The Issue Whether Respondents violated the statutes and rules alleged in the Second Amended Administrative Complaint; and, if so, what is the appropriate penalty to be imposed against Respondents.
Findings Of Fact OFR is the state agency charged with administering and enforcing chapter 560, Florida Statutes, including part II related to money services businesses. At all times material hereto, Payservices has been a foreign corporation and part II licensee pursuant to chapter 560, specifically a "money services business," as defined in section 560.102(22), and "money transmitter," as defined in section 560.102(23).4/ At all times material hereto, Mr. Danenberg has been the chief executive officer, compliance officer, and an owner of Payservices. As such, Mr. Danenberg is an "affiliated party" and a "responsible person" as defined in sections 560.103(1) and 560.103(33). Count I Licensees, such as Payservices, are required to annually file a financial audit report within 120 days after the end of the licensee's fiscal year. The financial audit report is prepared by a certified public accountant and is used to demonstrate to OFR that the licensee has the financial health to conduct its business and transmit funds within the State of Florida. Payservices' fiscal year ends December 31st. Respondents were required to provide Payservices' 2016 financial audit report to OFR by no later than May 1, 2017. On December 20, 2017, William C. Morin, Jr., OFR's Chief of the Bureau of Registration, contacted Payservices by email with regard to Payservices' failure to timely file a financial audit report within 120 days after the 2016 fiscal year ended. Mr. Danenberg responded by email that same day, telling Mr. Morin that Payservices' accountant had prepared a financial audit report "many months ago," and that it was his "impression" that it had been uploaded to the REAL system "at some point when we filed the quarterly reports." Mr. Danenberg attached to his December 20, 2017, email what OFR accepted as the financial audit report that same day. Notably, the document indicated it was prepared by a certified public accountant on June 15, 2017, after the May 1, 2017, deadline. In any event, Mr. Morin reviewed the REAL system regarding Payservices and determined there were no problems with the REAL system's ability to accept uploaded documents. Mr. Morin testified that he could see on the REAL system that Payservices successfully uploaded a quarterly report and Security Device Calculation Form on January 26, 2017, which created a transaction number. Mr. Morin also observed that Payservices started to upload its financial audit report, which would create a transaction number, but no financial audit report was actually attached and uploaded to the REAL system on January 26, 2017, under that transaction number. According to Mr. Morin, Payservices may have attempted to start to file a financial audit report on January 26, 2017, but it did not complete the transaction because no financial audit report was attached. At hearing, Mr. Morin acknowledged that: "When I looked at the Financial Audit Report transaction, nothing was attached. And I also know that the functionality of the REAL system will kind of allow for the transaction to be completed and nothing attached." Tr. p. 100. Mr. Morin testified that Mr. Danenberg was cooperative when he was contacted on Decemeber 20, 2017, and submitted the financial audit report. The persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not submit their financial audit report to OFR until December 20, 2017, almost eight months after the May 1, 2017, deadline. Count II Licensees, such as Payservices, are required to annually file Form OFR-560-07, Security Device Calculation Form, by January 31st of each calendar year for the preceding calendar year. The Security Device Calculation Form requires licensees to report to OFR the dollar amount of transactions with Florida consumers. The dollar amount of transactions identified in the form is then utilized by OFR to determine if additional collateral is necessary to protect Florida consumers in the event a claim is made against the collateral for monies that were not properly transmitted by the licensee. Andrew Grosmaire, OFR's Chief of Enforcement in the Division of Consumer Finance, acknowledged at hearing that a licensee has 60 days to amend the face value of its surety bond, should an increase be required, and that at all times material hereto, the value of Payservices' surety bond has been correct for the minimum amount required. Nevertheless, Mr. Morin testified that Respondents did not file Form OFR-560-07, Security Device Calculation Form, until February 10, 2018, ten days late. The persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not file Form OFR-560-07, Security Device Calculation Form, until February 10, 2018, ten days late. Count III Licensees, such as Payservices, are required to update information contained in an initial application form, or any amendment to such application, within 30 days after the change is effective. In Payservices' initial application dated September 25, 2015, Respondents identified Corporate Access, Inc., as its registered agent with an address for service of process at 236 East 6th Avenue, Tallahassee, Florida 32303. According to the Department of State, Division of Corporation's records, on January 10, 2017, Mr. Danenberg was appointed as Payservices' registered agent with a new address for service of process at 300 West Palmetto Park Road, A210, Boca Raton, Florida 33432. Respondents filed an amended license application with OFR on August 28, 2017, which still listed Corporate Access, Inc., as the registered agent for service of process. On February 26, 2018, Respondents amended their registered agent information with the Department of State listing a new address for Mr. Danenberg at 14061 Pacific Pointe Place, No. 204, Delray Beach, Florida 33484. Mr. Morin testified that at no time have Respondents updated their initial application with OFR to reflect Mr. Danenberg as the registered agent for Payservices and his address as the registered agent.5/ Mr. Morin and Mr. Grosmaire testified that the reason a licensee needs to update a change in the registered agent's name and address is so that OFR may effectuate service of process against the licensee. Yet, Mr. Grosmaire acknowledged that OFR has access to the Division of Corporation's records. Nevertheless, the persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not update their initial application with OFR to reflect Mr. Danenberg as the registered agent for Payservices and his address as the registered agent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that OFR impose an administrative fine against Respondents in the amount of $6,000. DONE AND ENTERED this 16th day of December, 2019, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of December, 2019.
