The Issue Whether the Respondent is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction contrary to Section 475.25(1)(b), Florida Statutes, and Whether the Respondent is guilty of failure to account or deliver real estate brokerage books and records and other personal property in violation of Section 475.25(1)(d), Florida Statutes.
Findings Of Fact The Petitioner is a state agency charged by statute with the regulation of real estate salespersons and brokers. The Respondent, Robert Joseph Gumbrewicz, at all times relevant to this complaint, held real estate salesperson license number 0576053. On or about March 31, 1992, the Respondent bought Buy Owner Realty of Jacksonville, Inc. (Buy Owner) from James Weiss, a licensed real estate broker. Phyllis Sellers was employed by Respondent as the corporation's broker of record. Phyllis Sellers notified U.S. Title that she had become broker of record for Buy Owner. Buy Owner had incurred debts while owned by Weiss. A debt owed by Buy Owner to a copier company was not paid, and the company obtained a judgment against Buy Owner. The company then executed on its judgment and froze, on April 28, 1993, the operating account of Buy Owner, Account Number 5084900-134, at First Bank of Jacksonville. On April 27, 1993, the Respondent issued a check in the amount of $350 on Buy Owner's Account Number 5084900-134 at First Bank of Jacksonville to Phyllis Sellers as partial payment of a commission which she had already earned. Buy Owner had already earned its commission in this transaction and had already transferred its money from its trust account to its operating account. On April 27, 1993, Phyllis Sellers deposited the check from Respondent on Buy Owner's Account 5084900-134 into her bank account. On April 29, 1993, the check was presented to First Bank of Jacksonville for payment. This check was not paid because the account had been frozen pursuant to court order. There was no evidence presented that the Respondent knew, at the time he issued the check, that the account was going to be frozen. There were funds sufficient to pay the check in the account when it was issued. Immediately following receipt of the check, Sellers went on vacation. Upon her return, she found that the office of Buy Owner had been closed, and the records of the business were not present on the former business premises. Sellers attempted to contact the Respondent, but he would not return her calls. Hearsay evidence was received that the Respondent had removed the records of the office and was maintaining them in his garage at his home; however, there was no direct evidence of what happened to the records. The Respondent, in a response to admissions filed by Petitioner, denied taking the records.
Recommendation Based upon the consideration of the facts found and the conclusions of law reached, it is, RECOMMENDED: That the Department of Business and Professional Regulation enter a final order which dismisses the Administrative Comoplaint against the Respondent. DONE and ENTERED this 29th day of July, 1994, in Tallahassee, Florida. STEPHEN F. DEAN, 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 29th day of July, 1994. COPIES FURNISHED: Steven W. Johnson, Esquire DPR - Division of Real Estate 400 West Robinson Street, #N-308 Orlando, FL 32801 Robert J. Gumbrewicz, Esquire 808 Elmwood Street Orange Park, FL 32073 Darlene F. Keller, Division Director DPR - Division of Real Estate 400 West Robinson Street, #N-308 Orlando, FL 32801 Jack McRay, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
Findings Of Fact At all times material hereto, Respondent Perroni was a licensed real estate broker having been issued license No. 0146232; Respondent Florida First Realty and Development, Inc., was a corporation licensed to conduct real estate business having been issued license No. 0215700 and branch office license No. 0215701; and Respondent Perroni was a duly licensed real estate broker and was the qualifying broker for Respondent Florida First, a licensed brokerage corporation. Respondents negotiated a contract on or about May 13, 1980, wherein Bernice Elstrom agreed to sell certain real property to Lorraine Baretela. Pursuant to that contract, Respondents accepted $300 from Baretela as an earnest money deposit. That contract for purchase and sale specified that the closing on that purchase and sale would take place on May 19, 1980, six days later. During those six days, Theresa McMullin, the salesperson employed by Respondents who obtained the contract between Elstrom and Baretela, arranged for the buyer's title insurance policy. The title search disclosed two outstanding liens against the property: one final judgment in the amount of $364.67 plus costs, and an outstanding 1979 tax bill of $38.44 plus interest and penalties. She advised both the seller and buyer of these outstanding liens, and the seller agreed to clear those liens and close on the transaction. During the same six days, Baretela had second thoughts about whether she wished to purchase the property. She appeared on several occasions at the property with her friends to obtain their opinions on whether she should buy the property. She consulted an attorney to ascertain if there was any way she could get out of her contract without forfeiting her $300 deposit. When McMullin told her of the two liens against the property, Baretela told McMullin she was glad there were liens against the property, since she did not wish to purchase it and believed that would allow her to void her contract. McMullin advised her that was not true, that the liens would be cleared prior to or at the closing, and that if Baretela refused to close an the contract, she would forfeit her $300 deposit. Baretela advised that she would rather lose her deposit than purchase property she decided she did not want, and Baretela and McMullin continued to look at other properties for Baretela to purchase. By Monday morning, May 19, McMullin had assisted the seller in clearing the liens on the property. She spoke to Baretela on the telephone and reminded Baretela that the closing was scheduled for that day. Baretela said she would not close. McMullin again reminded her that Baretela would lose her deposit if she did not close. On May 19, the seller was ready, willing, and able to convey clear title to the property. McMullin advised Respondent Perroni that there was a problem with the closing. Within a few days after May 19, Respondent Perroni, McMullin, and Baretela met at Respondent's office. Respondent advised Baretela that she could still close on the property and avoid forfeiting her $300 deposit. Baretela advised that she would rather forfeit her deposit money and that she would not close on the property. Baretela left the office, and no further contact was made by Baretela regarding her deposit money. Pursuant to the terms of the contract, Perroni disbursed one half of the $300 deposit to the seller and retained one half of the deposit. On or about November 26, 1980, Respondents negotiated a contract whereby Thomas A. and Linda Rupert agreed to purchase certain real property. Respondents accepted $500 from the buyers as an earnest money deposit on the transaction. The contract was expressly made conditional on the buyers applying for and obtaining either a mortgage insured by the FHA, under Section 235, or by the VA, in an amount not less than $40,000. On February 25, 1981, Carruth Mortgage Corporation, a company handling FHA funds, advised the buyers that they did not qualify for the required financing, since the buyers had insufficient liquid assets to close the loan. Linda Rupert contacted Larry Zimmerman, the employee of Respondents handling the transaction, and Zimmerman advised Perroni there was a problem with the transaction and requested Perroni to become involved. Perroni ran a preliminary qualification on the buyers and ascertained that the Ruperts could qualify for a $38,000 mortgage from FHA. He met with Linda Rupert and advised her that the Ruperts could still purchase the property by placing the $38,000 mortgage on the property, and Respondent offered her a $2,000 second mortgage to make up the difference. During that meeting, Rupert advised Respondent that she would have to talk to her husband about whether they wished to have two mortgages on the property, and Rupert also discussed with Respondent Perroni a refund of the $500 deposit. Perroni advised her that he would be willing to refund $370, but that he believed himself entitled to retain $130 for survey and other expenses he had incurred pursuant to the contract, which provided that in the event the buyer failed to qualify for the $40,000 mortgage, deposit moneys would be returned less expenses incurred on behalf of the buyer. Rupert advised she would not agree to reimburse Respondent for expenses incurred on her behalf, that she would discuss Respondent Perroni's offer of a second mortgage with her husband, and she would then contact Respondent to advise him of her decision. Rather than advising Respondent of the result of any discussions with her husband, Linda Rupert filed a complaint with some local citizens' dispute settlement program alleging that Respondent refused to return her money to her. Although that local agency scheduled a hearing regarding Rupert's complaint, Respondents were not notified of that hearing. When Respondents failed to appear at the citizens dispute hearing, Rupert went to the office of Congressman Skip Bafalis and spoke to one of the secretaries working there. When the secretary telephoned Respondent to inquire regarding Linda Rupert's deposit, this was the first contact that Respondents had regarding Linda Rupert's decision following her meeting with Respondent. Respondent assumed the telephone call meant the Ruperts did