-shirt situation correctly by consulting with the Walton County Supervisor of Elections before she filed the report. In conducting its investigation, the Petitioner simply relied upon phone calls to several employees of the clerk's office, Miss Thompson and James King, Sr., the maker of the shirts, by a commission representative. That person, Ms Fuchs, never conversed or attempted to converse with any witness in person and never conversed with the Respondent or, for instance, the Respondent's husband at all. She never conferred with a number of employees who had purchased the T-shirts. In an investigation involving a purported violation of a statute involving the element of willfulness and intent on the part of such a Respondent, an interview of the Respondent and persons who might best be able to give information relevant to her intent underlying the submittal of such a campaign treasurer's report would seem to be well-advised. Such was not done, however. Moreover, the Petitioner never dispatched an investigator or any other officer or agent of the Petitioner to Walton County to conduct an investigation, including conversations with other employees and persons who might have knowledge of this situation, as the Florida Ethics Commission had done in its own investigation. Hence the investigation was conducted in a cursory fashion and facts revealed by the testimony and evidence adduced at the formal hearing were unknown to the Petitioner but could have been known to it had it more thoroughly investigated the case before issuing the Statement of Findings. There is a substantial likelihood that if a more thorough investigation had been conducted by the Petitioner, that probable cause would not have been found, as with the case of the complaint against the Respondent which Mr. Riley had filed with the Florida Ethics Commission and which was determined by it and by the Elections Commission to be unfounded. The testimony presented in this case establishes that the Respondent is a truthful and honest person. Her testimony which was largely uncontradicted by any other evidence, is therefore fully credited and accepted in making the foregoing Findings of Fact.
Findings Of Fact Bernard M. Tully, M.D. served by mail his Motion to Tax Attorney's Fees and Costs pursuant to Chapter 57, Florida Statutes, on May 19, 1987; same was filed with the Division of Administrative Hearings on May 21, 1987 and was assigned DOAH Case No. 87-2265F. This instant cause is a fee and costs case pursuant to Chapter 57, Florida Statutes, arising out of Department of Professional Regulation, Board of Medical Examiners v. Bernard M. Tully, M.D.; DOAH Case No. 85-3175. The Department of Professional Regulation has moved to dismiss Tully's Motion to Tax Attorney's and Costs, (hereafter, "Fees and Costs Petition") upon allegations that the claim was not filed in a timely manner pursuant to Section 57.111(4)(b)2, Florida Statutes, and upon allegations that the Fees and Costs Petition did not comply with the requirements of Section 57.111(4)(b), Florida Statutes, in that the claimant had not submitted an itemized affidavit of the nature and extent of the services rendered as well as the costs incurred. A Voluntary Dismissal was served by mail by Petitioner Department of Professional Regulation in DOAH Case No. 85-3175 on March 6, 1987, and filed with the Division of Administrative Hearings on March 10, 1987. The Order closing the Division file in that case was entered March 18, 1987, but is largely superfluous since a Voluntary Dismissal by the party bearing the burden of proof dismisses a cause by operation of law as of the date of filing of the Voluntary Dismissal. Tully's Fees and Costs Petition was served (May 19, 1987) and filed (May 21, 1987) well beyond the 60 day timeframe (May 11, 1987) provided in Section 57.111(4)(b)2, Florida Statutes, for the filing of such claims. Tully's Fees and Costs Petition attached schedules itemizing costs incurred and pleadings filed in DOAH Case No. 85-3175. The Petition was not verified and no affidavits are attached. In these respects, the Fees and Costs Petition failed to comply with Section 57.111(4)(b)1, Florida Statutes, and Rule 22I-6.35, Florida Administrative Code. Neither does the Fees and Costs Petition or any accompanying affidavit allege whether or not Tully requests an evidentiary hearing; that he is a small business party; where his domicile and principal office are located; how many employees he has; whether or not he is a sole proprietor of an unincorporated business, and, if so, whether or not his net worth exceeds $2,000,000; whether or not he operates as a partnership or corporation i.e. professional practice, and, if so, whether or not the net worth exceeds $2,000,000; whether the agency's actions were substantially unjustified; and whether or not circumstances exist that would make the award unjust; or whether or not the agency was a nominal party only. There were also no documents upon which the claim was predicated attached to the Fees and Costs Petition. in these respects, the Petition failed to comply with virtually all of Section 57.111(4)(b), Florida Statutes, and Rule 22I-6.035(1)(2), and (3), Florida Administrative Code. Tully timely filed a Response to Order to Show Cause wherein he acknowledged as true and accurate the dates as found in Finding of Fact 4, supra. Moreover, his Response concedes that pursuant to Section 57.111(4)(b)2, Florida Statutes, the application for an award of attorney's fees must be made within 60 days after the date that a small business party becomes a prevailing small business party, but his Response asserts that nothing in the applicable statute provides that an application for costs must be made within 60 days, and therefore at least his application for costs must be deemed timely. The Response further sets out an itemization of costs incurred and is sworn to by Tully's attorney of record. No leave to amend the Petition was granted by the Order to Show Cause.
The Issue Were the procedures followed by the Department of Labor and Employment Security (DLES) in evaluating the proposals for Diversity Training fraudulent, illegal or arbitrary?
Findings Of Fact In January 1994, the Department issued a request for proposals to provide diversity training. The Petitioners, Hallas and Lyca, and the Intervenor, Davis, all submitted proposals to DLES for evaluation. Intervenor, J. Davis and Associates represented by Julius Davis its principal officer, had presented proposals and bids earlier on previous Request for Proposals, and had complained informally to the Department about the procedures used which he had identified as unfair and potentially illegal. The Department posted the scores of its evaluation of the proposals and awarded the contract to New Day. Gail Hallas discovered that the scoring of the various elements of the proposals was not in accord with values established in the RFP. She also determined there were errors in the totalling of the scores in Hallas' evaluation. She brought this to the attention of Barbara Chance who was the procurement chief for the contract. Although Ms. Chance was initially incredulous, DLES determined there were errors, reevaluated the proposals and reposted the results. Hallas and Lyca both filed timely protests of the Department's conduct in evaluating the proposals and awarding the contract. The diversity training project manager was Aaron Weeks. Mr. Weeks participated in the conference held by the Department to present the RFP and answer questions. The daughter of Geraldine Thompson, the president of New Day which was awarded the contract, is or was engaged to Aaron Weeks. This relationship was made known previously to the contracting and procurement representative of DLES by Julius Davis, the Intervenor, and was the subject of articles in the local paper. Hallas also introduced a report of the Inspector General which brought this matter to the attention of the DLES. New Day included a portion of a letter from the Secretary of Labor on Department letterhead which was a testimonial about New Day's performance on prior contracts. When the evaluators reevaluated the proposals using the scale published in the RFP, the scores of evaluators Berryman and Branton differed inexplicably from their original evaluations, and were not a mathematical interpolation of the original scores. See Petitioner's Exhibit V, which is attached* and made a part of this order. *NOTE: Exhibits V is not a part of this ACCESS document but is available for review in the Division's Clerk Office. Lyca was the second lowest qualified bidder on the project. Lyca was an experienced diversity trainer and had experience in bidding for such projects. As part of its post bid process, Lyca sought certain information to which it was entitled to refine and improve its bidding/proposal process. Lyca was unable to obtain easily information generally provided to bidders. Hallas did the same thing and met with the same or similar impediments. When Lyca and Hallas sought to protest the award, they both got erroneous information from representatives of DLES and were unable to get appropriate information about filing a protest. Hallas accidently discovered the second posting and was able to timely file its protest. Ms. Carter's review of the evaluations forms of her proposal indicated that she was not a minority business enterprise. This was a scored point of evaluation. The forms did not indicate whether the evaluators had considered whether a business was a minority business enterprise. Evaluation of responses appeared to be based upon evaluation sheets and not on criteria in the RFP. There were numerous transpositions and similar arithmetic errors made by the evaluators. None of the errors inured to