The Issue Whether Respondents assisted their client in receiving unclaimed property to which the client was not entitled, and, if so, what discipline should be imposed against Respondents’ locator registration with the Florida Department of Financial Services. Whether Respondents received and refused to return unclaimed property to which they were not entitled, and ,if so, what discipline should be imposed against Respondents’ locator registration with the Florida Department of Financial Services.
Findings Of Fact On November 26, 2014, United States Magistrate Judge Thomas B. McCoun, III, Middle District of Florida, in response to a Motion to Stay filed in a related case by Mortellaro & Sinadinos, PLLC, entered an Order denying the motion. Magistrate McCoun’s Order provides an excellent overview of the facts underlying the instant dispute. The “background facts” set forth below are, in part, taken from Magistrate McCoun’s Order. Background Facts During all times relevant hereto, the Department was responsible for examining and approving all claims for unclaimed property under chapter 717, Florida Laws (2013). Section 717.1400, Florida Statutes, provides that State of Florida licensed private investigators, certified public accountants, and attorneys must register with the Department if they desire to file claims on behalf of claimants seeking unclaimed property from the Department. Upon successfully completing the registration process, a claimant’s representative is assigned a locator identification number. During times relevant hereto, Michelangelo Mortellaro and Gina M. Sinadinos were members in good standing of The Florida Bar. Mr. Mortellaro and Ms. Sinadinos are shareholders in the law firm of Mortellaro & Sinadinos, PLLC. Attorneys Mortellaro and Sinadinos registered with the Department as representatives authorized to assist claimants and were jointly issued locator identification number 103423042. In the instant dispute, Respondents were retained by the Estate of Darlene Swaim to file with the Department a claim for unclaimed property. Diann Capwell and Darlene Swaim had a joint checking account at Wachovia Bank, N.A. (Wachovia). Ms. Capwell, who received social security benefits, passed away on April 23, 1989. From April 1989 through March 2010, the Social Security Administration (SSA) deposited approximately $247,619.00 in benefits for Ms. Capwell into the joint checking account that she held with Ms. Swaim. On March 17, 2004, Ms. Swaim passed away. According to the Department, on April 30, 2010, Wachovia reported to the Department that it held $182,248.61 in unclaimed property in the account titled in the names of Ms. Capwell and Ms. Swaim. Wachovia remitted the funds to the Department, which, in turn, held the $182,248.61 in an unclaimed property account. On November 2, 2012, a Petition for Administration of the Estate of Ms. Swaim was filed in the probate division of the Circuit Court for Broward County, Florida. Mack A. Swaim served as the personal representative of the estate. On February 14, 2013, Attorneys Mortellaro and Sinadinos, pursuant to their registered locator status, filed a claim with the Department on behalf of the Estate of Darlene Swaim for the $182,284.61 (Swaim claim). Upon approval of the claim, Attorneys Mortellaro and Sinadinos would receive 50 percent of the funds as its locator fee. On July 24, 2013, the Department approved the Swaim claim and issued a paper warrant payable to the Estate of Darlene Swaim, c/o Mack A. Swaim, in the amount of $91,142.31 (purported estate funds). The paper warrant for the purported estate funds was delivered to the Mortellaro & Sinadinos law firm. On July 26, 2013, the Department disbursed, via electronic funds transfer, the remaining $91,142.30 to the Mortellaro & Sinadinos law firm as payment of its locator fee. The Social Security Administration On August 1, 2013, SSA notified the Department that the purported estate funds should not have been deposited into the Wachovia joint checking account following Ms. Capwell’s death. SSA did not file a formal claim with the Department until August 14, 2013. The Purported Estate Funds On August 2, 2013, the following email exchange occurred between the Department and Respondents. From the Department (8/2/13 at 2:26 p.m.): I received notification from the Soc. Sec. Admin. that there was a $200,000+ overpayment into the account that was reported to this office. As such, the Soc. Sec. Admin. is entitled to these funds, not the estate or your office. I am currently in the process of cancelling the warrant that was issued to the PR and I advise you to return your fee to this office within 15 days. From Respondent (8/2/13 at 3:20 p.m.): Please be advised that the checks, including the estate check, have been negotiated. With that said, we have not disbursed any of the funds; nor will we, until this matter is resolved. Please