not want to buy the property by utilizing a second mortgage and accordingly refunded their $500 earnest money deposit. On or about July 8, 1980, Respondent Perroni entered into a contract with James D. Bell for the construction of a home on Bell's lot. The contract called for the construction to be financed by an FHA 235 loan. Respondents accepted $500 from Bell as a deposit on the construction of his home. Respondent Perroni, who is also a licensed certified contractor, explained to Bell, a carpenter-subcontractor by trade, and Bell's mother-in-law, who is in the real estate business and was involved throughout the dealings between Perroni and Bell, how the transaction would work. Since FHA does not finance the actual construction, Bell would deed his lot to Perroni. Perroni, as the contractor, would place a construction mortgage on that lot. When the house was completed, Perroni would deed back the house and the lot, and the construction mortgage would be replaced by the FHA mortgage. Bell and his mother-in-law agreed. On July 16, 1980, Bell gave Respondent Perroni a warranty deed for his lot for the purpose of constructing a new home on the property. Respondent Perroni provided Bell with a receipt of this deed stating that the title would be transferred back to Bell upon the completion of the home and closing. On September 12, 1980, Respondent Perroni placed a mortgage on Bell's lot to finance the construction of the home. On November 6, 1980, Bell was given notice that FHA 235 financing was not available. Respondent Perroni explained to Bell that the 235 program was simply between federal government budget years and that the program was being refunded so that if Bell would simply wait, the funds would be available within the next two or three months. Bell advised Respondent that he did not wish to wait for the FHA funds because he had located a friend of his who could pull the building permit so that Bell could build himself a more costly house for less money than Respondent could build for him. He demanded that Perroni deed the lot back to him and refund his $500. Perroni agreed to deed back the lot, but advised Bell that Perroni now had $2,000 in expenses from the transaction: $200 for perk and survey work, and $1,800 in costs to clear the construction mortgage. On November 25, 1980, Bell signed a release prepared by Perroni, Perroni gave Bell a quitclaim deed for the property, and Perroni paid $1,800 to clear the construction mortgage off the property. Perroni retained Bell's $500 deposit. At all times material hereto, Sheila D. Johnson was licensed as a real estate salesman. On July 1, 1980, she and Respondent Perroni entered into a contract whereby Florida First would open an office in Port St. Lucie, and Johnson would be the office manager and run the Port St. Lucie office. Under the terms of that agreement, Perroni and Johnson would each provide $3,500 to fund the new office, and thereafter all profits and all liabilities would be split between the two equally. Although all other salespersons in the Port St. Lucie office were covered by the standard commission agreement utilized by Florida First, the agreement between Perroni and Johnson makes no mention of any commissions to be paid to Johnson for sales made by her, but rather only specifies an equal split between Johnson and Perroni as to profits and losses of the company. Johnson commenced running the Port St. Lucie office. She maintained all records and was an authorized signature on all bank accounts for the company. Perroni continued to work out of Florida First's office in North Fort Myers and went to the Port St. Lucie office an average of once a week. During each of his visits, Perroni and Johnson would go through the bank accounts and other records of the Port St. Lucie office. Johnson kept no ledgers and had no central bookkeeping system. All salesmen kept their own records of commissions due or paid. All salespersons at the Port St. Lucie office were authorized to purchase lots for the 235 program with a price limit set by Perroni as to the maximum to be paid for any lot. Applicants for financing under the 235 program would then be matched with lots purchased by Respondents. By October, discussions took place between Perroni and Johnson whereby Perroni expressed his dissatisfaction with certain operational aspects of the Port St. Lucie office. He advised Johnson that certain expenses incurred by her were unreasonable and advised her of his displeasure with the fact that she had purchased lots for the 235 program from a personal friend of hers for more money than that authorized by Perroni. He provided Johnson with an accounting of office expenses in October. Perroni revoked Johnson's authorization to write checks on behalf of the company and removed the checkbooks from the office. He provided her with an accounting of the business expenses as of November 22, 1980. He subsequently gave her a copy of a computer printout showing business losses through December 1, 1980. Perroni temporarily closed the Port St. Lucie office in January, 1981. By letter dated January 5, 1981, he advised Johnson that he was declaring the July 1, 1980, agreement between them null and void effective January 1, 1981, due to her default in that agreement. He demanded reimbursement from her for business losses in the approximate amount of $10,000. By letter to Perroni dated January 10, 1981, Johnson demanded payment of total commissions due her on five transactions to be closed in the total amount of $1,737. She noted that $180 of that amount was past due. She also requested return of her initial investment pursuant to her attorney's advice. She sent a copy of her correspondence to the Port St. Lucie Board of Realtors and Florida Board of Real Estate. The letter contains no demand for an accounting. Thereafter, Perroni's attorney and Johnson's attorney engaged in demand letters between them. On April 3, 1981, and on June 15, 1981, attorneys for the Department of Professional Regulation sent letters to Perroni stating that the Department had received a complaint from Johnson that Perroni had failed to deliver commissions due to her. Four of the five transactions listed in Johnson's letter of January 10 were recited. No request for an accounting was contained in either letter. By letter dated July 8, 1981, Perroni responded to the Department explaining, essentially, that the agreement between Perroni and Johnson was in the hands of their attorneys and referred the Department to Perroni's attorney for details regarding the financial dispute between Perroni and Johnson. On September 24, 1981, the Department sent Perroni another copy of Johnson's January 10 demand letter. The Department requested Perroni to prepare an accounting of any commissions due to Johnson, with the accounting to be sent to Johnson and the Department, together with Perroni's explanation regarding Johnson's investment in the partnership. This letter constitutes the first demand for an accounting on commissions. By letter dated October 15, 1981, Perroni responded to the Department's demand for an accounting by listing the four transactions, advising that three of the four transactions had in fact closed, and reciting the commission to be paid on those three transactions. He advised that the records of the fourth transaction could not be located. Be briefly explained the terms of the agreement between him and Johnson, explained that litigation between him and Johnson would probably be necessary, and again referred the Department to his attorney for any information or documents that might be needed. This letter constitutes an accounting as requested by the Department. The transaction on which Perroni could not locate the file in order to ascertain any commission possibly due to Johnson was the Zdanowicz to McCloud transaction. McCloud is Johnson's mother. In her deposition, Johnson admitted removing from the Port St. Lucie office what she considered her "personal" files. Many of the records from the Port St. Lucie office have never been located, including the file on the James Bell transaction wherein Perroni placed his copy of the release signed by Bell. Perroni's records indicate that the total losses suffered at the Port St. Lucie office through January 1, 1981, amount to $32,492.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, therefore, RECOMMENDED THAT: A final order be entered finding Respondents not guilty of the allegations contained in all five counts of the Administrative Complaint and further dismissing the Administrative Complaint filed against Respondents, John R. Perroni and Florida First Realty and Development, Inc. RECOMMENDED this 7th day of October, 1982, in Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of October, 1982. COPIES FURNISHED: Bruce D. Lamb, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Alfred E. Johnson, Esquire 3443 Hancock Bridge Parkway #501 North Fort Myers, Florida 33903 Mr. Samuel R. Shorstein Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Frederick H. Wilsen, Esquire Staff Attorney Florida Real Estate Commission Post Office Box 1900 Orlando, Florida 32802 Mr. Carlos B. Stafford Executive Director Florida Real Estate Commission Post Office Box 1900 Orlando, Florida 32802 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION DEPARTMENT OF PROFESSIONAL REGULATION, Petitioner, vs. CASE NO. 82-083 DPR NOS. 0005124 JOHN R. PERRONI AND 0012101 FIRST FLORIDA REALTY AND 0012012 DEVELOPMENT, INC., 0012023 0013742 Respondent. /
The Issue Whether the Department of Revenue properly assessed sales or use tax and local government infrastructure surtax on payments allegedly constituting "rent" that Petitioner paid to the mortgagee in accordance with an Occupancy and Indemnity Agreement and Trust Agreement.