the benefit of the Petitioner Hallas. Lyca lost revenues and had expenses in filing the RFP. Hallas submitted a detailed proposal containing 111 pages. Her staff represented all areas of diversity, racial, gender, sexual orientation, disability and age. The RFP reflected that diversity of trainers was to be considered, however, Hallas scored lower than New Day which had only racial and gender diversity differences. The reevaluation was suppose to be conducted on the same proposals using the same criteria. Only the number of points assigned each element changed. Gail Hallas obtained copies of the evaluator's first evaluations and their reevaluations, and prepared an extract of their scores comparing the results. See Petitioner's Exhibit V, attached. This extract revealed that three of the evaluators made a mathematical conversion of their first scores to arrive at their second scores, one without error and the other two with minor errors. The evaluations of Berryman and Branton were significantly different on the reevaluation. A review of Exhibit V reveals, for example, that on the second evaluation, Branton evaluated Davis, Human X, and L.O. Wilson as having a total of 35, when Davis and Human X had 40 and L.O. Wilson had a 45 on the first evaluation. On the other hand, the scores for Hallas and Lyca remained almost identical: 27 vs. 29 and 67 vs. 67 respectively. More importantly, Branton's evaluation of Hallas on both occasions was much lower than the rating of the other evaluators (27 and 29), less than one half of score given Lyca (67) by Branton. While this may appear good for Lyca, it virtually eliminated Hallas from consideration. However, Berryman, whose scores of all the proposals were markedly lower than the other evaluators, scored Lyca as her third highest, but so low (28) as to eliminate Lyca. Only New Day received high scores from all the evaluators in both evaluations. All of the other competitors received at least one very low score, which effectively eliminated them from consideration, and the single low scores given by to Lyca and Hallas respectively by Berryman and Branton were inconsistent with their other assessments as indicated above. This technique had been used previously to insure that awards went to New Day, and had been the cause of Davis' earlier informal protest to the Department.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED that: The subject contract not be awarded to New Day, The contract not be awarded to the next highest bidder which was Lyca because the manner in which the proposals were evaluated was tainted, and That prior to reinstituting the RFP, the process be sanitized and insulated from persons having any conflicting interests regarding this RFP and its evaluation. DONE and ENTERED this 19th day of July, 1994, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of July, 1994. APPENDIX CASE NO. 94-2354BID Petitioners' proposed findings were read and considered. The following list indicated which findings were adopted, and which were rejected and why: Paragraphs 1 through 6 Adopted Paragraph 7 Rejected as preliminary statement. Respondent's proposed findings were read and considered. The following list indicated which findings were adopted, and which were rejected and why: Paragraphs 1 through 4 Adopted. COPIES FURNISHED: Lyca Associates, Inc. Lynda V. Carter, President Suite B-6 4403 Vineland Road Orlando, FL 32811 The Hallas Group Gail Hallas, Owner 6822 22nd Avenue N, Suite 329 St. Petersburg, FL 33710 Mr. Julius Davis J. Davis and Associates, Inc. Human Resources Management Consultants 2371 Sunderland Avenue, Suite 4 Wellington, Florida 33414 Edward A. Dion, General Counsel Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, S.E. Tallahassee, FL 32399-2189 and Carolyn Davis Cummings, Esquire Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, S.E. Tallahassee, FL 32399-2189 Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, FL 32308
The Issue Whether Petitioners violated provisions of Chapter 106, Florida Statutes, as alleged in the Order of Probable Cause filed August 23, 2002.
Findings Of Fact Chapters 97 through 106, Florida Statutes, comprise the Florida Election Code (Code). Pursuant to the Code, the Commission is empowered specifically to enforce the provisions of Chapters 104 and 106, Florida Statutes. Mary McCarty was elected to the City Commission of Delray Beach, Florida in 1987. She was elected to the Palm Beach County Commission in 1990. She has been returned to that office in each subsequent election and she is currently a member of the Palm Beach County Commission. In November of 2002, she was elected to her fourth term as Chairman of the Palm Beach County Republican Executive Committee. The Committee to Take Back Our Judiciary was an unincorporated entity. It was a de facto committee, which, for reasons addressed herein, did not ever become a "political committee" as defined in Section 106.011(1), Florida Statutes. Ms. McCarty has run for public office six times and was successful on each occasion. Prior to each election she received from the Florida Secretary of State a handbook addressing campaign financing. She is familiar with the statutes and rules with regard to financing an individual campaign. Sometime before the Thanksgiving Holiday in 2000, Ms. McCarty received a telephone call from Roger Stone of Washington, D.C. Ms. McCarty knew Mr. Stone, who at various times had been a campaign operative for Senator Arlen Specter, had been involved in opposing the sugar tax amendment in Florida, and had been a consultant to Donald Trump, during his short-lived presidential campaign. Ms. McCarty was aware that Mr. Stone and Craig Snyder were principals of IKON Public Affairs, a business entity with offices in Washington, D.C., and Miami Beach, Florida. Roger Stone informed Ms. McCarty that he was forming a committee to raise funds for the purpose of taking action against the Florida Supreme Court. Mr. Stone stated that he had formed The Committee and that he wished for her to be the chairperson. She did not initially commit to undertake this responsibility. A few days after the conversation with Mr. Stone, Ms. McCarty received a facsimile draft of a fundraising letter that The Committee proposed to post. The facsimile was sent by Roger Stone from Washington. She made some suggested changes and returned it to the address in Washington from whence it came. Subsequently, she had a telephone conversation with Lora Lynn Jones of Unique Graphics and Design in Alexandria, Virginia. Ms. Jones was in the business of making mass mailings. Ms. McCarty told Ms. Jones that her name could be used on the fundraising letter although Ms. McCarty did not sign the fundraising letter. Nevertheless, the document was mailed to a large number of people and it bore the printed name, "Mary McCarty, Palm Beach County Commissioner." The first time Ms. McCarty saw The Committee's finished product it was in the form of a "Telepost, high priority communication." She first saw the "Telepost" when it arrived in her mailbox in early December 2000. The wording of the letter was different from the draft Ms. McCarty had seen earlier. Unlike the draft, it targeted specific justices on the Florida Supreme Court. It cannot be determined from the evidence the date the December "Telepost" was posted, but it was posted before Ms. McCarty determined that she had become Chairperson of The Committee. The "Telepost," dated December 2000, solicited funds so that The Committee could, ". . . send a clear message to the Florida Supreme Court that we will not tolerate their efforts to highjack the Presidential election for Al Gore." Later in December 2000, Mr. Stone called Ms. McCarthy and told her that she should be the chairman of The Committee. She agreed. Ms. McCarty signed a "Statement of Organization of Political Committee," which was dated December 19, 2000. This is a form provided by the Division of Elections, which, if properly completed and filed, officially establishes a political committee. She also signed a form entitled "Appointment of Campaign Treasurer and Designation of Campaign Depository for Political Committee." Mr. Stone, or his operatives, provided these forms to Ms. McCarty. She signed them and mailed them to Mr. Stone's address in Washington, D.C., which was the headquarters of the IKON Public Affairs Group. The "Statement of Organization of Political Committee," dated December 19, 2000, was received by the Division of Elections on December 26, 2000. It listed Amber McWhorter as Treasurer. Inez Williams, who works in the document section of the Division of Elections, processed the form. When Ms. Williams received it, she recognized that the form was incomplete because on the face of it the reader could not determine if the committee was an "issue" committee, or a "candidate" committee. Ms. Williams noted that the mailing address on the form dated December 19, 2000, was "c/o VisionMedia," 1680 Michigan Avenue, Suite 900, Miami Beach, Florida. Ms. Williams found a telephone number for that business and dialed it, on December 27, 2000. No one answered so she left a message on VisionMedia's answering machine. In addition to the telephone call, Ms. Williams prepared a letter with the address of, "Mary McCarty, Chairperson, The Committee to Take Back Our Judiciary, 1348 Washington Avenue, Suite 177, Miami Beach, Florida." This letter was dated December 27, 2000, and was signed by Connie A. Evans, Chief, Bureau of Election Records. This is the address found on the "Appointment of Campaign Treasurer and Designation of Campaign Depository for Political Committee," which had also been received by the Division of Elections on December 26, 2000. The letter signed by Ms. Evans on December 27, 2001, informed