be further advised that since the estate is still open, the probate court has exclusive jurisdiction over the estate assets. This position is clearly in line with the unclaimed property statute 717.1242, F.S., - Restatement of jurisdiction of the circuit court sitting in probate and the department. Since this law firm has a fiduciary responsibility to the Personal Representative and the beneficiaries of the estate, it will not release estate funds without the probate court entering an order directing same. On or about August 2, 2013, the paper treasury warrant representing payment to the estate was initially deposited into a checking account opened for the Estate of Darlene Swaim at SunTrust Bank. SunTrust is the same bank where Respondents maintain multiple accounts, including the firm’s IOTA trust account. At the time of presentation of the paper warrant to the bank, SunTrust provisionally made the funds available to the estate for withdrawal. Respondents, after being contacted by the Department on August 2, 2013, regarding SSA’s claim, immediately transferred the estate funds into the firms’ IOTA trust account for safekeeping. The Department, after receiving Respondents’ email reply of August 2, 2013, immediately contacted SunTrust and informed the bank that the paper warrant presented to the bank for payment to the Estate of Darlene Swaim was void. SunTrust reversed the provisional credit to the estate checking account which resulted in the estate account being overdrawn by approximately $91,000. Because SunTrust had only issued a provisional credit for the deposit of the estate funds, this meant that SunTrust needed to reconcile the estate checking account. Accordingly, SunTrust, soon after Respondents transferred the estate funds into their trust account, debited Respondents’ trust account in the amount of $91,142.31. The evidence shows that the estate funds were provisionally made available to both the Estate of Darlene Swaim and Respondents. The evidence also conclusively establishes that monies from the State treasury were never released by the Department to SunTrust, the Estate of Darlene Swaim, or Respondents. On or about August 27, 2013, Respondents filed with the probate division of the Circuit Court for Broward County, Florida, an Emergency Motion to Return Estate Funds. Respondents’ emergency motion argued, in part, that the Department lost jurisdiction of the monies at issue once it approved the estate’s claim, and that the circuit court, sitting in probate, possessed exclusive jurisdiction to resolve any dispute regarding the estate funds. On September 6, 2013, the circuit court held a hearing on Respondents’ emergency motion. The Department did not attend the hearing, and claims that it never received notice of the same. Respondents assert that the Department received proper notice of the hearing on the emergency motion but, for whatever reason, elected not to attend. Nevertheless, the circuit court, after hearing argument from Respondents on the emergency motion, verbally granted the motion and directed Respondents to provide the court with a written order outlining the court’s ruling. By correspondence dated September 9, 2013, the Department advised Respondents that they should “immediately return the $91,142.31 (locator fee) to which the firm is not entitled [and] [i]f [they] fail to return these funds within ten days, the Bureau will pursue appropriate remedies for conversion of the funds.”1/ The letter makes no mention of the emergency motion that was then pending before the circuit court. Furthermore, the September 9, 2013, letter to Respondents does not contain a Notice of Rights statement or any other language which provided Respondents with a clear point of entry to challenge the Department’s contention that Respondents possessed funds (i.e., the locator fee) to which they were not entitled. On September 23, 2013, the Department responded in writing to the emergency motion and argued to the circuit court that the Department has exclusive jurisdiction to determine the merits of claims for unclaimed property held in the State treasury. The circuit court was not persuaded by the Department’s assertions, and on October 30, 2013, entered a written Order granting Respondents’ motion and directed therein that the Department return the $91,142.31 to the Estate of Darlene Swaim on or before November 19, 2013. The Department neither appealed nor complied with the Order of the circuit court, but instead, on November 15, 2013, issued a Notice of Intent to Approve Claim (Notice of Intent) in favor of the SSA in the amount of $182,284.61. A Notice of Rights statement, for the first time, was included with the Notice of Intent. Despite the fact that Respondents were now provided with a point of entry to challenge the Department’s actions, they elected not to challenge the intended action, in part, because