Findings Of Fact From March 4, 1976, through March 18, 1976, and from April 19, 1976, until the business closed in 1976, Lipshutz was a registered real estate salesman in the employ of FAR. From October 29, 1975, through February 18, 1976, Gottstein was a registered real estate salesman in the employ of FAR. From February 20, 1976, until March 31, 1976, and from April 19, 1976, until the business closed in 1976, Beck was a registered real estate salesman in the employ of FAR. FAR was a registered corporate broker, located in Dade County, Florida. During those periods of time, Far was engaged in an enterprise whereby advanced fee listings were obtained from Florida property owners. Salesmen known as "fronters" or "qualifiers" were employed to place calls to Florida property owners whose names and phone numbers had been provided to the salesmen by FAR. The prospects were asked if they cared to list their real estate with FAR in anticipation of resale. It was explained that there would be a refundable fee to be paid by the property owners for the listing. The refund was to occur upon sale of the property. If the prospect was interested, then certain literature was mailed out to them. Other salesmen were employed as "drivers" who would make the second contact of the prospect who indicated an interest in listing his property. The driver would secure a signed listing agreement along with a check for $375.00 which constituted the refundable listing fee. There was no evidence that any of the listings obtained by FAR were ever resold. There were, however, three parcels of land in negotiation for sale when the operations of FAR were terminated in June, 1976. There was to be a division separate and apart from the "fronters" and "drivers" to do the actual selling of the property. The listings were advertised in the Fort Lauderdale area but there was no evidence to establish whether or not other advertising occurred. There was a total absence of evidence and, hence, a failure of proof as to the allegations of misrepresentations by Respondents. FREC introduced no evidence to show that Respondents represented that the property could be sold for several times the purchase price, that it would be advertised nationwide and in foreign countries or that the company had foreign buyers wanting to purchase United States property listed with the company. There was no evidence introduced to show that Respondents either made the representations or knew them to be false. There was no evidence introduced to show that Respondents knew that no bona fide effort would be made to sell the property listed. There was no evidence of any nature introduced by FREC to show that Respondents were dishonest or untruthful.
The Issue Does Respondent, Ynnor Distribution Group, Inc., owe Petitioner, William E. Gable, Jr., d/b/a Gable Enterprises, $13,430.02 for the sale of four shipments of watermelons?
Findings Of Fact On July 17, 2001, Mr. Gable sold Ynnor 42,330 pounds of watermelon for $3,128.19. (Exhibit 1) On July 17, 2001, Mr. Gable sold Ynnor 42,740 pounds of watermelon for $3,150.70. (Exhibit 2) On July 19, 2001, Mr. Gable sold Ynnor 46,283 pounds of watermelon for $4,165.47. (Exhibit 3) On July 24, 2001, Mr. Gable sold Ynnor 44,540 pounds of watermelon for $2,985.70. (Exhibit 4) The total amount Ynnor owed Mr. Gable was $13,430.02. (Exhibit 4) There was no payment on the account by Ynnor. Mr. Gable called the recipient of the watermelons. They were all received in good shape and payment for the watermelons was made by the recipient to Ynnor. Ynnor did not attend the hearing. No evidence was received on the amount Ynnor alleged as a counterclaim.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter its final order finding that Respondent, Ynnor Distribution Group, Inc., owes Petitioner, William E. Gable, the amount of $13,430.02. DONE AND ENTERED this 27th day of November, 2002, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN 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 27th day of November, 2002. COPIES FURNISHED: Kathy Alves Fidelity & Deposit Company of Maryland Post Office Box 87 Baltimore, Maryland 21203 Ronald S. Booth, Sr. Ynnor Distribution Group, Inc. Post Office Box 1202 Winter Haven, Florida 33882-1202 William E. Gable, Jr. Gable Enterprises 6511 Bradley Road Marianna, Florida 32448 Brenda D. Hyatt, Bureau Chief Bureau of License and Bond Department of Agriculture and Consumer Services Mayo Building 407 South Calhoun Street, Mail Stop 38 Tallahassee, Florida 32399-0800
The Issue Whether the Respondent is guilty of misrepresentation, false promises, false pretenses, dishonest dealing, trick, scheme or device in a real estate transaction in violation of Section 475.25, Florida Statutes. Whether the license of Respondent should be revoked or suspended or whether the Respondent should be otherwise disciplined.