Ms. McCarty that items 3 and 7 needed to be "rephrased." It further informed Ms. McCarty, that upon receipt of the requested information the committee would be included on the "active" list. The message recorded on The Committee answering machine on December 27, 2001, generated a response from a person who identified himself as Mr. Snyder, on January 2, 2002. Mr. Snyder engaged in a telephone conversation with Ms. Williams. Ms. Williams explained to Mr. Snyder that items 3, 5, 7, and 8, would have to be completed properly as a condition of The Committee's being recognized. A letter dated January 4, 2001, bearing the letterhead of "The Committee to Take Back Our Judiciary," and signed by Amber Allman McWhorter, was faxed to the Division of Elections on January 4, 2001, and received that date. This letter referenced the telephone call between Ms. Williams and Craig Snyder, who was further identified as The Committee's attorney. The letter stated that a corrected Statement of Organization of Political Committee, and a designation of treasurer, would be forwarded to the Division of Elections within the next 72 hours. On January 8, 2001, a filing was received by the Division of Elections that was deemed by the Division to be complete. Subsequently, in a letter dated January 10, 2001, and signed by Connie Evans, informed Ms. McCarty and The Committee that the Statement of Organization and the Appointment of Campaign Treasurer and Designation of Campaign Depository for The Committee complied with the Division of Elections' requirements. The Committee was provided with Identification No. 34261. Posted with the letter was a copy of the "2000 Handbook for Committees," which is published by the Division of Elections. The letter and the handbook were sent to The Committee operation in Miami, not Ms. McCarty, and no one in the Miami Beach operation ever forwarded it to her. Connie Evans, Bureau Chief of Election Records, the entity that supervises the filing of the forms mentioned above, believes that due to a court ruling in Florida Right to Life v. Mortham, Case No. 98-770-Civ-Orl-19A, the language in Section 106.011, Florida Statutes, which defines a "political committee," has been found to be unconstitutional. She believes that a political committee is not required to register with the Division of Elections but that if a committee does register, it must abide by the statutes regulating political committees. Ms. Evans has informed numerous entities of this interpretation of the law in letters. The efficacy of that case, and Ms. Evans' interpretation of it, will be discussed further in the Conclusions of Law, below. Ms. McCarty signed a "Campaign Treasurer's Report Summary"(CTR-Q1) which was filed with the Division of Elections on April 10, 2001. This addressed the period January 1, 2001 until March 31, 2001. Under the certification section of the CTR-Q1 are the words, "It is a first degree misdemeanor for any person to falsify a public record (ss. 839.13, F.S.)." Immediately above her signature are the words, "I certify that I have examined this report and it is true, correct, and complete." The box found immediately above and to the right of her signature, was checked to signify that Ms. McCarty was the chairperson of The Committee. According to Ms. Evans, The Division of Elections regulates several kinds of committees. There are "issues" committees, "candidate" committees," "party executive" committees, and "committees of continuing existence." Depending on the nature of the committee, different rules apply. The Committee was a "candidate" committee so the contribution regulations of a political candidate applied to the committee. That meant that the maximum contribution per person was $500. The CTR-Q1 indicated in the "Itemized Contributions Section" that seven people contributed $1,000 and one person contributed $2,000. Walter Hunter, Neda Korich, Arthur Allen, William Shutze, Caroline Ireland, Henry Allen, and Honore Wansler, contributed $1,000, each. Robert Morgan contributed $2,000. The amounts in excess of $500 were eventually returned to the $1,000 contributors, except that in the case of Henry Allen, the refund was made to Allen Investment corporation. The sum of $1,500 was returned to Robert Morgan, the $2,000 contributor, but the CTR-Q1 listed only a $500 repayment. Therefore, the CTR-Q1 in its expenditures section was incorrect with regard to Mr. Morgan. The CTR-Q1 also listed in the "Itemized Contributions Section" the receipt, on January 2, 2001, of $150,000 for "LOA/INK extension of credit for direct mail services." These words may be interpreted to mean that a loan in the form of an "in kind" service had been provided. This was reported under the name of Creative Marketing, 2760 Eisenhower Avenue, Suite 250, Alexandria, Virginia. The Committee had a bank account at CityBank of Miami, Florida. The sole authorized signatory on the account was Diane Thorne. The Account No. was 3200015694. There was no entry in the bank account of the receipt of $150,000. This indicates that the item was not processed through the bank and it would not have been processed through the bank if it were really an "in kind" contribution. Because the beginning balance was zero on February 8, 2001, it is concluded that the inception date of Account No. 3200015694 was February 8, 2001. Lora Lynn Jones, is the principal of Unique Graphics and Design, which is located in Suite 253, at an address in Alexandria, Virginia, which is not further identified in the evidence of record. Ms. Jones prepared and posted the fundraising letter of December 2000, at the direction of Mr. Stone. Ms. Jones talked on the telephone with Ms. McCarty prior to mailing the fundraising letter and determined that the language in the letter was agreeable to Ms. McCarty. At the direction of Mr. Stone, Ms. Jones requested payment and received payment for her work, but from whom she cannot remember, except that she is sure that Creative Marketing did not pay it. The money for this production was paid in advance by wire transfer. There is no evidence in the record that this was paid from the account of The Committee. In fact, because the payment was made sometime in early December 2000, it could not have been paid from the account because it had not been opened. Ms. Jones is aware of an entity by the name of Creative Marketing Company and she believes it may be located in Northern Virginia, but she is not involved with it. It is found by clear and convincing evidence that the fundraising letter was not paid for by Creative Marketing, 2760 Eisenhower Avenue, Suite 250, Alexandria, Virginia. The bank records of The Committee reflect a $50,000 expenditure made to Unique Graphics and Design, paid with a check dated May 9, 2001. This represents a payment for something other than the fundraising letter dated December 2000. The $50,000 item was reported as an expenditure on the CTR-Q1 that was reported to have been made on March 12, 2001. It was reported as having been made to Creative Marketing as payee. The only check in the amount of $50,000, reflected in The Committee checking account for the period February 8, 2001, to June 30, 2001, was payable to Unique Graphics and Design and was dated May 9, 2001. Therefore, it is found that the CTR-Q1 is incorrect when it was reported as having been made on March 12, 2001, to Creative Marketing. Ms. Jones believes there is a company by the name of Creative Marketing Company, which she believes may be located in Northern Virginia, but she is not involved with it. Contributions remitted in response to the fundraising letter were forwarded to one of Mr. Stone's two addresses. Because the address of 1348 Washington Avenue, Suite 177, in Miami Beach, Florida, is the address listed on the fundraising letter, it is likely that contributions in response to the fundraising letter went to Mr. Stone's Miami Beach operation. In any event, it is found as a fact that Ms. McCarty did not personally receive or have any contact with any of the contributions remitted to The Committee. The people handling the receipt of funds and the deposits were Roger Stone and people paid by his organization, including Diane Thorne, the secretary; Amber McWhorter, the treasurer; and Craig Snyder. Just as Ms. McCarty was not involved in the receipt of income to The Committee, she was also not involved in the disbursement of funds. The CTR-Q1 was completed by The Committee's staff in either Miami Beach or Washington, D.C., but Ms. McCarty had no input into its preparation. When Ms. McCarty signed the CTR-Q1 she was without knowledge as to whether the report was truthful, correct, or complete. It is further found that she made no effort to ascertain whether the report was truthful, correct, or complete. She believed it to be true and correct because she trusted Mr. Stone's operatives to accurately prepare the report. Ms. McCarty, excepting the current litigation, has never been the subject of a Commission action. Ms. McCarty has an income of approximately $80,000. She owns a residence jointly with her husband which is valued at approximately $300,000 and which is subject to a mortgage of approximately $200,000. She owns a vacation home in Maine jointly with her husband that is valued at approximately $25,000. She and her husband own three automobiles. She owns stocks, annuities, mutual funds or certificates of deposit of an indeterminate value.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered dismissing the Orders of Probable Cause entered in the case of both Mary McCarty and The Committee to Take Back Our Judiciary. DONE AND ENTERED this 21st day of April, 2003, in Tallahassee, Leon County, Florida. HARRY L. HOOPER 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 21st day of April, 2003. COPIES FURNISHED: Kendall Coffey, Esquire Coffey & Wright, LLP 2665 South Bayshore Drive Grand Bay Plaza, Penthouse 2B Miami, Florida 33133 J. Reeve Bright, Esquire Bright & Chimera 135 Southeast 5th Avenue, Suite 2 Delray Beach, Florida 33483-5256 Mark Herron, Esquire Messer, Caparello & Self, P.A. Post Office Box 1876 Tallahassee, Florida 32302-1876 Eric M. Lipman, Esquire Florida Elections Commission 107 West Gaines Street Collins Building, Suite 224 Tallahassee, Florida 32399-1050 Barbara M. Linthicum, Executive Director Florida Elections Commission 107 West Gaines Street Collins Building, Suite 224 Tallahassee, Florida 32399-1050 Patsy Ruching, Clerk Florida Elections Commission 107 West Gaines Street Collins Building, Suite 224 Tallahassee, Florida 32399-1050