Findings Of Fact As of August 10, 1989, the corporation known as Panama City Toyota, Inc., owned a parcel of land where it conducted a new and used car sales business. The automobile inventory and dealer registrations with Toyota, Mitsubishi, etc., were also held in the name of the corporation or in the names of its principals. On that date, Panama City Toyota, Inc., executed a note and mortgage to Omni Finance Corporation in the amount of $1,200,000. The note was guaranteed by the three corporate shareholders, Mark Gerke, Norman Wiese, and Apryl Wiese. On July 11, 1991, a new corporation was formed, A.D.E. of Panama City, Inc. (A.D.E.). Its shares came to be held by members of the David Hill family. A.D.E. was formed for the purpose of acquiring the assets of Panama City Toyota, Inc. On July 29, 1991, A.D.E. (Buyer) and Panama City Toyota, Inc. (Seller) entered into a sale/purchase agreement whereby all the assets of Panama City Toyota were to be purchased by A.D.E. Those assets included an automobile dealership owned and operated by Toyota along with real estate associated with that dealership. The owners of Toyota were concerned that approval of the transfer of the dealership licenses from Toyota to A.D.E. might be held up for a period of several weeks or might be denied. The owners of Toyota needed cash and were anxious to close the portion of the sale transaction that involved the real property. One or more owners of Toyota also expressed the concern that if the dealership transfers were not approved by the automobile manufacturers, Toyota might not be able to "unwind the transfer" of the real property and would, effectively, be out of business. Mr. Robert Dittman, the attorney who represented Toyota in its transfer of assets to A.D.E., testified by deposition that Toyota's lender required title to the real property be held by a separate entity. He explained as follows: The best of my recollection is that the transaction lender which was World Omni Financial Corporation came up with a requirement that the real estate be owned by a separate entity and that originally the parties contemplated that A.D.E. would own both the tangible personal property and intangible personal property that was being sold as well as the real estate that was being sold, and at some point in time apparently the buyer's lender came up with a requirement for whatever reason, and I'm not privy to that reason, that they wanted a separate entity-they did not want the operating entity to own the real property. In order to assure the Buyer that title to the real property could be secured upon approval of the dealership transfers and assure the Seller that the sale could be "unwound" if the dealership transfers were not approved, the attorneys for both sides hit upon the idea of an arrangement whereby Buyer would acquire title to the real property, but transfer it to a "Trustee" who would hold the land until the dealership transfers were either approved or denied. To give the Seller greater comfort, Mr. Gerke was named to serve as the initial "Trustee." The plan was for Seller to continue operations until the dealership transfers were approved, then the payment for the inventories and dealership licenses would be made and the real property would come out of the "trust" to the Buyer. Toyota's conveyance of title to the real property to a Trustee rather than to A.D.E. enabled the parties to satisfy the lender that title would be held by a separate entity, to satisfy the Buyer (A.D.E.) that title to the real property could be secured upon approval of the dealership transfers, and to satisfy the Seller, Toyota that the sale could be "unwound" if the dealership transfers were not approved. Thus, initially the trust had a purpose for its creation. A.D.E.'s former attorney, Mr. Jerry Williams, prepared the Trust Agreement for the Trust in accordance with the agreement between A.D.E. and Toyota, that the Trustee would hold title to the real property. The trust was entered into on December 31, 1991. To give the Seller greater comfort, Mark Gerke, who was shareholder in Toyota and operated the Toyota dealership, was named to serve as the initial Trustee. Also on December 31, 1991, A.D.E. and the initial Trustee of the Trust entered into an Occupancy and Indemnity Agreement. The Occupancy Agreement gave an option to purchase the property to Petitioner, the beneficiary of the trust. The Occupancy and Indemnity Agreement provided in paragraph 3 on page as follows: 3. Note Payments. During the Term, A.D.E. shall pay $12,000 per month for its right to occupy and use the Real Estate, or such greater or lesser amount as shall be required to pay all principal, interest and costs when due under the certain promisory [sic] note to be issued by Trustee as maker in favor of World Omni Financial Corp. as payee ("Note"). Such payments shall be made to the payee or holder of the Note. At all times material to this action, A.D.E. has been the sole beneficiary under the Real Estate Trust Agreement. By specific language in the Agreement, the Trust has no authority to act in any fashion nor as to any matter except as specifically authorized by the beneficiary. The beneficiary has sole authority to authorize action by the Trustee, sole authority at any time to remove the Trustee and sole authority at anytime to terminate and dismantle the Trust entirely and demand distribution of all assets to it. Not long into this arrangement, on April 30, 1992, certain questionable business practices of Seller were discovered. A.D.E. caused Mr. Gerke to resign as "Trustee" and named David Hill, II, as his successor. Mr. Hill was selected by his father, who in effect directed the operations of A.D.E and actually caused the purchase of Toyota and the creation of the various agreements involved in that purchase. David A. Hill, II, has held a majority ownership interest in the Petitioner. At this point the beneficiary and grantor essentially became one. Several months after that on October 21, 1992, the dealership transfers were approved and the second part of the deal was closed. Toyota executed a warranty deed conveying the real property to the trust. The trust no longer had a purpose and the beneficial and title interests merged. By its terms the trust terminated. However, through an oversight, formal transfer of title did not happen. Pursuant to the finalization of the sale (and on the brink of foreclosure by Omni), Buyer assumed the note and mortgage with Omni and Omni released Toyota as maker and Mr. Gerke, Mr. Wiese, and Ms. Wiese as guarantors. Because of the fact that record title was still in Trust, the assumption of the note was in the Trust's name, rather than A.D.E. Therefore, David Hill, II, signed a Note and Mortgage Assumption and Modification Agreement in his capacity "as Trustee under Real Estate Trust Agreement dated December 31, 1991." Around March 25, 1997, financing for the business was moved to SouthTrust Bank. David H. Hill, II, as Trustee under the Trust, obtained a loan from SouthTrust Bank of Alabama, N.A. (SouthTrust Bank) in the amount of $770,990.34 to refinance the purchase of the automobile dealership from Toyota. SouthTrust's attorneys, seeing that title was in a trust, required the trustee to execute an Assignment of Rents. A.D.E. provided its financial statements for the years ending December 31, 1997, and December 31, 1996, to its mortgage holder(s). The mortgage holder relied on the financial assets of A.D.E. in making the loan. The notes to A.D.E.'s financial statements for the years ending December 31, 1997, and December 31, 1996, represented as follows: NOTE 8: INVESTMENT IN SUBSIDIARY The Company has an investment in David Hill, II, Real Estate Trust, a wholly owned subsidiary. Management has elected to use the equity method of accounting for this investment. A.D.E. of Panama City, Inc.'s Equity in the investment at December 31, 1997 and 1996 is $392,836 and $356,688, respectively. Generally accepted accounting principles require that investments in majority owned subsidiaries be accounted for as consolidated subsidiaries. The effect of the departure from generally accepted accounting principles on financial position, results, operations, and cash flows has not been determined. Additionally, the notes to A.D.E.'s financial statements prepared by A.D.E.'s accountant for the years ending December 31, 1996, and December 31, 1997, included the following statement: The Company leases buildings and land