Findings Of Fact Respondent is a registered real estate salesperson who holds license no. 0075657. He was employed as a "listing solicitor" by World Wide Property Services, Inc., a registered real estate broker (now dissolved) from August 7, 1975 through April 23, 1976, soliciting listings for real estate in Florida. The solicitation was by telephone nationwide except Florida. Seymour L. Rottman was President of World Wide Property Services, Inc. and Lee Small was Vice President of the corporation during the time Respondent was employed. The purpose of World Wide Property Services, Inc. was to secure listings of and purchasers for various Florida properties. Mr. Rottman was a subpoenaed witness for Petitioner at subject hearing. During Respondent's period of employment he and Mr. Small were in charge of hiring salesmen for the company and hired Respondent. Respondent was employed to obtain listings by telephone from property owners who lived out of state but owned Florida property. The procedure followed was for a salesman to call an out of state land owner picked from a list of prospects and inquire if he or she would be interested in selling their property at a higher price than it had been purchased for. This was termed a "front" call and the salesman was termed as a "fronter". If the prospect expressed interest in listing the property, his or her name was provided to World Wide Property Services, Inc. who then mailed literature to the property owner describing the efforts that would be made by that organization to sell the property. Enclosed with this material was a listing and brokerage agreement. This agreement provided that the owner of the property would pay a prescribed listing fee to World Wide Property Services, Inc. which would be credited against a 10 percent commission due that firm upon sale of the property. In return, the corporation agreed to include the property in its "listing directory" for a one year period, direct its efforts to bring about a sale of the property, advertise the property as deemed advisable in magazines or other mediums of merit, and to make an "earnest effort" to sell the property. The accompanying literature explained that the listing fee was necessary in order to defray administrative costs of estimating the value of the property, merchandising, advertising, brochuring and cateloging the information. The material also stated that advertising would be placed in various foreign countries and cities of the United States. In addition, it stated that the property would be "analyzed", comparing it to adjacent property to arrive at a price based on recent sales of neighboring property and also review the status of development and zoning in the immediate area of the property to assist in recommending a correct selling price for approval by the owner. During the course of the calls to prospects Respondent advised them that the property would be advertised internationally and in the United States and that bona fide efforts would be made to sell the property. She represented herself as a salesman for that organization. After the promotional literature was sent to the prospect, the salesmen including Respondent, made what was called a "drive" call to answer any questions and to urge that the property be listed. After making these calls Respondent had no further contact with the property owner. The listing fee was $325. The salesmen received approximately one-third of the fee, about $100 per listing. The salesmen, including Respondent, telephoned the prospects and then read from the script entitled "front" and "drive". The instructions from the broker was to stay within the script but Respondent was not monitored at all times. During the course of operation of less than a year World Wide Property Services, Inc. secured about 200 listings and grossed approximately $80,000 to $90,000 in the "advance fee" listings, but no sales were made. Respondent made no sales but did secure a limited number of listings making approximately $250 - $400 during the time of his employment. Respondent testified that he had worked for another corporation that took advance fees. The reading from the script heretofore referred to as "front" and "drive" was usually done by someone else. Respondent did not attempt to make sales inasmuch as it was not the job for which he was employed. He stated that he told the clients the "advance fee" was for expenses and did not tell them that part of it would be his commission. He was a personal friend of the President of World Wide Property Services, Inc., but had no supervisory capacity in the corporation for which he worked. He stated that calling a person back and increasing the amount previously mentioned by 10 percent would put "just a little zip into it. This has been done ever since I have been in the real estate business." Petitioner contends: that while a salesman for World Wide Property Services, Inc. Respondent solicited and obtained listings by telephone of property owners and that as an inducement to list the property, falsely represented that the property could be sold for a price far in excess of its purchase price; that a bona fide effort would be made to sell the property and that it would be listed nationally and internationally and that the company had foreign investors wanting to purchase United States property. Respondent contends: that he never misrepresented or fraudulently induced any potential customer to send in advance fees because he operated as others do in the real estate business and the property was salable and he thought foreign investors were interested.