Findings Of Fact The Petitioner, Lawrence A. Grolemund, has been in the securities business for over 21 years. Except for two complaints--one in 1986 and a second 1988--he has not been the subject of complaint or investigation by the National Association of Securties Dealers (NASD) or any state. He earned a reputation as a successful securities dealer and, as his career progressed, as manager of securities dealership branch offices. As branch manager, one of Grolemund's primary responsibilities was to insure that his office functioned in compliance with applicable state and federal law, and the rules of the NASD. Due to the reputation Grolemund had earned, the Chairman of the Board of Prudential Bache Securities, Inc., personally recruited Grolemund as a branch manager. After a training period, Grolemund assumed duties at the company's New Orleans office in August, 1982. He did not become a registered options principal for the New Orleans office until December, 1982. For several years before Grolemund's arrival, the company's New Orleans office had been a "problem office." A disproportionate share of securities violations occurred in that office, and management had difficulty controlling the associated persons in the office to achieve compliance. Several branch managers who preceded Grolemund had been disciplined by the NASD for inadequate supervision of the office. Grolemund knew some of the problems--he was hired to try to correct them--but he did not know the extent of the problems he would face when he took over. On August 25, 1986, the District 5 Business Conduct Committee filed a complaint against Howard Hampton, E.F Hutton & Company, Inc., Prudential-Bache Securities, Inc., Grolemund and others. The gist of the complaint is that Hampton committed various violations of the Securities and Exchange Act, SEC rules and NASD rules while an associated person with E.F. Hutton and with Prudential-Bache. Hampton was with E.F. Hutton from February, 1981, through August, 1982, and was with Prudential-Bache in the New Orleans office from August, 1982, through February, 1984. The violations involve Hampton's dealings with clients he brought with him from E.F. Hutton to Prudential-Bache. Most of the violations involve the exercise of discretionary power in the accounts of clients without prior written authorization. Some of the alleged incidents occurred while Hampton was at E.F. Hutton. Some occurred while Hampton was at Prudential-Bache but before Grolemund arrived at the New Orleans office. Some occurred after Grolemund arrived but before he became an options principal for the office. In some cases, the information in the file on which Grolemund had to rely was incorrect. Grolemund fired Hampton in December, 1983. (At the time Hampton was fired, no complaints had yet been leveled against Hampton. In fact, all of the clients who ultimately complained against Hampton went with Hampton when he was fired from Prudential-Bache.) Grolemund also fired some other "unsavory" account executives in the New Orleans office. Grolemund was charged, along with other Prudential-Bache options principals, with failure and neglect to establish, maintain, and/or enforce written procedures which would enable Prudential-Bache to exercise reasonable and proper supervision of Hampton and with failure and neglect to supervise Hampton reasonably and properly. Grolemund was represented in the proceedings before the district committee by in-house counsel for Prudential-Bache. Otherwise, Grolemund did not have independent advice of counsel. Prudential-Bache was involved in other proceedings before the SEC which made it in its best interest to resolve the matters arising out of the New Orleans office. For several months, Prudential- Bache tried to convince Grolemund to settle. In addition, Grolemund was concerned whether the District 5 Business Conduct Committee would fairly consider the complaint against him. As part of his successful management of Prudential-Bache's New Orleans office, he competed directly against other securities dealers in the area, some of which were represented on, or had friends who were on, the Committee. When Grolemund came to New Orleans, there were 16 account executives in the office. Under his term of management, after he fired four to five account executives, including Hampton, the New Orleans office grew from 16 to 36 account executives. In addition, Grolemund opened satellite offices in Shreveport and Lafayette, Louisiana. These offices grew in size to 11 and 9 account executives, respectively. Many of the account executives Grolemund added were recruited away from competitors, and he was concerned that there might be hard feelings against him among the members on the Committee. After spending considerable time weighing all factors, Grolemund agreed on or about November 3, 1987, to settle the Hampton matter on terms that included acceptance of a finding that he was guilty of the allegations against him and acceptance of a censure, a 21-day suspension, a requirement that he re- qualify as a registered options principal, and a $7,500 fine. The settlement was reduced to writing in final form on April 25, 1988. As a result of the 21-day suspension, another options principal at Prudential-Bache was required to sign all options agreements during the suspension. Otherwise, Grolemund's job was the same as before the suspension, and Grolemund continued to receive his full normal compensation from Prudential- Bache. Prudential-Bache paid the fine for Grolemund. Re-qualification was a matter of passing a written examination, which did not present a problem for Grolemund. In agreeing to settle, Grolemund misunderstood that the district committee's action would not be the basis of any other proceedings against him. He also misunderstood that the offer of settlement would resolve all pending matters involving the New Orleans office, including the so-called Keel matters. Contrary to Grolemund's understanding, the NASD filed another complaint against Prudential-Bache and Grolemund on May 9, 1988. This complaint, which had been under investigation during the time the Hampton case was proceeding, involved an account executive named Patrick Keel. Like Hampton, Keel was alleged to have exercised discretionary power in the accounts of clients without prior written authorization. He also was alleged to have recommended unsuitable stock and option investments to two clients and to have falsely reported to Prudential-Bache that some of his clients enjoyed profits from the investments he had recommended and made for them, when in fact they had incurred losses. As with the Hampton matter, Grolemund was accused of having failed to establish, maintain, and enforce written supervisory procedures that would have enabled him to exercise proper supervision of Keel and of having failed to properly supervise Keel. The Keel matter went to hearing before the District 5 Business Conduct Committee on August 24-25, 1989. As to what it called Cause One, the Committee found that Keel engaged in unauthorized and unsuitable options transactions in the account of one customer and that Grolemund had failed to supervise Keel properly in connection with the options transactions. Under Cause Two, the Committee found that Keel made unauthorized and unsuitable stock and options transactions in the account of another customer and that Grolemund had ample early warning that Keel was not handling his options accounts properly. The Committee noted that in October, 1984, the customer had lodged complaints regarding Keel's options trading and that Grolemund had daily conversations with a superior concerning problems with Keel's options accounts. The Committee found that, even if Grolemund did not have the benefit of the early warnings of irregularity, his response to the concerns raised by the customer in her December 10, 1984, telephone conversation was inadequate. The Committee found that, given the customer's refusal to sign the activity letter that Grolemund sent her, it was incumbent upon Grolemund to determine whether the customer understood options, whether options transactions were consistent with her financial situation, and whether she had approved the options transactions before their execution. The Committee found that Grolemund did not compile and review the customer's account documentation, which would have revealed that options trading was inconsistent with her objectives and needs and that the customer was only approved for Level II trading although Keel had executed two Level III transactions. Accordingly, the Committee found that Grolemund had violated Article III, Sections 1 and 27 of the Rules of Fair Practice by failing to supervise Keel properly. Under Cause Three, the Committee found that Keel recommended to a customer (the same customer involved in Cause Two) that she commit 25-30% of her net worth to a Hawaiian real estate private placement tax shelter that was not consistent with the customer's needs and