for administrative offices and operations from David Hill II Real Estate Trust with terms of monthly renewals. The Company pays the maintenance and repairs for these facilities. The terms of the loan included a requirement that A.D.E. produce a lease between David H. Hill, II, Trustee, as landlord, and A.D.E., as tenant, within 45 days after closing. Additionally, David H. Hill, II, as Trustee, was the sole mortgagor of the property pursuant to the loan by SouthTrust Bank. David H. Hill, II, as Trustee, was the sole maker of the promissory note for the loan. However the funds were used in the operations of the dealership A.D.E. owned. SouthTrust Bank required A.D.E. to execute and provide the bank a resolution of the Board of Directors of A.D.E. before the bank would close the loan. On March 25, 1997, the Board of Directors of A.D.E. approved the resolution required by SouthTrust Bank (Resolution) stating, in part, as follows: WHEREAS, the Corporation agrees to and authorizes its officers to execute any and all documents necessary to secure a loan from SouthTrust Bank of Alabama, N.A., in the approximate amount of $770,990.334 (the "loan"), which will encumber the property which is owned by David H. Hill, II, Trustee under that Trust Agreement dated December 31, 1991, ("Property Owner"), and which is being leased by the Corporation from the Property Owner, (the "property"). The Property is located at 5303 West Highway 98, Panama City, Bay County, Florida . . . . In addition to the Resolution of the Board of Directors of A.D.E., SouthTrust Bank required execution of various documents in order to close the mortgage loan with David Hill, II, Trustee. David Hill, II, as Trustee, executed and delivered to SouthTrust Bank the following documents: Directions from David H. Hill, II, to Execute Documents for the loan. Affidavit of David H. Hill, II, as Trustee, dated March 25, 1997. Title Affidavit executed by David H. Hill, II, Trustee. Again David H. Hill, II, followed his father's instructions in obtaining the SouthTrust Loan and executing the documents for the loan. He never read the trust documents. Likewise he never read the loan documents. Indeed all of the transactions involving A.D.E. or the Trust were directed and instituted by Mr. Hill's father. The Trust never functioned independently of the beneficiary or the Hill family, its stockholders At all times since the transfer of title into the Trust, A.D.E. has made all payments on all debts secured by the property. All such payments were made directly to the lenders and did not pass through the Trust. The Trust, in fact, never had a bank account, never obtained an Employer Identification Number, and never filed (nor was ever required to file) a tax return. All insurance premiums and all real estate ad valorem taxes were paid directly by A.D.E. It is also undisputed that the Internal Revenue Service forms 1120S filed by A.D.E. reflecting income in 1992- 1995 claimed a deduction for rent paid by A.D.E. to the Trustee for the Trust Assets consisting of real property. However, the deductions were matched by the income reported on K-1s to the shareholders of A.D.E. and on various tax returns. The notes to A.D.E.'s financial statements prepared by A.D.E.'s accountant for the years ending December 31, 1997 through December 31, 1999, included the following statement: The Company leases buildings and land from the David Hill II Real Estate Trust. A.D.E. of Panama City, Inc. is the grantor of the trust. Based on all these facts, the evidence established that the Trust for at least tax purposes does not have a separate identity from its beneficiary A.D.E. The Trust is not in the business of renting or leasing property, no matter how much the Trust settlor's and A.D.E. played fast and loose with formal title records. Therefore, the payments of the mortgage by A.D.E. do not constitute rent and are not subject to tax.
Recommendation Based upon the findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Revenue enter a final order finding the payments Petitioner made to its mortgagee are not taxable as rent. DONE AND ENTERED this 2nd day of April, 2001, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER 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 April, 2001. COPIES FURNISHED: H. Cranston Pope, Esquire Post Office Box 1609 Panama City, Florida 32402-1609 J. Clifton Cox, Esquire Office of the Attorney General The Capitol, Tax Section Tallahassee, Florida 32399-1050 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32314-6668 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-1000
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, I make the following: The Defendant, Leroy Wilson, is a registered real estate broker with the Commission and during January 1, 1975 to November 5, 1975, Defendant was registered as trading as Overpass Real Estate. On April 27, 1975, Defendant was the owner of residential property located at 291 N.W. 29th Terrace, Ft. Lauderdale, Florida. On April 28, 2/ Robert English and his wife Mazie English in response to a "for sale" sign posted at 291 N.W. 29th Terrace, Ft. Lauderdale, Florida, went to the real estate brokerage office maintained by the Defendant at room 201 Romark Building, 3521 West Broward Boulevard, Ft. Lauderdale, Florida. Defendant and Mr. and Mrs. English discussed and negotiated a deposit receipt contract dated April 28, 1975, between the Englishes as purchasers and Defendant as seller for the purchase and sale of property owned by Defendant located at 291 N.W. 29th Terrace. Mrs. English testified that they put up an earnest money deposit of $300 acknowledged by Defendant, however, Defendant executed the deposit receipt contract reflecting an earnest money deposit of $600. (See FREC Exhibit number 2). Mrs. English testified that part of the terms of the contract was that she would apply for a mortgage loan but when it was determined that her daughter who was to participate with her in the purchase, was not able to stay with her, she and her husband decided not to apply for a mortgage loan. She explained to Defendant and he agreed to return the $300 deposit that she had submitted along with the deposit receipt contract. When the Englishes demanded the return of their deposit, Defendant advised them that "it was the law that the deposit must be kept for 6 weeks, and thereafter, he would have to keep the deposit another ten days." After the expiration of the six week period, the Englishes called the Defendant's office and was advised that he no longer lived there and other efforts by the Englishes to contact the Defendant were fruitless. Thereafter on or about August 20, 1975, the Englishes filed a complaint with the Commission. Approximately two days after the Commission initiated its investigation, the Defendant returned the $300 deposit to the Englishes. (See FREC Exhibit number 3). N.B. Wolf an employee of Gulf Atlantic Mortgage Brokers testified that she was familiar with the document received into evidence as Exhibit number 2 which is the deposit receipt contract entered into by the Defendant and the Englishes. She testified that she did not recall ever having taken a credit application for the Englishes to apply for a mortgage loan. Roy E. Conner, the operations officer for Plantation First National Bank testified that he caused to be gathered the bank records as they relate to the escrow account maintained by the Defendant at that bank. An examination of those bank records revealed that the Defendant's escrow bank account maintained at Plantation First National Bank had a shortage of $5 as of September 16 and that on August 14, his escrow bank account showed a balance of $65 when it should have reflected a balance of $300 in earnest money deposits. See FREC Exhibit number 4 received into evidence. Pruyn investigated Defendant's brokerage office on September 16, at 2951 N.W. Avenue, Ft. Lauderdale, Florida. Based on an official inspection, Pruyn noted a number of inadequacies in that there were no letterheads, no desks, no chairs, no business mail, no diary of witnesses or any official sign as required and set forth in Commission Rule 21V-10.07 and 10.09, Florida Administrative Code and Section 475.22, Florida Statutes. See FREC Exhibit number 5 received into evidence. As previously stated, the Defendant did not appear at the hearing nor did he have a representative present to present any defense to the charges made by the Commission in the administrative complaint.