Recommendation Reprimand the Respondent in writing. DONE AND ENTERED this 21st day of June, 1978, in Tallahassee, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Salvatore A. Carpino, Esquire Sanford Scott Rothman Florida Real Estate Commission 425 Surfside Boulevard Post Office Box 1900 Surfside, Florida 33154 Orlando, Florida 32801 ================================================================= AGENCY FINAL ORDER ================================================================= FLORIDA REAL ESTATE COMMISSION FLORIDA REAL ESTATE COMMISSION, Petitioner, PROGRESS DOCKET NO. 3101 vs. DADE COUNTY DOAH CASE NO. 77-1573 SANFORD SCOTT ROTHMAN, Respondent. /
The Issue Whether the Petitioner furnishes "transportation services" within the meaning of Section 214.72(2), Florida Statutes, and is entitled to an apportionment of its corporate income revenues pursuant thereto.
Findings Of Fact Petitioner, FLORIDA GIFT FRUIT DELIVERY, INC., is a Florida corporation with its principal business offices located in Weirsdale, Florida. The Respondent is the DEPARTMENT OF REVENUE, an agency of the State of Florida with offices located at Department of Revenue, Division of Corporate, Estate and Intangible Tax, Northwood Mall, Tallahassee, Florida 32303. This matter has been submitted on the depositions of various persons taken at the request of the Petitioner and the Respondent. Before the Hearing Officer there are certain requests for admissions and responses thereto and memorandum of law submitted by both parties. The parties have agreed to submit this cause to the Hearing Officer on the basis of this discovery plus the memorandum of law without actual appearance before the Hearing Officer. This is a proper procedure agreed to by all parties under the provisions of Chapter 120, Florida Statutes. Petitioner, FLORIDA GIFT FRUIT DELIVERY, INC., operates out of Weirsdale, Florida, serving G & S PACKING COMPANY, a wholesale gift fruit shipper, by contracting for trucks and drivers, inspecting and labeling baskets and packages of fruit and then loading the fruit on board these trucks for transportation to Post Offices or delivery services inside and outside the State of Florida. The aforesaid trucks are not owned by Petitioner but are owned and operated by independent owner-operators. Several other transportation systems are used from time to time including the services of United Parcel Post and scheduled airlines. The type of transportation depends on the particular route and drop points. Receipts of income of FLORIDA GIFT FRUIT DELIVERY, INC., for the years 1972, 1973 and 1974 were solely from G & S PACKING COMPANY. The Corporate Income Tax Returns for the years 1972, 1973 and 1974 were audited by the Corporate Income Tax Bureau of the Department of Revenue of the State of Florida which audit culminated with a Notice of Deficiency to the Petitioner for the foregoing tax years. A protest was filed, a conference between the parties did not resolve the issue and thereupon these proceedings were instituted by Petitioner. A major function of Petitioner, FLORIDA GIFT FRUIT DELIVERY, INC., is to seek out transportation services that can deliver the gift fruit in a minimum time frame to preserve the fresh quality of the fruit. Petitioner secures the transportation for shipment of the fruit of G & S PACKING COMPANY and makes other arrangements for the delivery of the fruit to the various Post Offices and other delivery centers. The drivers of the vehicles are not employees of Petitioner and Petitioner has no direct control over them. Petitioner bills G & S PACKING COMPANY at the end of the month for its services which reflects the transportation cost incurred at FLORIDA GIFT FRUIT DELIVERY, INC., both inside and outside the state, as billed to FLORIDA GIFT FRUIT DELIVERY, INC., from the transportation sources arranged. It has no direct control of the operators of the vehicles who are largely independent owner-operators.