objectives. However, the Committee noted that there was conflicting evidence as to whether Grolemund had reviewed the recommendation in light of the customer's personal financial strategy form. Although it was not Grolemund's job at Prudential-Bache to review suitability determinations with respect to private placements, the Committee expressed the view that Grolemund was in the best position to supervise the recommendations of salesmen and that he could not delegate this responsibility to other departments. Accordingly, the Committee found that Grolemund had violated Article III, Sections 1 and 27 of the Rules of Fair Practice under Cause Three. As to Causes Four through Eleven, the Committee dismissed all but two for insufficient evidence. As for the two that were not dismissed, the Committee found that Keel exercised discretion in the accounts of customers without prior written approval and that Grolemund failed to exercise proper supervision over Keel. The Committee reasoned that, by the time at issue, Grolemund had adequate warning of Keel's exercise of discretion without authority and that Grolemund allowed Keel not only to continue options trading but also allowed Keel to continue using special telephone and "bunching" privileges that, in the Committee's view, "greatly facilitated Keel's exercise of discretion." The Committee dismissed Cause Twelve to the extent that it alleged that Grolemund failed to supervise Keel reasonably with respect to the submittal of inaccurate active account information reports by him. The Committee, in its June 21, 1990, decision, censured Grolemund, barred him from associating with any NASD member in any principal capacity and fined him $4,000. Under the bar, Grolemund would not have been permitted to apply for reinstatement for at least ten years. Based on this decision, and the earlier disposition of the 1986 complaint in the Hampton matter, the Department offered to conditionally grant Grolemund's application, prohibiting Grolemund from acting as a principal, supervisor or manager. When Grolemund refused to accept the conditions, the Department denied the application. Grolemund appealed the Committee decision in the Keel matter to the Board of Governors of the NASD. The appeal was heard on October 11-12, 1990. On appeal, the Board reversed the finding that Keel executed out-of-level options transactions. The Board also noted that the record demonstrates a high degree of direct interaction between Grolemund, Keel, Keel's clients, and Prudential-Bache's operations manager and that the firm's records distribution system may have prevented Grolemund from exercising greater supervision over Keel. Because branch managers did not receive copies of customer information relating to limited partnerships, such as the Maui/Waikiki deal, Grolemund had no opportunity to assess the suitability of Keel's customer for the offering, or to compare the documents that Keel had completed in connection with that deal with other account information regarding the customer. The Board also noted that Grolemund engaged in more-than-adequate follow-up with clients following the receipt of complaints and that the customer may have been less than candid regarding her lack of understanding of the investments that Keel recommended for her account. Nonetheless, the Board believed that Grolemund fell short of the standard of reasonable supervision in that it should have been clear to Grolemund that Keel had not been properly trained and lacked a basic understanding of the practices of the securities industry. The well-documented problems that Keel's options trading caused with respect to customers' margins, and Keel's documented confusion of cash and margin accounts, certainly should have put Grolemund on notice that Keel lacked sufficient training to engage in such risky trading strategies as writing options. The Board also thought Grolemund should have inquired why there was no options agreement on file for one customer until after options trading in her account had ceased. The Board concurred with the Committee that Grolemund fell below the standard of reasonable supervision, and thereby violated Article III, Section 1 and 27 of the Rules of Fair Practice. The Board of Governors affirmed the censure and $4,000 fine against Grolemund. However, in light of the various mitigating factors regarding Grolemund's overall conduct, the Board ruled that barring him as a principal was an excessively harsh penalty. Instead, the Board suspended him from acting in any principal capacity for seven days and required him to requalify by examination in all principal capacities. In July, 1985, long before either the Hampton or the Keel complaint was filed, Prudential-Bache promoted Grolemund to the new Tampa office. When Grolemund took over as branch manager, the Tampa office was only nine months old. Grolemund successfully managed the Tampa office until May, 1990, when he applied for registration as an associated person with Advest, Inc. During Grolemund's time as branch manager, the Tampa office grew to 35 account executives. The evidence proved that no violations occurred in the Tampa office during the almost five years that Grolemund was the branch manager there. Since the Hampton and Keel matters, the securities industry has changed remarkably, in part as a result of the October, 1987, stock market crash. Before the crash, options trading generally was viewed as a conservative investment--a way to participate in the market with limited resources and to provide an additional source of income from a conservative investment. The risks of options trading now are widely recognized, and management generally has become sensitive and responsive to those risks. In addition, the data processing and informations systems now in general use in the industry have given management new and effective tools for supervising the activities of account executives. Some of these systems make it impossible for some of the Hampton and Keel violations to occur today. For example, the systems will not process options trades for which there is no record of prior written authorization in the file. For these reasons, it is not likely that activities such as those in which Hampton and Keel were involved in 1981 through 1984 would go undetected today by a manager of Grolemund's caliber or that, detected, they would go unchecked. Advest, Inc., the securities dealer that wants to associate Grolemund to manage its new Clearwater office, is a respectable securities dealer that places reasonably strong emphasis on compliance with the requirements of the various regulatory agencies under which it must operate. It specializes in relatively safe investments, certainly as compared with the activities of the New Orleans office of Prudential-Bache in the early 1980s. Options trading represents only 14 to 15 percent of Advest's total business nationwide. Less than six percent of the business of its new Clearwater office consists of options trading. Advest's compliance department generates a monthly computer report called a "commission versus equity" run which displays the account name and number, the account executive's number, gross commission generated for the month and year, the number of trades for the month and year to date, the amount of cash and securities in the account, and the value of the account in relationship to the trading on a percentage basis. Some variation of the report is provided to the branch managers, to the division managers, and to the branch group manager, with each higher level of management getting more and more information in the report. An options activity report is produced in the Advest compliance department on a daily basis listing all accounts that traded outside their levels, if any, and any accounts that have a trade executed where the appropriate forms are not on file within the allowed period. Advest compliance sends out active account letters to verify customer satisfaction. If the customer does not respond within ten days, a second letter is sent. If the customer does not respond to the second letter within ten days, the account is restricted from further activity. The Advest compliance department reviews all aspects of the branch offices on an annual audit. Compliance then issues a report to the branch manager, the division manager, and the branch group manager. The computer generated commission report would automatically detect a trade executed by a registered representative not assigned to the account for which the trade is completed and would place an asterisk around the account executive number. The manager would then be contacted by the compliance department and asked to explain the discrepancy. In addition to the ordinary compliance procedures in place at Advest, to address the concerns of the Department and other regulatory agencies, Advest proposes several measures to reduce even further the likelihood of violations in the new Clearwater office to which it will assign Grolemund as branch manager. First, it will limit the number of account executives under Grolemund to 15 or less for the first year. Second, it will require another senior registered options principal to supervise the options trading along with Grolemund for the first year. Third, Advest's branch group manager or another Florida branch manager will personally visit Grolemund's office four times during the first year to monitor compliance; during the second year, either he or another Florida branch manager will personally visit Grolemund's office for this purpose at least twice. Fourth, two annual routine compliance monitoring visits will be made, instead of the usual one visit. Finally, the branch group manager personally will review all new account information from Grolemund's office weekly.