The Issue The issues in this case are whether the Respondent, Peter C. Fischbach, should be disciplined on the charges alleged in the Administrative Complaint, FDBPR Case No. 97-83729. Specifically, the charges allege that, "under the guise of an alleged real estate 'consulting fee,'" Fischbach converted $10,000 of a prospective buyer's escrow money, contrary to their agreement that Fischbach only would be paid commission on the closing of a purchase, which did not occur. The three-count Administrative Complaint charges that these allegations establish violations of: Count I, Section 475.25(1)(b), Florida Statutes (1997), for fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction fraud, misrepresentation; Count II, Section 475.25(1)(d)1, Florida Statutes (1997), for failure to account or deliver funds; and Count III, Section 475.25(1)(k), Florida Statutes (1997), for failure to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement was properly authorized.
Findings Of Fact The Respondent, Peter C. Fischbach, is a licensed real estate broker in Florida. However, he has not been very active in actual real estate brokering; most of his involvement in the real estate business has been investing in and renting real estate on his own account. In 1994, Fischbach met Peter Graf, a German national who vacationed in Florida with his wife, Kaethe. The Grafs were interested in purchasing a campground on Alligator Point in Franklin County, Florida. One of Fischbach's tenants was an acquaintance of the Grafs, and the Grafs were impressed with Fischbach's property. When the Grafs became acquainted with Fischbach, they also were impressed with Fischbach's knowledge of real estate investing. In early 1995, the Grafs asked Fischbach to help him evaluate the Alligator Point property and put together an offer to purchase. Fischbach agreed; however, he attempted to explain that he did not do much real estate brokering and would prefer to be paid a fee for his services in an amount agreed to by the parties after Fischbach was finished with his work so that both would be in a better position to evaluate the fairness of his remuneration. Fischbach proposed that once they agreed to the amount of Fischbach's fee, Fischbach would return to the Grafs any sales commission paid to Fischbach on the transaction. The Grafs readily agreed to Fischbach's proposal. Fischbach made several trips to Franklin County, discussed strategy with the Grafs, negotiated with the prospective seller, and telephoned and corresponded with the Grafs in Germany. At the request of the Grafs' attorney, Fischbach assumed the responsibility of preparing a letter of intent to memorialize the agreement between seller and buyer. The attorney planned to prepare all legal documents necessary to implement the letter of intent. Fischbach first drafted an incomplete and undated Purchase and Sales Agreement for a purchase price of $1,250,000. (Petitioner's Exhibit 1). This rough draft included a provision for a 6% sales commission payable to Fischbach "at the closing." The evidence suggested that this draft was not signed by the Grafs or presented to the seller. On or about March 10, 1995, Fischbach completed a revised letter of intent. (Petitioner's Exhibit 2). The revised letter of intent included a provision for a 4 percent sales commission payable to Fischbach "at the closing." It also provided for a $100,000 deposit payable $25,000 initially and $75,000 by September 1, 1995, until which time the Grafs would be entitled to investigate and inspect the property. Closing was proposed for January 1, 1996. The parties were to execute the Purchase and Sales Agreement to be prepared by the Grafs' attorney as soon as possible and within 30 days. This letter of intent apparently was signed by the Grafs and presented to the seller, but the seller declined and asked for more money. On or about March 21, 1995, Fischbach again revised the letter of intent. (Respondent's Exhibit 5). This revision was for a purchase price of $1,350,000. It omitted any provision for a sales commission for Fischbach. As before, it provided for a $100,000 deposit payable $25,000 initially and $75,000 by September 1, 1995. But this revision only gave the Grafs until May 30, 1995, to investigate and inspect the property, and required the parties to execute the Purchase and Sales Agreement to be prepared by the Grafs' attorney on or before May 31, 1995. As before, closing was proposed for January 1, 1996. This second revised letter of intent apparently was signed by the Grafs and the seller, and the Grafs paid the initial deposit of $25,000 to Fischbach to be held in escrow. The day after Fischbach prepared the second revised letter of intent for signature by the parties, he met with the Grafs to discuss his fee. In Fischbach's mind, although he intended to continue to be available to answer questions and assist the Grafs through closing, his primary work was done, and he and the Grafs were in a position to come to an agreement on what Fischbach should be paid for his work. The Grafs were accompanied by Martin Lehner, a German friend and financial advisor to the Grafs, who Fischbach thought would be able to translate for them as necessary to assure that all parties fully understood the discussion. Fischbach opened the discussion by telling the Grafs that 6% was a normal real estate commission. However, it was Fischbach's opinion that 6% of the $1,350,000 purchase price in the letter of intent was too much for what Fischbach had done for the Grafs. Fischbach suggested that they instead consider a fee in the amount of 2% of the purchase price, or $27,000. The Grafs agreed. The parties then agreed that the fee would be payable $10,000 in September 1995, $10,000 in September 1996, and $7,000 in September 1997. The agreement was reduced to writing in the form of a note stating: "Peter's commission (2%), 3/22/95, $10,000 Sept 95, $10,000 Sept 96, $7,000 Sept 97." (Respondent's Exhibit 5). Peter Graf signed the note in the presence of his friend and financial advisor, signifying the agreement of him and his wife. Fischbach intended to communicate to the Grafs that he was entitled to his $27,000 fee regardless whether the transaction closed. However, Fischbach's use of the term "2% commission" both in the discussion about his fee and in the note intended to memorialize the agreement may have contributed to a misunderstanding as to what would happen if the transaction did not close. In order to facilitate the eventual transfer of funds from the Grafs to the seller at closing, and to enable Fischbach to attend other matters on the Grafs' behalf while they were in Germany, Fischbach had the Grafs execute a power of attorney, in favor of Fischbach, on or about May 31, 1995. During the summer of 1995, Fischbach participated in continued negotiations designed to achieve tax benefits for both seller and buyer. The Grafs also consulted immigration attorneys to acquire the visa necessary for him to purchase and operate the campground. By letter dated July 13, 1995, Fischbach apprised the Grafs of the status and reminded them both that a second deposit installment of $75,000 was due in escrow by September 1, 1995, and that the first $10,000 of Fischbach's fee was also due in September 1995. The Grafs received the letter but never questioned what it said about Fischbach's fee. On or about July 17, 1995, the Grafs' attorney completed a proposed Contract for the Sale and Purchase of Real Estate and Agreement for the Sale and Purchase of Business Assets. However, before it was executed the Grafs insisted on the addition of a provision that would suspend purchase money mortgage payments for one year in the event of a catastrophic hurricane. By letter dated September 15, 1995, Fischbach notified the Grafs that the seller refused to include the hurricane catastrophe provision in the Purchase and Sales Agreement and that the seller was giving the Grafs until October 2, 1995, to sign the proposed Contract for the Sale and Purchase of Real Estate and Agreement for the Sale and Purchase of Business Assets. Fischbach also advised the Grafs: "If we are done for now, I would like to close up your escrow account, pay myself the first $10,000 payment as agreed, and return the remaining money to Martin [Lehner] for him to invest for you." The Grafs received the letter but never questioned what it said about Fischbach's fee. When Fischbach did not hear from the Grafs by the seller's deadline, Fischbach assumed the deal was off and wrote to the Grafs on October 3, 1995: "I now need to close your $100,000 plus interest escrow account. I also would like to pay myself the first $10,000 real estate consulting payment that was due in September. Deborah and I are getting married and we could use the money." In fact, Fischbach did not get married, and he did not need the money; the second quoted sentence was Fischbach's way of trying to ask for the overdue payment in a light-hearted