Recommendation Affirm the Respondent DEPARTMENT OF REVENUE's adjustments for deficiencies in the Petitioner FLORIDA GIFT FRUIT DELIVERY, INC.'s tax returns for the fiscal years ending in 1972, 1973 and 1974. DONE and ORDERED this 24th day of March, 1977, in Tallahassee, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of March, 1977. COPIES FURNISHED: Clark Stillwell, Esquire Tucker, Hicks, Blanchard & Brannen, P.A. Post Office Box 24 Ocala, Florida 32670 E. Wilson Crump, II, Esquire Assistant Attorney General Department of Legal Affairs Tax Division, Northwood Mall Tallahassee, Florida 32304
The Issue Whether Respondent has incurred and failed to pay Petitioner's surcharge tax in the amount of $12,746.97, including statutory interest and statutory penalty, in violation of Section 561.501, Florida Statutes (2005), and Florida Administrative Code Rule 61A-4.063(8).
Findings Of Fact Based upon observation of the witnesses' demeanor while testifying, character of the testimony, internal consistency, and recall ability; documentary materials received in evidence; stipulations by the parties; and evidentiary rulings during the proceedings, the following relevant and material facts are determined: Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (Division), is the state agency charged with the responsibility of administering and enforcing the beverage law in Florida. Chapters 561 through 568, Florida Statutes (2005). In this disciplinary action, the Division seeks to impose sanctions on the license of Respondent, Beer: 30 Grill & Pub, Inc., d/b/a Beer: 30 Grill & Pub, on the grounds that Respondent failed to pay to the State of Florida the surcharge tax owed for on- premise sales of alcoholic beverages made during the period February 2000 through March 2003. Respondent denied the charge and requested a final hearing to contest this allegation. Respondent is subject to the regulatory jurisdiction of the Division, having been issued beverage license number 69- 02225, 4-COP, by the Division. That license allows Respondent to make sales of beer, wine, and liquor for consumption on premises at the restaurant located at 1602 West Airport Boulevard, Sanford, Florida 32771. At all times material to this proceeding, Respondent, by its corporate officer John Aitcheson, applied for and was holding license number 69-02225, 4-COP. In Florida, a licensee must keep records of all purchases and other acquisitions and sales of alcoholic beverages for a period of three years to comply with Section 561.501, Florida Statutes (2005). This requirement applies to any beverage license holder in Florida. In addition to selling alcoholic beverages for on- premise consumption, Respondent also sells packaged alcoholic beverage for off-site consumption. Surcharge tax in the amount of $0.14 per gallon of beer, $1.07 per gallon of wine, and $4.28 per gallon of liquor is assessed for each and every drink sold by Respondent for on- premise consumption, but no such surcharge tax is owed for off- premise package sales. The surcharge tax is paid by the on-premise consumers (patrons) to the state, and the vendor only collects and remits this surcharge to the state. As a reward for their effort to timely report and remit the surcharge to the state, the vendors are allowed to keep monthly, as an allowance, one percent of the total surcharge owed for the alcoholic beverages sold during that month. Respondent testified that he has a very simple method of keeping sales records. He makes handwritten records of each and every off-premise sale and also collects and keeps the distributors' invoices for the purchase of his alcohol supplies. Every month, Respondent subtracts the off-premise sold alcoholic beverages from the total quantity bought as reflected by the invoices from distributors, obtaining through this indirect method the total on-premise sales. Then Respondent multiplies the resulting quantity of alcohol sold on-premise that month with the applicable tax rate, obtaining thus his surcharge liability for that particular month. Respondent provided the Division with handwritten off- premise sales records. With the exception of the records mentioned above, the Division does not have in the file any other records submitted by Respondent. As well, Respondent did not offer any evidence to substantiate his claim that he indeed provided the Division with any additional records. However, Respondent testified that he neither maintained on-premise sales records, as required by Section 561.501, Florida Statutes (2005), nor was he able at the hearing to offer any proof whatsoever that would corroborate his claim that during the audited period he actually made more off-premise sales than reflected in his handwritten records. To enforce the surcharge tax provisions, the Division performs periodic audits of all licensees who sell alcoholic beverages for on-premise consumption. As part of the audit process, the Auditing Bureau of the Division requests and receives monthly reports from alcohol distributors detailing all the sales made by each distributor to each