Findings Of Fact The Respondent, Charles H. Butler, Jr., was for all periods relevant to this case a certified building contractor with the State of Florida, holding license number CB CA13872. It is officially recognized that on September 17, 1987, the administrative complaint that is the subject of this case was filed against Charles H. Butler, Jr. It is further officially recognized that the administrative complaint charges the Respondent with only two violations: Exhibiting "financial mismanagement, misconduct, or diversion, in violation of 489.129(1)(h) and (m)." Failing "to properly supervise the finances on said job, in violation of 489.129(1)(m), (j); 489.119; 489.105(4)." In April, 1986, Charles H. Butler, Jr., entered into a contract with Albert R. Harrelson to construct a commercial building for $144,000. R. Ex. 20, P. Ex. 6. Article 1 of the contract provides that "this contract includes by reference the following: 1) contract agreement form, 2) specifications, 3) material lists, and 4) approved plans." (E.S.) Article 3 of the contract stated that the "required plans and engineering to obtain a building permit are provided by the owner at his cost." The specifications, material lists, and approved plans are not in evidence. Pursuant to Article 7 of the contract, there was to have been a draw schedule for payments. The parties never agreed to a draw schedule as a part of their contract. A large portion of the loan for the construction was provided by Sun Bank of Tampa Bay. Sun Bank established a draw schedule for disbursement of the loan to the contractor, Mr. Butler, as progress was made in construction. Mr. Butler was not consulted regarding this draw schedule, and had not agreed to it. Mr. Harrelson apparently did not either since he testified that he got a copy of the Bank's draw schedule several months after entering into the contract with Mr. Butler. It is concluded that the draw schedule used by the Bank was imposed by the Bank, and was not a part of the contract between Mr. Butler and Mr. Harrelson. Sun Bank hired Inspection Service, Inc., to conduct inspections of the progress of the construction and in that manner to verify that construction had been completed, stage by stage, to justify disbursement of installments under the draw schedule. Sun Bank required Mr. Harrelson to approve loan disbursements as disbursements were made. In reliance upon progress reports of its inspector and Mr. Harrelson, Sun Bank made a total of $107,000 in disbursements under the loan. P. Ex. 9. Sun Bank had disbursed about $88,000 of this amount by February or March, 1987. P. Ex. 9. The amount disbursed by Sun Bank was never intended to cover the entire cost of construction. Mr. Harrelson was required to come up with his own funds to meet the total contract price. Mr. Harrelson refused to make payments to Mr. Butler outside the draw schedule imposed by the Bank. Mr. Harrelson discharged Mr. Butler for alleged breach of contract in March, 1987. Mr. Harrelson testified at length concerning defects that he perceived in the construction of the project and resultant extra financial cost to himself. While Mr. Harrelson testified as to his perception of mistakes made by Mr. Butler, Mr. Harrelson's testimony did not clearly explain the exact scope of the contract. There is no evidence that Mr. Harrelson has any training in the construction of commercial buildings. Mr. Butler testified at length about the delays and inadequacies in receipt of payments under the draw schedule, as well as disagreements he had with Mr. Harrelson concerning what was required by the contract. From the testimony of Mr. Harrelson and Mr. Butler it is concluded that there were changes made in the original plans, changes made in the scope of the work, changes made during the construction due to problems encountered, and that these changes were by attempted oral agreement. For example, neither party could agree as to who was to submit plans, although the written contract clearly says that the owner is responsible. The plans were never placed in evidence. Mr. Butler insists that the contract had an addendum. R. Ex. 20. Mr. Harrelson was not recalled to confirm or deny this testimony, but the contract submitted by the Petitioner, P. Ex. 6, has no addendum. There was to have been a draw schedule, but none was ever agreed to by the parties. Thus, the testimony is too fragmented, confused, and unclear to make a finding as to the exact scope and schedule of the contract. There was no testimony by the person who made the progress inspections for Sun Bank. There was no testimony from any expert in the field of contracting. During the formal administrative hearing, the Petitioner sought to voluntarily dismiss the charge of diversion of funds. The dismissal was sought without prejudice to refiling that charge at another date. The basis of the motion was that the witness from Sun Bank of Tampa did not bring files to answer questions from counsel, and was unprepared to answer from memory. It appeared during the course of the examination of the witness that counsel was not familiar with the documents in the possession of the witness, and that the witness was not prepared to present evidence. The motion was denied.