they had an Order from the circuit court directing the Department to return the purported estate funds. On January 9, 2014, the Department entered a Final Order Approving Claim (Final Order) in favor of the SSA in the amount of $182,284.61. In addition to the Final Order, the Department also issued a separate Notice of Intent to Offset and Notice of Rights, wherein the Department advised that it was seeking to collect the $91,142.30 locator fee that Respondents still possessed with respect to the Estate of Darlene Swaim from other claims where Respondents were owed locator fees. On February 7, 2014, Respondents appealed the Final Order approving SSA’s claim to the First District Court of Appeal, State of Florida (DCA). Among other things, Respondents requested the DCA “to reverse the final order, and order the Department to return the funds it ha[d] taken from the estate in accordance with its July 24, 201[3], approval of the estate’s claim as well as the probate court’s order directing the return of the [estate] funds.” On March 14, 2014, while Respondents’ appeal to the DCA was pending, the Federal Bureau of Investigation (FBI) seized the $91,142.30 locator fee from Respondents’ bank account. On August 19, 2014, Respondents filed a Verified Claim with the United States District Court seeking return of the seized locator fee. The Department was not a party to the seizure action, and the Estate of Darlene Swaim elected not to participate in the same. After some additional legal wrangling, and recognizing that recovery of its locator fee was contingent upon a successful recovery of the unclaimed monies by the estate (with the claim of the estate having been abandoned by Mr. Swaim), Respondents, on January 20, 2015, withdrew their Verified Claim with respect to the seized locator funds. Respondents “Received” the Locator Fee As noted above, Respondents, in their August 2, 2013, email to the Department, advised that “we have not disbursed any of the funds; nor will we, until this matter is resolved.” Respondents’ representation to the Department that none of the funds would be disbursed reasonably implies that all funds, including the locator fee, would be deposited in Respondents’ trust account. Rule 5-1.1(f), of The Florida Bar Rules Regulating Trust Accounts, provides as follows: Disputed Ownership of Trust Funds. When in the course of representation a lawyer is in possession of property in which 2 or more persons (1 of whom may be the lawyer) claim interests, the property shall be treated by the lawyer as trust property, but the portion belonging to the lawyer or law firm shall be withdrawn within a reasonable time after it becomes due unless the right of the lawyer or law firm to receive it is disputed, in which event the portion in dispute shall be kept separate by the lawyer until the dispute is resolved. The lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute. Rule 5-1.1(f) makes clear that when a lawyer is in possession of disputed property and the lawyer claims an interest in the same, the property shall be treated as trust property and, therefore, kept separate until such time as the dispute is resolved. If Respondents had maintained the locator fee in the firms’ trust account during the pendency of the dispute, Respondents would be in a better position to assert that the firm never actually received the locator fee because of the special character of property held in trust. In her Verified Claim filed with respect to the seized locator fee, Respondent Sinadinos attests to the following: On July 26, 2014, the Department issued a warrant in favor of [Respondents] in the amount of $91,142.30, effectuated by electronic funds transfer, to a bank account of Claimant at SunTrust Bank. Shortly thereafter, [Respondents] transferred the $91,142.31 into [Respondents’] savings account at SunTrust Bank. Subsequently, for accounting purposes, [Respondents] opened a money market account at SunTrust Bank, account number xxx0890, wherein it deposited the $91,142.31 warrant in favor of [Respondents] issued by the Department in connection with claim no. C5047499. The $91,142.30 was seized pursuant to a seizure warrant . . . from SunTrust account number xxx0890. While the Verified Claim references two different amounts, it is clear that the locator fees are the same monies that were seized by the FBI from Respondents’ money market account.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order finding that Michelangelo Mortellaro and Gina M. Sinadinos violated sections 717.1322(1)(a) and 717.1341(1)(a), Florida Statutes. It is further recommended that the Department suspend locator license number 103423042 for a period of one month.6/ DONE AND ENTERED this 21st day of November, 2016, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN 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 21st day of November, 2016.