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 granting Grolemund's application for registration as an associated person with Advest, Inc., subject only to the following conditions: First, that Advest limit the number of account executives under Grolemund to 15 or less for the first year; Second, that Advest require another senior registered options principal to supervise the options trading along with Grolemund for the first year. Third, that Advest's branch group manager or another Florida branch manager will personally visit Grolemund's office four times during the first year to monitor compliance and that, during the second year, either he or another Florida branch manager personally visit Grolemund's office for this purpose at least twice. Fourth, that Advest make two annual routine compliance monitoring visits to Grolemund's office, instead of the usual one visit. Finally, that the branch group manager personally review all new account information from Grolemund's office weekly. RECOMMENDED this 21st day of February, 1991, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 21st day of February, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-5880 To comply with the requirements of Section 120.59(2), Florida Statutes (1989), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Accepted and incorporated. Rejected in part in that the Department did not consider the order of the Board of Governors of the NASD on appeal from the order of the District 5 Business Conduct Committee on the 1988 "Keel" complaint before giving notice of intent to deny the application. Otherwise, accepted and incorporated. Accepted and incorporated. Rejected in the sense that final action has not yet been taken. As it refers to Department notice of intended action, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but subordinate and unnecessary. 8.-10. Accepted but subordinate and unnecessary. Rejected as not proven. Also, subordinate and unnecessary. Accepted but subordinate and unnecessary. First sentence, accepted and incorporated. Second sentence, rejected as not proven exactly when the uniform guidedlines went into effect. Rejected as not proven exactly when the uniform guidedlines went into effect. Accepted and incorporated to the extent not subordinate or unnecessary. 16.-17. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but subordinate and unnecessary. Accepted but unnecessary. Rejected as not proven that the system was in operation since 1980. 21.-23. Accepted but subordinate and unnecessary. 24. Accepted and incorporated. 25.-28. Accepted and incorporated. 29. Accepted but subordinate and unnecessary. 30.-36. Accepted and incorporated. Rejected as not proven. Accepted but subordinate and unnecessary. Accepted but subordinate to facts contrary to those found and unnecessary. First clause, accepted; second clause, rejected consistent with the NASD orders. Accepted but subordinate to facts contrary to those found and unnecessary. Accepted but subordinate and unnecessary. 43.-46. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated in the form of the findings of the Board of Governors of the NASD on appeal from the 1988 "Keel" complaint. Accepted but unnecessary. 49.-50. Accepted and incorporated. 51.-52 Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but subordinate and unnecessary. Accepted and incorporated. Accepted but subordinate and unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. Respondent's Proposed Findings of Fact. 1.-2. Accepted and incorporated. Rejected as conclusion of law and unnecessary. Rejected that the orders were entered in 1986 and 1988; otherwise, accepted and incorporated. 5.-7. Rejected as conclusion of law and unnecessary. 8.-12. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but unnecessary. Accepted that the Committee characterized its decision in those terms by way of explaining why it was just to differentiate between Prudential-Bache and its representatives, including Grolemund, and E.F. Hutton and its representatives. However, in fact, the various dispositions were agreed by the parties. It is unnecessary to include this finding. 15.-18. Accepted and incorporated. 19. Accepted but unnecessary. 20.-21. Accepted and incorporated. 22. Accepted but unnecessary. COPIES FURNISHED: Edward W. Dougherty, Esquire Mang, Rett & Collette, P.A. 660 East Jefferson Street Tallahassee, Florida 32302 Margaret S. Karniewicz, Esquire Assistant General Counsel Department of Banking and Finance Legal Section The Capitol Tallahassee, Florida 32399-0350 Hon. Gerald Lewis Comptroller The Capitol Tallahassee, Florida 32399-0350 William G. Reeves, Esquire General Counsel Department of Banking and Finance The Capitol Plaza Level, Room 1302 Tallahassee, Florida 32399-0350
The Issue The issue in this proceeding is whether Petitioner is entitled to an award of reasonable costs and attorney fees pursuant to Section 57.111, Florida Statutes.
Findings Of Fact Peggy Watkins and operates Watkins Health Care Center. The center employs under 25 employees and earns less than two million dollars in revenue. Peggy Watkins was the prevailing party in the exemption hearing, P.W. v. Department of Health and Rehabilitative Services, DOAH Case No. 94-1729C, Rendition No. HRS-95-192-FOF- RCD (Fla. DHRS F.O. issued August 3, 1995), which is the action underlying the request for fees and costs in this case. The underlying exemption action in this case resulted from the Department's denial of Petitioner's request for exemption from disqualification from employment in a caregiver capacity to disabled adults on February 14, 1994. The disqualifying factor used by the Department in its decision was a confirmed report of adult abuse, FPSS Number 92-021519 involving the exploitation of W.W. a disabled adult. The report stated in part: Capacity to consent: . . . W.W. does not have the capacity to consent. Findings/classification": W.W. has been living in a mobile home owned by Peggy Watkins for the past four and one half years. It is filthy, run down, and according to local realtor, Yvonne Mediate, would only be worth $150/month, if it were to be cleaned. W.W. actually pays Peggy Watkins $600/month, not including utilities, which he has to pay for separately. She also takes $200 out of his check every month prior to depositing it, and provides no receipts nor gives any explanation as to how this money is spent. Separate checks are drawn on W.W.'s account for food, gas and incidentals, etc. Out of $1,074/month he receives, he has not saved a penny in the four and a half years that Peggy has been payee on his check She provided no receipts for any of the appliances she claims to have bought him and he has no appliances either. She claims that he has sold his appliances for drugs. W.W. denies that this is so . . . , a drug screen was done and W.W.'s system was found to be free of drugs. . . . . Although W.W. complained loud and long about the misappropriation of his funds, at the begin- ning of this investigation, it wasn't long before he did a 180 degree turn about Improper management of finances: verified. . . . The evidence at the exemption hearing demonstrated that there were multiple payments for utilities throughout the course of any given month. Also the evidence at the hearing showed that the Department considered a document which purported to outline a rental/services agreement between Petitioner and W.W. The agreement indicated that Petitioner's rent included utilities and housekeeping services which appeared not to be being performed or paid out of the rent. Given these facts, there is no question that the Department acted reasonably in relying on the confirmed adult abuse report as a basis for denying the Petitioner's request for exemption. As it turned out the evidence at the exemption hearing cast serious doubt on the strength of the abuse report and it was recommended that she be granted an exemption which recommendation was adopted in the Final Order. However, those facts do not demonstrate the Department was not justified in relying on the abuse report as it was established and maintained in the Department's abuse registry in making its initial decision in that case. At the time of making its decision the Department had to decide issues of credibility and reliability in weighing whether to grant Petitioner an exemption. The Hearing Officer's determination was at odds with the determination of the Department, however, the Department's reliance on the veracity of the reports in its abuse registry was not unreasonable. Finally, the total attorney's time spent on this case based on the amendments and deletions to the attorney's affidavit made at the hearing is 97.4 hours. Given the numerous changes made to the affidavit at the hearing and the inclusion of time and work spent on behalf of Petitioner in her other cases, the evidence did not demonstrate a reliable factual basis for the amount of time spent by Petitioner's attorney relative to this proceeding. Given these facts, Petitioner is not entitled to an award of Attorney's fees and costs.
The Issue The issue is whether Respondent, as campaign treasurer, signed two checks drawn on the candidate's primary campaign account when such account lacked sufficient funds to cover the checks and, if so, what penalty should be imposed.