Recommendation It is therefore recommended that the Department of professional Regulation, Construction Industry Licensing Board, enter its final order dismissing the administrative complaint against Charles H. Butler, Jr. DONE and RECOMMENDED this 23rd day of March, 1988, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of March, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-5041 The following are rulings upon proposed findings of fact which have either been rejected or which have been adopted by reference. The numbers used are the numbers used correspond to the numbered and unnumbered paragraphs and sentences in the findings of fact proposed by the Petitioner. (All paragraphs after paragraph 3 have been deemed to be numbered sequentially thereafter.) Findings of fact proposed by the Petitioner: 3. The first sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. Since the entire contract was never proven by clear and convincing evidence, the relevance of this proposed finding of fact is unknown. It is impossible to conclude that the Respondent caused a "self made deficit of $25,000" since the contract itself was never proven by clear and convincing evidence. The administrative complaint did not charge Mr. Butler with failure to supervise the construction of the building. It charged him with financial mismanagement and failure to supervise finances. Moreover, the relevance of evidence concerning Mr. Butler's presence on the job site was never tied into the charge of financial mismanagement. No finding can be made on this record as to the percentage of completion on any date since the contract was never proven. With respect to the remainder of this proposed finding (the list of construction defects), the administrative complaint did not charge Mr. Butler with incompetence in the construction of the building. It charged him with financial mismanagement and failure to supervise finances. Since the entire contract, including changes and alleged defects, was never proven by clear and convincing evidence, it is impossible to conclude that Mr. Harrelson paid more than the contract price. The last two sentences are not relevant to the charge of financial mismanagement. The first sentence is not supported by the evidence. With respect to the next sentence of this proposed finding (the list of construction defects), the administrative complaint did not charge Mr. Butler with incompetence in the construction of the building. It charged him with financial mismanagement and failure to supervise finances. The last sentence is true, and adopted by reference. Since the entire contract was never proven by clear and convincing evidence, the relevance of this proposed finding of fact is unknown. No finding can be made on this record as to the percentage of completion on any date since the contract was never proven. Findings of fact proposed by the Respondent: None. COPIES FURNISHED: Lee Sims, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Charles H. Butler, Jr., Pro Se 8917 Maislin Drive Tampa, Florida 33610 Fred Seely, Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32201 Tom GallagherSecretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 William O'Neil, General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750
The Issue Whether the petitioner should revoke respondent's self-insurance privilege for failure to comply with Rule 38F-5.10(2)(a), Florida Administrative Code.