The Issue Whether Norman Wayne Lund, an active broker in Lund Realty, Inc., a licensed corporate broker, failed to account or deliver to Daisy and Kenneth Parnell money in the form of a deposit which had come into his hands and which was not his property or which he was not in law or equity entitled to retain, under the circumstances, and at the time which was agreed upon or which was required by law or, in the absence of an agreed upon time, upon demand of the Parnells, who were entitled to such an accounting or delivery.
Recommendation The position and actions of the various individuals should also be considered in this case in arriving at a penalty because none of the parties have completely "clean hands." The Parnells precipitated the breach by insistence on a note and mortgage; the Hammers have made no attempt to clarify the situation by paying the commission and cost; and the attorneys kept Lund Realty completely in the dark about what was transpiring. The Lunds are the only ones involved in the transaction who have tried to carry out their obligation. Further, they also are the only one who stand to lose financially with out seeking judicial relief. Based on the foregoing Findings of Fact, Conclusions of Law, and other factors bearing on the case, the Hearing Officer would recommend that the Florida Real Estate Commission place Norman Wayne Lund on probation for one year, and suspend the registration of Lund Realty, Inc. until the escrow funds concerned have been interplead in a court of competent jurisdiction to resolve the conflicting claims to said funds. DONE and ORDERED this 28th day of January, 1977 in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Manuel E. Oliver, Esquire Florida Real Estate Commissions 2699 Lee Road Winter Park, Florida 32789 Carleen Chalk Lund 612 West Vine Street Kissimmee, Florida 32741 Norman Wayne Lund 612 West Vine Street Kissimmee, Florida 32741
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 The issues in this case include whether Respondent is guilty of having committed culpable negligence in a business transaction or failed to maintain trust funds in a proper account until disbursement was authorized and, if so, the appropriate penalty.
Findings Of Fact Respondent has been a licensed real estate broker in the State of Florida since 1983 and holds license number 0405933. His most current license was as a broker trading as Realty Trend. Respondent started Realty Trend in 1985 for the primary purpose of managing rental properties. Although he had little or no training or experience in accounting, Respondent retained considerable responsibility for the day-to- day bookkeeping associated with his business, though at times he employed a bookkeeper. Respondent maintained one account for sales transactions, in which he participated as the broker, and one account for property management activity. Respondent participated in few sales transactions and is phasing out of that part of the business. All escrow monies held by Respondent were kept in interest-bearing accounts. Although Respondent retained the interest, he disclosed this fact to the parties through the sales contract. Within about 18 months, Respondent had acquired about 100 properties to manage. Respondent decided to automate the bookkeeping and purchased a computer program that would write checks, track income and expenses, generate reports, and generally handle all aspects of bookkeeping. The program was designed to assist in property management operations. Emphasizing service to property owners, Respondent had always tried to send his checks for rent collected the past month between the tenth and fifteenth of each month. By August, 1989, Respondent had been warned by Petitioner that he had to allow two or three weeks for tenant's checks to clear and determine what emergency maintenance expenses might be incurred. Through a combination of ignorance about bookkeeping, his responsibilities as a broker holding escrow monies, and the property management computer program, Respondent mishandled his trust account. His repeated bookkeeping errors and failure to take corrective action allowed a sizable shortage to accumulate by the time Petitioner conducted a routine office audit on November 17, 1989. Respondent cooperated fully with the audit and promptly provided Petitioner's investigator with a box full of bank statements. His account was reaudited on January 8, 1990. Poor bookkeeping prevents a precise determination of the shortage, but it exceeds $10,000. It is difficult to understand how Respondent's books became so confused as to become nearly worthless. There was no evidence of fraudulent intent. It appears as likely that Respondent overpaid property owners as that he overpaid himself. Respondent's ongoing ignorance of his serious trust account shortages or, in the alternative, repeated failure to solve recognized trust account shortages represents culpable negligence. Even by the time of hearing, Respondent candidly admitted that he could not provide an accurate figure for the shortage and had not yet been able to repay the deficiency, although he intended to do so.