manner. The Grafs received Fischbach's October 3, 1995, letter and again did not question what it said about Fischbach's fee. However, by this time it was occurring to the Grafs that they were going to be out $10,000 and not have anything to show for it. Notwithstanding the agreement regarding Fischbach's fee, the Grafs now thought $10,000 was too much to pay Fischbach in light of the failure of the deal to close. They decided to take it up with Fischbach when they returned to Florida from Germany. The Grafs never communicated to Fischbach at any time that they had any questions whatsoever about Fischbach's fee, or Fischbach's intention to deduct it from the escrow money. On October 18, 1995, Fischbach paid himself $10,000 and refunded the balance of the Grafs' deposit plus interest. Peter Graf testified at one point that he and his wife were back in the United States when the escrow account was closed, but he also testified that he did not return until November 1995. It is found both that the Grafs had not yet returned and that the Grafs still had not contacted Fischbach to object to his fee or to his intention to deduct $10,000 from escrow when Fischbach closed the escrow account. Peter Graf testified that he contacted Fischbach shortly after the Grafs returned to Florida to complain about Fischbach's fee and the deduction of $10,000 from the escrow refund. Fischbach testified that he heard nothing from the Grafs until approximately the middle of February 1996. Due to irreconcilable direct conflict in the testimony, it was not proven that the conversation occurred earlier than the end of January or early February 1996. Whenever their first conversation on the subject occurred, Graf told Fischbach there should not have been any fee since there was no closing, and Fischbach's response was that the Grafs had agreed to the fee. Fischbach thought that he was able to remind the Grafs of their fee agreement, again explain it to them, and thereby resolve their complaint. Fischbach wrote to the Grafs' attorney on February 26, 1996, in response to a telephone call from the attorney, in which the fairness of Fischbach's fee was questioned. In the letter Fischbach again explained in detail the agreement for the fee under which the Grafs actually still owed Fischbach another $17,000. Fischbach wrote that he saw no reason why he should have to give the Grafs any money back. Fischbach's letter also confirmed that the Grafs had approached Fischbach the preceding week to complain about the fee, but that Fischbach thought the matter had been discussed, explained and settled. The Grafs' attorney declined to take their case against Fischbach. He told the Grafs that as far as he was concerned, the dispute was "between you two." Later, the Grafs consulted a Louisiana attorney and requested that the attorney do "whatever was necessary." According to Peter Graf, the Louisiana attorney lodged a complaint with the Florida Real Estate Commission. Despite the evidence that the Grafs agreed to a $27,000 "consulting fee" for services rendered, they maintained that the fee should not be paid because there was no closing. Yet, the Grafs concede that Fischbach is entitled to something for his work, and they offered him $2,500 to $3,000. Fischbach, on his part, still maintains that he is owed another $17,000 but had not tried to collect it, he says, due to "embarrassment" about the dispute. He testified that it never occurred to him to return the $10,000 to escrow and have the Florida Real Estate Commission resolve the dispute and issue a disbursement order because he was not familiar with the procedure, not being very active in the brokerage of real estate.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a Final Order dismissing the charges against the Respondent, Peter C. Fischbach. DONE AND ENTERED this 23rd day of March, 1999, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON 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 23rd day of March, 1999. COPIES FURNISHED: Steven W. Johnson, Senior Attorney Department of Business and Professional Regulation Division of Real Estate Suite N-308A 400 West Robinson Street Orlando, Florida 32801 Peter C. Fischbach 405 Central Avenue St. Petersburg, Florida 33701 James Kimbler, Acting Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Orlando, Florida 32802-1900 William Woodyard, Acting General Counsel Department of Business and Professional Regulation Northood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Based upon the documentary evidence and the testimony taken at the hearing, the following relevant facts are found: At all times material hereto, Respondents were licensed by the Florida Real Estate Commission and subject to the jurisdiction of the Department of Professional Regulation. Their license numbers are 0151878 and 0195386, respectively. By previous order of the Board, the license of Respondent Gerald Rosen has been revoked. At all times material herein, Riken Realty, Inc., was a licensed corporate broker and doing business at 1742 N.E. 163rd Street, North Miami Beach, Florida 33162. Respondent Mishkin was a salesman associated with Riken Realty, Inc., and was the principal owner of said corporation. At all times material herein, Riken Realty, Inc., had Its escrow account at the Intercontinental Bank, North Miami branch, bearing escrow account number 401-001039. Respondent Mishkin was an authorized signatory on this account. On or about February 28, 1980, Victor Rosenbloom of Clifton, New Jersey, entered into an oral sublease agreement for the period commencing March 1, 1980 through April of 1980 for premises known as Apartment C 307, Summerwinds Apartment Complex, 494 N.W. 165th Street, North Miami Beach, Florida, at $900 a month. The total rent of $1,800 was paid by Rosenbloom by Traveler's Checks on February 28, 1980 to Riken Realty, Inc. Further, Rosenbloom gave to Riken Realty on March 1, 1980 his Traveler's Checks in the amount of $900 as security damage deposit on said apartment. The lease was negotiated by an associate of Riken Realty, Inc., which had a rental listing on said premises. At all times material herein, Respondent Mishkin was lessee of said premises, subletting to Rosenbloom. Rosenbloom vacated said premises on April 29, 1980, on which day Respondent Mishkin inspected the premises and found no damages; as a result, no deductions were to be made on said $900 security damage deposit. Rosenbloom requested Mishkin to refund said deposit in full, Respondent Mishkin agreed to said refund and to this effect issued his written statement that a refund would be made by May 15, 1980. On or about June 14, 1980, Respondent Mishkin issued a refund check to Rosenbloom in the amount of $811.00 on the escrow account of Riken Realty, Inc., bearing check number 1765 and dated June 14, 1980, to the order of Vic Rosenbloom. The stated check was not honored upon presentation for the reason that the account had been closed on June 17, 1980. Further, when Respondent Mishkin issued said check the escrow balance was seventy-six cents, which balance occurred on or about May 21, 1980 and continued until the account was closed on June 17, 1980. The stated check for $811.00 was, in fact, insufficient refund since the refund should have been for the full amount of the deposit, specifically, $900. Rosenbloom individually and by and through his attorney, made repeated demands both orally and in writing for a full refund of the deposit. Respondent eventually repaid Rosenbloom $811.00 but failed to pay the service charge incurred by the previously transmitted dishonored check and failed to render an accounting for the deductions made from the $900 security deposit.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, It is RECOMMENDED: That Riken Realty, Inc. and Steve Mishkin be found guilty of violating Section 475.25(1)(b) and (d), Florida Statutes, and their licenses be suspended for a period of six (6) months. Since Respondent Gerald Rosen's license has already been revoked, the charges against him should be dismissed. DONE and ORDERED this 7th day of October, 1982, in Tallahassee, Florida. SHARYN L. SMITH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of October, 1982. COPIES FURNISHED: Michael J. Cohen, Esquire Suite 101 Kristin Bldg. 2715 East Oakland Park Blvd. Ft. Lauderdale, Florida 33306 Brian Hal Leslie, Esquire 1795 North East 164th Street North Miami Beach, Florida 33160 Riken Realty, Inc. 1742 North East 163rd Street North Miami Beach, Florida 33162 Carlos B. Stafford, Executive Director Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Samuel R. Shorstein, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
The Issue Whether Petitioner's application for licensure as a real estate salesperson should be denied on the ground that he is not qualified for licensure for the reasons set forth in the Florida Real Estate Commission's October 19, 1999, Order preliminarily denying his application.