Findings Of Fact Respondent has been a certified public accountant since 1996. Since 2000, Respondent has been employed with a Hollywood, Florida accounting firm, where he is now a partner. Respondent has been licensed since 1996 to practice accounting in Florida. Sometime prior to June 2005, a friend of Respondent told him that a candidate for office in Miami needed help with his campaign. Respondent agreed to meet with the candidate, Richard Dunn, who was running for the District 5 seat on the City of Miami Commission. At the meeting, Respondent became acquainted with Mr. Dunn, who is a minister and an experienced candidate for public office. During the meeting, Mr. Dunn asked Respondent to serve as his campaign treasurer. Mr. Dunn explained that his main duty would be to maintain the campaign checkbook and make deposits of campaign contributions. Respondent also understood that he would have to attend some fundraising events. Respondent had never previously served as a campaign treasurer, but the parties agreed upon a satisfactory payment, and Respondent assumed his duties as campaign treasurer in July 2005. When Respondent started as treasurer, Mr. Dunn's campaign staff gave him checkbooks and deposit slips. At no time did Respondent ever investigate whether the election laws imposed upon him any special requirements. No one on Mr. Dunn's campaign staff gave Respondent a copy of the explanatory campaign materials provided each campaign by the Clerk's Office of the City of Miami. These materials include all relevant campaign finance laws. Respondent's lack of familiarity with the duties of a campaign treasurer emerged early. He learned that he had to file campaign treasurer reports when campaign staff informed him of this responsibility. At the same time, Respondent learned that campaign staff, including Mr. Dunn, were not careful in the management of the campaign's finances. In trying to prepare his first report, Respondent had problems obtaining all of the necessary information, such as all of the checks that had been written. Despite his lack of familiarity with campaign finance laws, Respondent knew that he could not write a check if an account had insufficient funds. Respondent assumed (wrongly, as noted below in the Conclusions of Law) that he could sign a check, even if the account lacked funds to cover it, as long as sufficient funds would be deposited before the check was presented for payment at the payor's bank. Respondent was not the first campaign treasurer for this campaign. However, the existence of a prior treasurer did not make it any easier for Respondent to assemble the necessary documents, such as copies of bank statements, so that he could do his job. Also, 30-45 days after taking over as treasurer, Respondent learned that the campaign maintained at least one other checking account. In short order, Respondent learned that the bank mailed the statements to Mr. Dunn, not the treasurer. Respondent suggested to Mr. Dunn that the bank issue a copy to Respondent. Mr. Dunn agreed with this proposal, but the bank, Wachovia Bank, said that it could not do so. Respondent never suggested to Mr. Dunn that he direct the bank to mail the statements to Respondent, who would then send a copy to Mr. Dunn. Quickly, Respondent also learned that Mr. Dunn was writing most of the checks, including counter checks. Respondent repeatedly impressed upon Mr. Dunn the importance of keeping Respondent informed about these checks, but Mr. Dunn and his campaign staff did not routinely do so. After failing to convince Mr. Dunn to restrict check- issuing privileges to Respondent, Respondent prepared a check authorization form that Mr. Dunn and his campaign staff could use each time that they issued checks. However, despite all of these efforts, consisting of five to ten telephone calls and meetings, Respondent never succeeded in obtaining Mr. Dunn's cooperation for very long. On the 10-15 occasions that Respondent wrote and signed campaign checks, he often, but not invariably, contacted the bank and asked it to fax transaction reports or partial statements to cover a specific date range. On those 10-15 occasions, Respondent often, but not invariably, called Mr. Dunn for confirmation of deposits before writing. If Respondent ever attempted to obtain this information by online banking, he never so indicated during the hearing. Although Respondent did something to update himself on current activity in the checking account each time that he had to write and sign a check, his information was necessarily incomplete. Overall, Respondent admits that he never was able to get the accounting problem within the campaign under control. Although Respondent wrote and signed relatively few checks, he wrote and signed the two checks at issue in this case many months after discovering the problems described above. On October 27, 2005, Respondent signed a check to The Miami Times for $3625.63 and drawn on the campaign account. Account balances were $542.34, $792.34, and $1892.34 on October 26, 27, and 28, 2005, respectively. Clearly, Respondent signed this check at a time that the account lacked sufficient funds to cover it. Respondent delivered the $3625.63 check to a member of the Dunn campaign and instructed her to ensure that the account had sufficient money before giving it to the payee. He added that she should deliver the check only to Mr. Dunn. On the same day, Mr. Dunn signed a check drawn on the same account in the amount of $500 and payable to the prior campaign treasurer, Johnny Studstill. Although the October bank records reveal no insufficient funds fees, the November bank records reveal seven instances of insufficient funds: November 10, 21, 22, and 30 (four times). Respondent explained that the bank imposed these fees because deposits had not yet cleared, but the imposition of these fees was sufficient to alert Respondent to mounting problems, and two of these instances had arisen prior to the date on which he signed the November 22 check, which is the second check at issue in this case. On November 22, 2005, Respondent signed a check to radio station WMBM for $2000 and drawn on the campaign account. Account balances were $694.25, $2909.25, and $6091.84, on November 21, 22, and 23, 2005, respectively. The relevant day is November 22, so it would appear that the bank balance was sufficient to cover this check. However, on the same day, Respondent signed checks in the amounts of $1065 and $1492.65 and payable to ASAP Mailing Service and Dodd Printing, although the latter check was marked void shortly after Respondent signed it. Thus, the total of the $2000 check to WMBM and $1065 check to ASAP (counsel for Petitioner conceding at the hearing that a voided check should not count) exceeded the account balance of $2909.25. On the same day, Mr. Dunn signed three checks drawn on the same account. One was in the amount of $850 and payable to radio station WEDR, one was in the amount of $185 and payable to Isaiah Walker, and the third was in the amount of $2000 and payable to radio station WHQT. About three weeks prior to the end of the campaign, Respondent realized that the situation was unworkable, even though his administrative assistant at the accounting firm was devoting 20 hours weekly to campaign-related bookkeeping work. Respondent remained with the campaign only to avoid the negative appearance that would be created by his leaving his post in the days running up to the election. Respondent asked Mr. Dunn not to leave him "high and dry," but Respondent was never paid for his services to the campaign, beyond a single $1000 check to cover costs. When signing the October 27 check, Respondent knew that, due to the campaign's poor financial management practices, he lacked even the information to determine whether the account balance would be sufficient when the check was presented to Wachovia. He did not consider whether the account balance was sufficient when he signed the check because he was not aware of this requirement of law. Respondent's violation of law was willful when signing the October 27 check. By this time, Respondent had been serving as campaign treasurer for nearly four months. He was increasingly aware that he did not have the full cooperation of the candidate. Although he did not know the relevant requirement of law, Respondent recklessly disregarded this requirement because he had never made any effort--let alone a reasonable effort--to inform himself of this legal requirement. The circumstances likewise establish recklessness in the signing of the November 22 check. Factually, Respondent's acts and omissions on November 22 were less defensible because the account had twice incurred insufficient-funds fees in the two weeks preceding the signing of the November 22 check, and he had another month to see that Mr. Dunn and the campaign staff would not agree to reasonable financial-management controls. Legally, Respondent's ongoing failure to inform himself of the applicable legal requirements imposed upon him as a campaign treasurer remained entirely unreasonable, with the passing of another month, the incurring of insufficient-funds fees, and the repeated confirming that Respondent would not have any significant cooperation from Mr. Dunn as his campaign approached its completion. The key factual determination in this case is that Respondent willfully violated the legal requirement that sufficient funds be in the account when the checks were signed. Respondent was understandably unfamiliar with this requirement, which is different from the more common requirement, with which he was familiar, that sufficient funds must be available when a check is presented to the issuing bank for payment. The requisite finding of Respondent's recklessness in failing to exercise any apparent effort to inform himself of this requirement of law is facilitated by the manner in which he handled the more common responsibilities of bookkeeping. Respondent proceeded recklessly in this area, as well. Respondent knew that the probability of bounced checks elevated considerably, the longer that more than one person wrote checks and the campaign staff was so lax in getting him the information on their activity in the account. Reckless disregard for the proper discharge of basic bookkeeping responsibilities is evidence of Respondent's overall state of mind at the relevant time. If Respondent did not initially realize his ignorance of campaign finance laws, he had to understand the limits of his knowledge when campaign staff told him he had to file campaign treasurer reports. By not informing himself of Section 106.11(4), Florida Statutes, by the time that he signed the two checks that are the subject of this case, Respondent displayed reckless disregard of his legal obligations. Under the law set forth below, Respondent's reckless disregard of the law constitutes a willful violation of the law. Here, Respondent, an accountant, has wholly disregarded Section 106.11(4), Florida Statutes, without making any reasonable inquiry into the limitations on check signing in a campaign.
Recommendation It is RECOMMENDED that the Florida Elections Commission enter a final order finding Respondent guilty of two counts of violating Section 106.11(4), Florida Statutes, and imposing a civil penalty of $500. DONE AND ENTERED this 21st day of August, 2007, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 21st day of August, 2007. COPIES FURNISHED: Barbara M. Linthicum, Executive Director Florida Elections Commission The Collins Building, Suite 224 107 West Gaines Street Tallahassee, Florida 32399-1050 Patsy Rushing, Clerk Florida Elections Commission The Collins Building, Suite 224 107 West Gaines Street Tallahassee, Florida 32399-1050 Eric M. Lipman, Esquire Florida Elections Commission Collins Building, Suite 224 107 West Gaines Street Tallahassee, Florida 32399-1050 Mark Herron, Esquire Messer, Caparello & Self, P.A. 2618 Centennial Place Post Office Box 15579 Tallahassee, Florida 32317
The Issue The issue in this bid protest is whether Respondent acted arbitrarily when it decided to reject all of the bids it had received in response to a solicitation seeking bids on a contract for roof repairs.