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Florida Real Estate Commission enter a final order reprimanding Respondent; imposing an administrative fine of $500; requiring Respondent to complete an approved 60-hour course; suspending his license for a period of six months, commencing retroactive to the date on which Respondent cease operations due to the emergency suspension; and placing his license on probation for a period of three years following the conclusion of the suspension, during which time Respondent shall file escrow account reports with the Commission or other person designated by the Commission at such intervals as the Commission requires. DONE and ORDERED this 8 day of October, 1990, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8 day of October, 1990. COPIES FURNISHED: Darlene F. Keller Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, FL 32801 Attorney Steven W. Johnson Division of Real Estate Florida Real Estate Commission 400 W. Robinson St. Orlando, FL 32801-1772 Thomas I. McIntosh 13542 N. Florida Ave. Tampa, FL 33613 Attorney Neil F. Garfield Envirwood Executive Plaza, Suite 200 5950 West Oakland Park Blvd. Lauderhill, FL 33313 Kenneth E. Easley General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
Findings Of Fact The Petitioner is a State government agency charged with licensing and regulating the practice of real estate sales and brokerage in the State of Florida. Its authority under Chapter 475, Florida Statutes, includes the duty to prosecute Administrative Complaints against licensees who have allegedly violated the various provisions of Chapter 475 enumerated above. The Respondent, Key Realty Management, Inc., is and was at all times material hereto a corporation licensed as a real estate broker in the State of Florida, having been issued License Number 0222667 in accordance with Chapter 475, Florida Statutes. Respondent Dan Lee Issacs is an officer of and qualifying broker for the Respondent, Key Realty Management, Inc., and holds License Number 0203152. On or about September 26, 1985, Richard A. Cook, an investigator employed by the Petitioner, conducted a routine audit of the Respondents' real property rental management trust account numbered 1201145156 maintained at Barnett Bank at 315 South Calhoun Street, Tallahassee, Florida. The audit consumed about one and one-half days. The audit revealed that as of September 26, 1985, the Respondents had received in trust from their tenants, in their capacity as real estate brokers, damage and security deposits in the amount of approximately $76,566.46. The balance of record in that account at the time of the audit was only $44,232.30. Approximately $32,334.16 were thus unaccounted for. The Petitioner's investigator, Mr. Cook, admitted in his testimony that there was no basis for him to believe that the subject funds unaccounted for had been diverted to the Respondents' own use, embezzled or otherwise improperly employed. He also acknowledged that there was no evidence of intentional misconduct in these particulars. Mr. Cook further conceded in his testimony that this prosecution stems from an increased emphasis by his agency on enforcing the requirements, concerning accounting for escrow monies, expressed in the statutory provisions pled in the Administrative Complaint in the last two years. His testimony reveals that the motivation for this prosecution, at least in part, results from that policy change. No other witness was presented by the Petitioner. The Respondent presented the testimony of Gary Erdman, an accountant and computer consultant. The witness was in charge of the Respondents' accounting, records keeping and management and computer programming. He designed their computer system, which kept up with their rental property management records, receipts and disbursements. During November 1984 to January 1985, the Respondents' business was in the process of converting to a new computer management, data storage and processing system. They were a very busy firm, with a large number of clients and properties which they managed. They thus ran out of space on their old computer system. Mr. Erdman was unable to transfer all the old data and program of the firm to the new system and had to re-program the new system. Some information was lost and never was entered in the new system. Additionally, on July 16, 1985, a problem of an accidental nature, possibly due to lightning, damaged the hard computer data storage disk of the firm and some data, which contained the record of receipts and disbursements regarding the missing $32,334.16, was lost. There was no soft disk or other backup system for this data, so it was irretrievably lost. Mr. Erdman had to start trying to reconstruct the lost data at the same time he was having to keep up, on a day-to-day basis, with his records keeping and accounting responsibilities. The reconstruction process, therefore, took a substantial