Findings Of Fact Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made: Petitioner is a disbarred attorney. He began practicing law in approximately 1972, and was licensed to practice in Florida and New York. In or about March of 1991, Petitioner was involved in a transaction involving the sale of an aircraft. The purchaser of the aircraft was Joseph Towne. Mr. Towne paid for the aircraft by giving Petitioner, who was conducting the closing, a cashier's check issued by Citizen's United Bank, N.A., in the amount of $150,000.00 (Cashier's Check). Petitioner deposited the Cashier's Check in his trust account at a Miami, Florida branch of Sun Bank (Petitioner's Bank). He subsequently made payments (by check) from his trust account. On or about March 25, 1991, New Jersey National Bank, which had purchased Citizen's United Bank, N.A., refused to honor and make payment on the Cashier's Check and returned it (with the notation "refer to maker") to Petitioner's Bank. Upon receiving the returned Cashier's Check, Petitioner's Bank made the necessary adjustments to Petitioner's trust account to reflect that the Cashier's Check was not honored. As a result, there were not sufficient funds in Petitioner's trust account to cover all of the checks drawn on the account. When he learned what had happened, Petitioner contacted New Jersey National Bank and was told that it appeared that the Cashier's Check had been stolen some time ago. Petitioner then wrote a letter to Gail Alston, a consumer affairs specialist employed by the Comptroller of Currency in New York, asking her to "look[] into the matter." He received back from Ms. Alston the following written response to his letter: This is in response to your letter concerning New Jersey National Bank, Ewing Township, New Jersey. As a result of our inquiry, the bank has advised that this matter was previously investigated by the bank's Loss Prevention and Security Division. The review revealed that the subject check was stolen approximately ten years ago, prior to New Jersey National Bank's purchase of Citizens United Bank (CUB). The check was presented for payment in March of 1991 and returned to Sun Bank- Miami for the above reason. You were advised that CUB was no longer a bank, that the subject check had been stolen to the best of their knowledge and New Jersey National Bank had no way of determining that the check itself is not counterfeit. The question of who should bear liability, if any exists, in this matter is not governed by administratively enforceable banking statutes. Any restitution you seek in this matter would have to be decided by the courts through private legal action. Petitioner determined not to pursue such "private legal action." In October of 1991, Petitioner was disbarred (effective nunc pro tunc June 6, 1991) by the Florida Supreme Court for misuse of client trust funds resulting in trust fund shortages amounting to approximately $208,000.001 and for failure to keep proper trust fund records. The Florida Supreme Court also ordered Petitioner to pay $4,348.27 in costs. Petitioner was thereafter disbarred in New York based upon the same misconduct that led to his disbarment in Florida. In 1993, Petitioner was arrested and charged in Broward County Circuit Court with grand theft in the first degree for the same misconduct (relating to his handling of trust fund monies) for which he was disbarred in Florida and New York. Petitioner pled no contest and was adjudicated guilty as charged in this criminal proceeding. Petitioner was sentenced to community control, followed by a period of probation, and ordered to pay $208,290.04 in restitution. In August of 1997, Petitioner's probation was terminated and a Judgment was entered which effectively "converted the previously issued Order of Restitution to a civil judgement." The Judgment directed Petitioner to pay the full amount of restitution he owed ($208,290.04) "immediately." There is no indication in the evidentiary record that Petitioner has made any restitution payments. Furthermore, the evidentiary record lacks persuasive competent substantial evidence demonstrating that, since engaging in the unethical and criminal conduct that resulted in his disbarments and criminal conviction, Petitioner has transformed himself into a trustworthy and responsible person with a good reputation for fair dealing who, if allowed to become a licensed real estate salesperson, would conduct himself in a manner that would not endanger the public.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission issue a final order denying Petitioner's application for licensure as a real estate salesperson. DONE AND ENTERED this 23rd day of May, 2000, in Tallahassee, Leon County, Florida. STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of May, 2000.
Findings Of Fact Respondent Martha M. Bustillo is a real estate broker licensed in the State of Florida, having been issued license number 0401092. At all times material hereto, she has been the qualifying broker for Respondent Virmar Investments, Inc. Respondent Virmar Investments, Inc., is a real estate brokerage corporation licensed in the State of Florida, having been issued license number 0237551. At no time material hereto has Respondent Olga Venedicto been licensed in the State of Florida as either a real estate broker or as a real estate salesperson. In July of 1992 Thomas F. Sevilla contacted Virmar Investments, looking for a house to buy. Olga Venedicto took his phone call and told him that she would help him. Sevilla went to Venedicto's "office" at Virmar Investment and began working with her. Venedicto gave Sevilla her business card which represented that she is the vice president of Virmar Investments, Inc., and carries the notation "registered real estate brokers." In addition to giving him her card which carried her name, Virmar's name, and the word "brokers" in the plural form rather than the singular form, Venedicto specifically told Sevilla that she was a broker. Venedicto and Bustillo took Sevilla to see a house which he decided to buy. He gave Venedicto his check for $2,000 as a deposit and instructed her and Bustillo to make an offer on that house. Venedicto told him she would put the money in Virmar's escrow account. Instead, the money was deposited in Virmar's operating account. Sevilla did not buy that house, and Venedicto and Bustillo took him to see a second house. Sevilla decided not to make an offer on that house and asked Venedicto to refund his money. It took a month before Sevilla received a check from Venedicto. Although the check was marked "deposit return," the check was not written from Virmar's account but rather was a check from a Mega Group Corp. for only $1,675. When Sevilla attempted to cash that check, it was dishonored three times, with the notation "N. S. F." Finally, the check was honored by the bank. Sevilla had expected to receive his entire $2,000 deposit. Neither Venedicto nor Bustillo had ever told him in advance that they would keep part of his money. Although Respondents' attorney during the final hearing implied that his clients may have kept part of Sevilla's money to pay for a survey and credit report, Sevilla had not agreed in advance to pay for a credit report, and no evidence was offered as to what house Sevilla might have purchased a survey on or for what reason. Further, neither Venedicto nor Bustillo gave him a copy of any survey or credit report nor was he ever shown one or advised that either would be obtained. When Sevilla inquired as to why he was reimbursed the lesser amount, only then did Venedicto tell him that Respondents were keeping part of his money for a credit report. Respondents Bustillo and Virmar authorized and assisted Venedicto in her performance of acts and services requiring licensure as a salesperson relative to the transaction with Sevilla. Rita and Carlos Benitez listed their house for sale with Pedro Realty. Gladys Diaz was the listing agent at Pedro Realty. Respondents Bustillo and Venedicto brought Carlos Martinez and his wife to look at the Benitez house. Gladys Diaz was present at the time. Respondents Bustillo and Venedicto subsequently came to Diaz' office and presented to Diaz and Carlos Benitez an offer on behalf of Mr. and Mrs. Martinez. Respondent Venedicto represented