Findings Of Fact On February 12, 1980, the Department of Labor and Employment Security, through its Bureau of Self-Insurance, notified the Deauville Hotel (respondent) of its intention to revoke respondent's workers' compensation self-insurance privilege for failure to comply with the requirements of Rule 38F-5.10(2)(a), Florida Administrative Code. This Rule requires each se1f-insurer to have on file with the Department a "financial statement of a current date showing a net worth of not less than $250,000 and a current ratio of more than 1 to 1, and a working capital of an amount establishing financial strength and liquidity of the business to pay normal compensation claims promptly". Specifically, petitioner contends the respondent filed financial statements for calendar year 1978 that were not certified by an outside independent accounting firm, and that such statements reflected an unsatisfactory current ratio and net worth in contravention of the Rule. Respondent is a large luxury hotel located in Miami Beach, Florida, and employs more than 400 persons. It is a division of Deauville Operating Corporation. Respondent is now and has been for a number of years a self- insurer under Section 440.38(1)(b), Florida Statutes. The privilege to self- insure is granted by the Department when an employer demonstrates the financial ability to promptly discharge all amounts required to be paid under the provisions of the Workers' Compensation Law as contained in Chapter 440, Florida Statutes. Having once established the requisite financial integrity, an employer must file within six months following the close of each succeeding fiscal year financial statements demonstrating the continued ability to discharge all obligations under the Law. The Department is reposed with the responsibility of reviewing the financial statements to insure compliance with the applicable rules governing self-insurers. When the administrative complaint was issued, respondent had on file financial statements consisting of a balance sheet, statement of income, home office equity, and changes in financial position (Exhibit No. 1). All statements were prepared using the year ending December 31, 1978. Three financial measurements are used by the Department to evaluate the financial integrity of an employer. These are current ratio, net worth and working capital. However, the Department has chosen to rely only upon the first two measurements as a basis for revoking the self-insurance privilege of respondent. The current ratio of a business entity is determined by comparing the ratio of current assets to current liabilities as shown in the most recent financial statement (Rule 38F-5.01 (10), Florida Administrative Code). The owner's equity or net worth is computed by subtracting total liabilities from total assets. Working capital is derived by taking the excess of current assets over current liabilities. (Rule 38F-5.01(16), Florida Administrative Code);. The application of these measurements to the 1978 financial statements of respondent reveals a current ratio of .82 to 1 based upon current assets and liabilities of $667,542 and $816,542, respectively, a negative net worth of $543,112, and a working capital in a negative position. Efforts by petitioner in late 1979 and early 1980 to obtain more current financial statements of respondent were not successful. However, in April and July, 1980, respondent filed certain financial data for calendar year 1979 and the year ending March 31, 1980 (Exhibit Nos. 2, 3, 6 and 7). Exhibit Nos. 2 and 3 pertain to the financial position of the Deauville Operating Corporation at December 31, 1979, and incorporate therein the operating results of the Deauville Hotel. Exhibit No. 2 failed to segregate the Corporation's current assets and liabilities from total assets and liabilities. Therefore, no determination of current ratio or working capital can be made. The Exhibit does show the Corporation had a net worth of $2,643,487. Exhibit No. 3 revised the data shown in Exhibit No. 2 and provided a division of assets and liabilities from which a measurement of current ratio and working capital can be calculated. However, the Corporation improperly classified as a current asset a long-term receivable in the amount of $2 million. Had this asset been properly classified, current liabilities would have exceeded current assets and produced a negative working capital and current ratio of less than 1 to 1. Exhibit Nos. 6 and 7 are financial statements of the Deauville Hotel for calendar year 1979 and the year ending March 31, 1980, respectively. Exhibit No. 6 shows total current assets and liabilities of $495,449 and $1,072,540, respectively, as of December 31, 1979. The resulting current ratio is .46 to 1 while the working capital is in a negative position. Net worth is a negative $394,639. As of March 31, 1980, current assets had increased to $832,763 while current liabilities had slightly decreased to $1,017,636. The current ratio is accordingly less than 1 to 1. At the same time, net worth had increased to a positive amount of $137,901 while working capital remained in a negative position by virtue of current liabilities exceeding current assets (Exhibit No. 7). None of the financial statements are certified by outside independent accounting firms. The audit reports for the set of statements contained in Exhibit Nos. 1, 2, 6 and 7 specifically contain a disclaimer by the accountants that they have "not audited or reviewed the accompanying financial statements, and accordingly, do not express an opinion or any other form of assurance on them". By the same token, the statements encompassed in Exhibit No. 3 include the conspicuous disclaimer by the accountant that such statements are "unaudited".
Recommendation Based upon the foregoing findings of fact and conclusions of law, the Hearing Officer recommends that petitioner Department revoke the privilege of respondent to be a self-insurer under Section 440.38(1)(b), Florida Statutes. DONE AND ENTERED this 15th day of August, 1980, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of August, 1980. COPIES FURNISHED: Douglas P. Chanco, Esquire Suite 131, Montgomery Building 2652 Executive Center Circle East Tallahassee, Florida 32301 William Wade Hampton, Esquire Post Office Box 355 Gainesville, Florida 32602