period of time. Through this witness, the Respondents introduced their Exhibit 1, which was the claim or notice of loss to their insurance carrier as probative of and corroborative of Mr. Erdman's testimony regarding the July 16, 1985 accidental data loss. From that point it took two months after July 16, 1985, to learn from the manufacturer of the hard disk how much of the data had been lost. The Respondents had sent the hard disk to that manufacturer for repair and damage assessment. July and August of every year is the busiest time in the Respondents' rental management business. Possibly because of this they were unaware of the accounting problem regarding the $32,334.16 until it was discovered by Mr. Cook. The Respondents were very cooperative with Mr. Cook and apparently were unaware of the problem until he discovered it. They immediately transferred funds to cover the deficit in the subject escrow account so that no client or entity entitled to the funds therein suffered any loss. No misrepresentation was made to any client, person or entity entitled to any funds in their escrow account concerning the use, location, depository or entitlement to any escrow funds. The Respondents have now corrected the problem with their computer system and have also voluntarily changed their accounting procedures and deposit procedures so that not only loss and damage security deposits, but also rental income itself goes directly to their trust account first, before any disbursement to the landlords entitled to net rentals above the Respondents' fees and costs. Formerly, everything was deposited initially in the Respondents' operating account and then withdrawn and deposited in the escrow account, as to the security and loss and damage deposit receipts. Under the new system, however, they are able to more readily track every monetary receipt and more readily and properly account for it. This change was voluntarily made only a week or two after Mr. Cook's first visit wherein he alerted them to the problem. Additionally, Respondents' Exhibit 2 reflects that apparently there was an excess of $50,000 in the subject bank account as evidenced by a bank reconciliation record contained in that exhibit, which Mr. Cook had not seen at the time of his investigation and prior to the hearing. Thus, the subject $32,334.16 may be somewhat overstated. Further, it was established with this exhibit that, as of October 23, 1985, one month after Mr. Cook's inspection, the subject trust account had a balance of $73,973.56. It was shown by the Respondent that at the time of Mr. Cook's inspection the office staff was overloaded and that transfers to the trust account were running behind schedule. Some of the deficit was merely due to non-timely deposits to the trust account, rather than funds being mistakenly placed in a different account or used for other purposes by mistake, it not having been established that any intentional wrong-doing occurred concerning the trust account and escrow account violations charged. In any event, it has been established that the Respondents' new computer system of accounting and record management has alleviated the problem discovered by Mr. Cook. The Respondents have never encountered such a problem with their deposits either before or after this instance as of the time of hearing. It was established by the Respondent, Dan Issacs, who testified, that neither he nor his firm was co-mingling rental income with funds required to be retained in their trust account but rather were simply unaware of the apparent requirement that rental receipts must first be deposited in the trust account. In any event, it was established conclusively that no funds were diverted for the Respondents' own use or benefit and that all monies are now properly on deposit and are otherwise accounted for and were within a matter of several weeks after the audit and inspection. Additionally, all computer-retained records are now subjected to back-up record keeping at the present time.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is, therefore RECOMMENDED that the Administrative Complaint filed against Dan Lee Issacs and Key Realty Management, Inc. be dismissed in its entirety. DONE and ENTERED this 13th day of May, 1987, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of May, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2911 Petitioner's Proposed Findings of Fact: Accepted. Rejected as irrelevant. 3-5. Accepted. Accepted, except as to specific amounts which are found in the Recommended Order. Accepted, but not dispositive. Rejected as not in accordance with the greater weight of the evidence. Accepted. COPIES FURNISHED: James H. Gillis, Esquire Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Elwin R. Thrasher, Jr., Esquire Post Office Box 4351 Tallahassee, Florida 32315 Van Poole, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Joseph A. Sole, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Harold Huff, Executive Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