herself to be a realtor and Respondent Bustillo to be Venedicto's partner and broker. Respondent Venedicto discussed the contract and price with Diaz and Benitez while Respondent Bustillo observed Venedicto's presentation. The offer had previously been signed on behalf of Respondent Virmar by Respondent Venedicto who represented to Diaz that the signature on the offer was that of Respondent Venedicto. Mr. Benitez signed the document, and Diaz then took the offer to Mrs. Benitez to obtain her signature. Mrs. Benitez also signed the offer, thereby completing the contract. Thereafter, delays ensued because Mr. and Mrs. Martinez were not in a financial position to be able to purchase the home. Respondent Venedicto contacted Mrs. Benitez and attempted to re-negotiate the contract. During those negotiations which were not successful, Respondent Venedicto represented herself to Mrs. Benitez as being a licensed real estate agent. In response to Mrs. Benitez' inquiries, Respondent Venedicto gave Benitez her business card carrying the names of Venedicto and Virmar and the notation "registered real estate brokers." As to the portion of the transaction involving Mrs. Benitez, all of her contact with the three Respondents in this cause was with Respondent Venedicto. Venedicto gave Benitez advice regarding proceeding with the sale and handled the negotiations. Prior to September 24, 1992, Hector F. Sehweret, an investigator for the Department of Business and Professional Regulation, requested that Respondents Bustillo and Virmar produce certain records for inspection by him. He spoke with Respondent Bustillo on a number of occasions to no avail. He offered to give her time to gather the records if necessary, but she never did. On September 24, 1992, he served Respondent Bustillo with a subpoena for those records. She still failed to produce them. Thereafter, she would not return his phone calls, and when he came to the office of Virmar Investments, Respondent Bustillo would hide from him. Neither Respondent Bustillo nor Respondent Virmar have ever produced the records subpoenaed. Further, no explanation has been given for the failure of Respondents Bustillo and Virmar to produce their records. Although the attorney for Respondents implied during the final hearing that the records may have been destroyed by Hurricane Andrew, there is no evidence to support that implication; rather, the evidence is uncontroverted that the building housing the real estate office of Respondents Virmar and Bustillo was not damaged by Hurricane Andrew. Ileana Hernandez is a realtor and a mortgage broker licensed in the State of Florida. She met Respondents Bustillo and Venedicto during a real estate transaction. In November of 1991 Respondents Bustillo and Venedicto contacted Hernandez regarding obtaining money in exchange for a second mortgage on certain real property. At the time, Respondents did not tell Hernandez the identity of the owner of the property, but Hernandez was given the address of the property and was advised that the market value of the property was approximately $79,000. Hernandez was subsequently advised that Respondent Venedicto (a/k/a Olga Bichara) was the owner of the property. It was agreed that Respondent Venedicto would execute and record the promissory note and mortgage in the amount of $15,500. Hernandez, who knew that Respondent Bustillo was the president of Terra Title, gave her a personal check payable to Terra Title in the amount of $15,000 on November 26, 1991. Respondent Venedicto, who had promised Hernandez that the promissory note and second mortgage would be recorded, never recorded those documents. Further, Respondents never delivered the original copy of the promissory note and mortgage to Hernandez despite her repeated demands. Hernandez later discovered that Respondent Venedicto was not the sole owner of the property which she had attempted to mortgage but jointly owned the property with her son. Accordingly, Respondent Venedicto's signature would not be sufficient to perfect a mortgage on the property. Hernandez also discovered that the mortgage, represented by Bustillo and Venedicto to be a second mortgage, was not. There were already two mortgages on the property. Had Hernandez known the true ownership and the true encumbrances on the property, she would not have loaned Venedicto the $15,000 because that raised the total amount of mortgages on the property to be in excess of the value of the property. Three checks which were subsequently written by Respondent Bustillo from the operating accounts of Respondent Virmar and of Mega Group Corp. were dishonored by the bank with the notation "N. S. F." As a result of those checks, Hernandez obtained default final judgments against Respondent Virmar and against Mega Group Corp., which final judgments are still unsatisfied. Prior to that time, however, Respondents Venedicto and Bustillo approached Hernandez regarding their need to borrow $35,000 to be re-paid in 30 days in conjunction with some real estate development in which Respondents Venedicto and Bustillo were involved. Respondent Venedicto and Respondent Bustillo each individually represented that Hernandez would have her money back in 30 days. Respondent Bustillo told Hernandez that Respondent Venedicto was in business with Bustillo and was selling real estate in Mexico. Bustillo asked Hernandez to make the check payable to Bustillo's company Terra Title. Hernandez went to the offices of Respondent Virmar and handed her personal check made payable to Terra Title to Respondent Venedicto. When the 30 days had passed with no payments to Hernandez, she went to Virmar Investments and made Respondent Venedicto sign a promissory note for $35,000. By the time of the final hearing in this cause, Hernandez had recovered only $15,000 of the $35,000 loan made to Respondent Venedicto and had recovered only the principal amount of the money supposed to have been secured by a second mortgage on real property. Hernandez is still owed $20,000 in principal alone.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered revoking the license of Respondent Martha M. Bustillo, revoking the license of Respondent Virmar Investments, Inc., and requiring Respondent Olga Venedicto to pay an administrative penalty in the amount of $5,000 within 30 days from the entry of the Final Order. DONE and ENTERED this 31st day of January, 1994, at Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of January, 1994. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 93-3328, 93-3329, and 93-3330 Petitioner's proposed findings of fact numbered 2-18, 20-29, and 31-33 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 1 has been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Petitioner's proposed finding of fact numbered 19 has been rejected as not being supported by the weight of the evidence in this cause. Petitioner's proposed finding of fact numbered 30 has been rejected as being unnecessary to the issues involved herein. Respondents' proposed findings of fact numbered 1, 4, 5, 8, 9, 18, 25, 26, 28, 37, 42, 49-52, 55, 57, 62, 63, 69, 71, and 73 have been adopted either verbatim or in substance in this Recommended Order. Respondents' proposed findings of fact numbered 2, 6, 11-17, 19-22, 30- 36, 43, 46-48, 53, 54, 56, 58, 60, 67 and 68 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Respondents' proposed findings of fact numbered 7, 10, 23, 29, 61, 64, 65, 70, 72, and 75 have been rejected as not being supported by the weight of the evidence in this cause. Respondents' proposed findings of fact numbered 3, 24, 27, 38-41, 44, and 45 have been rejected as being unnecessary to the issues involved herein. Respondents' proposed findings of fact numbered 59, 66, 74, and 76-78 are rejected as being irrelevant to the issues under consideration in this cause. COPIES FURNISHED: Steven W. Johnson, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street, Suite N-308A Orlando, Florida 32802-1900 Ofer M. Amir, Esquire Amir & Associates, P.A. 8751 West Broward Boulevard, Suite 500 Plantation, Florida 33324 Darlene F. Keller, Division Director Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32802-1900 Jack McRay, Acting General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Tallahassee, Florida 32399-0792