Findings Of Fact On January 10, 2008, the Florida Department of Environmental Protection (the "Department" or "DEP") issued an Invitation to Bid (the "ITB"), the purpose of which was to solicit competitive bids from qualified contractors on a project whose scope of work envisioned repairs to the wind-damaged roofs of several buildings located on the grounds of the Hugh Taylor Birch State Park in Fort Lauderdale, Florida. Some of the buildings to be repaired were single-family residences. Work on these structures accordingly needed to conform to the requirements prescribed in the 2007 Manual of Hurricane Mitigation Retrofits for Existing Site-Built Single Family Residential Structures (the "Manual"), which the Florida Building Commission (the "Commission"), following an explicit legislative directive, see Section 553.844(3), Florida Statutes,1 recently had adopted, by incorporative reference, as a rule. See Fla. Admin. Code R. 9B-3.0475 (2007).2 The Rule had taken effect on November 14, 2007, giving the Manual's contents the same status and force as the Florida Building Code. Id. Just before the Department issued the ITB, the Commission had approved, at a meeting on January 8, 2008, a modified version of the Manual, which it called the 2007 Manual of Hurricane Mitigation Retrofits for Existing Site-Built Single Family Residential Structures, Version 2 (the "Revised Manual"). In consequence of the Commission's approval of the Revised Manual, the Florida Department of Community Affairs ("DCA") caused a Notice of Proposed Rule Development to be published on January 25, 2008, in the Florida Administrative Weekly. This official advertisement announced that the Commission intended to amend Rule 9B-3.0475, so that its incorporative reference would mention the Revision Manual instead of the Manual. See 34 Fla. Admin. W. 461-62 (Jan. 25, 2008).3 DCA caused a Notice of Proposed Rule respecting the intended revision of Rule 9B-3.0475 to be published on February 1, 2008, in the Florida Administrative Weekly. See 34 Fla. Admin. W. 605 (Feb. 1, 2008).4 On February 5, 2008, the Department issued Addendum No. 4 to the ITB (the "Addendum"). The Addendum provided in pertinent part as follows: Bidders shall bid the project as specified despite the recent change in Rule 9B-3.0475 relating to hurricane mitigation retrofits. Any additional water barrier will be accomplished by Change Order after award of the contract. (The foregoing provisions of the Addendum will be referred to hereinafter as the "Directive"). On February 12, 2008, the Department opened the bids it had received in response to the ITB. Ten (out of 12) of the bids submitted were deemed responsive. The bid of Petitioner Spinella Enterprises, Inc. ("Spinella") was one of the acceptable bids. On February 19, 2008, DEP posted notice of its intent to award a contract to the lowest bidder, namely Spinella, which had offered to perform the work for $94,150. The second lowest bidder was The Bookhardt Group ("Bookhardt"). Bookhardt timely protested the intended award, raising several objections, only one of which is relevant here. In its formal written protest, dated March 3, 2008, Bookhardt alleged that "[t]he new State of Florida law F.S. 553.844 was not part of the solicitation." On April 4, 2008, Rule 9B-3.0475, as amended to incorporate by reference the Revised Manual, took effect. See Fla. Admin. Code R. 9B-3.0475 (2008). On May 16, 2008, DEP posted notice of its intent to reject all bids received in response to the ITB. (Bookhardt's protest, which remained pending, had never been referred to DOAH for a formal hearing.) Spinella timely protested the Department's decision to reject all bids. In an email sent to Spinella on July 22, 2008, DEP's counsel explained the rationale behind the decision: The reason the Department rejected all bids follows. When the Department posted the notice of intent to award the contract to Spinella Enterprises, Inc., the second low bidder (Bookhardt Roofing) protested the intent to award. The second low bidder's basis for protesting the intended award was that Addendum 4 directed bidders to ignore certain rules of the Construction Industry Licensing Board [sic], which had become effective after the bid opening, which was not in accordance with the law. As a result, this may have caused confusion and the Department had no assurance that bidders were bidding the project correctly. In addition, the statement in Addendum 4 that the Department would add the required moisture barrier afterward by change order set up a situation where bidders had no idea how much the Department would be willing to pay for the change order. Further, the moisture barrier was not the only thing required by the new rules. Potential bidders may not have bid due to these uncertainties. The Department agreed with Bookhardt's assertions and rejected all bids . . . . Notwithstanding Spinella's protest, the Department issued a second invitation to bid on the project in question. As of the final hearing, the bids received in response to this second solicitation were scheduled to be opened on August 12, 2008. Ultimate Factual Determinations The Department's decision to reject all bids is premised, ultimately, on the notion that the Directive told prospective bidders to ignore an applicable rule in preparing their respective bids.5 If this were true, then the Directive could have been a source of potential confusion, as the Department argues, because a prudent bidder might reasonably hesitate to quote a price based on (possibly) legally deficient specifications. The Directive, however, did not instruct bidders to ignore an applicable, existing rule. Rather, under any reasonable interpretation, it instructed bidders to ignore a proposed rule and follow existing law. Such an instruction was neither confusing nor inappropriate. To be sure, the first sentence of the Directive——at least when read literally——misstated a fact. It did so by expressing an underlying assumption, i.e. that Rule 9B-3.0475 recently had been changed, which was incorrect. In fact, as of February 5, 2008, the Rule was exactly the same as it had always been. (It would remain that way for the next two months, until April 6, 2008).6 DEP's misstatement about the Rule might, conceivably, have confused a potential bidder, at least momentarily. But DEP did not factor the potential for such confusion into its decision to reject all bids, and no evidence of any confusion in this regard was offered at hearing.7 More important is that the unambiguous thrust of the Directive was to tell bidders to rely upon the "not recently changed" Rule 9B-3.0475, which could only have meant Florida Administrative Code Rule 9B-3.0475 (2007) as originally adopted, because that was the one and only version of the Rule which, to that point, had ever existed. Thus, even if the Department were operating under the mistaken belief, when it issued the Addendum, that Rule 9B-3.0475 recently had been amended; and even if, as a result, DEP thought it was telling prospective bidders to ignore an applicable, existing rule, DEP nevertheless made clear its intention that prospective bidders follow the original Rule 9B- 3.0475, which was in fact the operative Rule at the time, whether or not DEP knew it. Indeed, as any reasonable potential bidder knew or should have known at the time of the Addendum, (a) the Commission recently had approved the Revised Manual, but the contents thereof would not have the force and effect of law unless and until the Revised Manual were adopted as a rule, which had not yet happened; (b) the Commission had initiated rulemaking to amend Rule 9B-3.0475 so as to adopt the Revised Manual as a rule, but the process was pending, not complete; (c) Rule 9B-3.0475 had not been amended, ever; and, therefore, (d) the Manual still had the force and effect of law. See endnote 6. The Directive obviously could not alter or affect these objective facts. At bottom, then, a reasonable bidder, reviewing the Directive, would (or should) have concluded either (a) that the "recent change" which DEP had in mind was the Commission's approval of the Revised Manual (or the subsequent announcement of the proposed amendment to Rule 9B-3.0475) or (b) that DEP mistakenly believed the Rule had been changed, even though it had not been. Either way, a reasonable bidder would (or should) have known that the Department wanted bidders to prepare their respective bids based not on the Revised Manual, but the Manual. In other words, regardless of what DEP subjectively thought was the existing law, DEP clearly intended (and unambiguously expressed its intent) that bidders follow what was, in fact, existing law. This could not have confused a reasonable bidder because, absent an instruction to exceed the minimum required legal standards (which the Directive was not), a reasonable bidder would have followed existing law in preparing its bid, just as the Directive required. Once it is determined that the Directive did not, in fact, instruct bidders to ignore an applicable, existing law, but rather told them to rely upon the applicable, existing law (notwithstanding that such law might change in the foreseeable future), the logic underlying the Department's decision to reject all bids unravels. Simply put, there is no genuine basis in logic or fact for concluding that the Addendum caused confusion. The other grounds that DEP has put forward do not hold water either. Contrary to the Department's contention, the possibility that a Change Order would be necessary if an "additional water barrier" were required could not possibly have confused potential bidders or caused them to be uncertain about how much money the Department would be willing to pay for such extra work. This is because Article 27 of the Construction Contract prescribes the procedure for entering into a Change Order, and it specifies the method for determining the price of any extra work. See ITB at 102-05. The fact that the proposed amendment to Rule 9B-3.0475, if it were to be adopted and become applicable to the instant project, might require other additional work, besides a water barrier, likewise could not reasonably have caused potential bidders to refrain from bidding, for the same reason: The Construction Contract contains explicit provisions which deal with the contingency of extra work or changes in the work. Id. In sum, DEP's intended decision to reject all bids cannot be justified by any analysis that a reasonable person would use to reach a decision of similar importance. It is, therefore, arbitrary.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order finding that its decision to reject all bids was arbitrary. Because the Department elected not to comply with the statutory directive to abate this procurement pending the outcome of Spinella's protest, with the result that the contract at issue possibly has been awarded already to another bidder; and because the choice of remedies for invalid procurement actions is ultimately within the agency's discretion, the undersigned declines to make a recommendation regarding the means by which DEP should rectify the harm to Spinella, but he urges that other appropriate relief be granted if Spinella cannot be awarded the contact. DONE AND ENTERED this 2nd day of October, 2008, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of October, 2008.