particular licensee. An exception to the automatic monthly distributor reporting procedure is made for the Schenk Company, a beer distributor, which reports its sales to different vendors only when expressly requested by the Division. After receiving all the sales data concerning a particular vendor from the distributors, the Auditing Bureau uses a computer program to calculate the gross surcharge liability of that particular licensee. Special deductions are then allowed for off-premise sales, employee drinks, etc. The burden is on the holder of the license to demonstrate that such person qualifies for a deduction by providing accurate records of off-premise sales, giving employee drinks, etc. Fla. Admin. Code R. 61A-4.063(4) - 61A-4.063(9). It is each licensee’s obligation to accurately report all on-premise monthly sales and to pay the tax collected from customers. There is a penalty and interest surcharge for late reporting and late paying. In addition to the penalty and interest mentioned above, the Division is statutorily required to assess interest and penalties for any underreporting and/or underpayment of the tax due for the period of the audit. If underreporting/underpayment penalties and interest are assessed, they are applied only to the period of the audit. No penalty or interest is applied to any period over the end of the audit. In the present case, the Auditing Bureau calculated Respondent’s surcharge liability based on the data provided by the distributors. The audit allowed Respondent deductions for all off-premise sales recorded in Respondent's handwritten off- premise sales records. At no material time did Respondent request any other deductions nor did he provide any evidence that he would be entitled to any other deductions. It is incumbent to Respondent to carefully keep records of all sales that would entitle him to receive deductions. The Division cannot allow surcharge tax deductions that are not corroborated by any records. Fla. Admin. Code R. 61A-4.063(9). Moreover, Respondent did not even advance any amount of any additional deduction; his position being only that he should have been allowed more deductions because he made more off-premise sales. Absent evidence that more alcoholic beverages were sold off-premise than recorded in the records already taken into consideration by the audit, no additional deductions may be allowed to Respondent. Fla. Admin. Code R. 61A-4.063(9). The audit found that Respondent understated his tax reports and underpaid $7,433.66 in surcharge tax. For the failure to timely report and remit the entire surcharge tax due for the period February 1, 2000, through February 28, 2003, the Division assessed statutory interest of $1,693.85 and a statutory penalty of $3,619.46 for a total surcharge liability of $12,746.97.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a final order finding Respondent liable and ordering payment for the surcharge tax principal of $7,433.66, plus interest of $1,693.85 and a statutory penalty of $3,619.46 for a total surcharge liability of $12,746.97. DONE AND ENTERED this 24th day of January, 2006, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE 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 24th day of January, 2006.
The Issue Whether the license of the Respondents should be suspended or the Respondents should be otherwise disciplined for false advertising and misrepresentations in a real estate transaction.
Findings Of Fact Robert T. Gabor holds License #0029823 as a registered real estate broker and trades as Gabor Realty. Frances Gabor holds License #0029822, is the wife of Respondent Robert T. Gabor, and is associated with him as a real estate salesperson. An administrative complaint filed October 5, 1978, by the Petitioner, Florida Real Estate Commission, alleged that the Respondents were guilty of false advertising and misrepresentation in a real estate transaction. The Respondents requested an administrative hearing. On or about February 26, 1978, the Respondents placed an advertisement in the Sentinel Star in Orlando, Florida, advertising a home for sale as follows: BRANTLEY area FHA VA $26,500. * BUY OWNER * 3/4 ACRE * Immaculate 3 bdrm carpet 894-5828 A couple, Mr. and Mrs. Reese, called the telephone number indicated in said advertisement and went to see the home but decided against buying it. Thereafter, the Respondents placed a different advertisement in the newspaper: BRANTLEY 894-5828 BY OWNER * 3/4 ACRE * FHA * $800. DN $25,000. mtg. 30 yrs $228/mo pays all, 3 bdrm, 1 1/2 bath, 7 yr young. There was no indication in either of the foregoing advertisements for the sale of the house that the owners was real estate salespersons. The advertisements gave the home telephone number of the Respondents, although the Respondents had a real estate office in Orlando known as Gabor Realty which was listed under a different telephone number. The Reese couple read the second advertisement on the same property and again became interested in it. They met the Respondents at the house, viewed the house, and talked with the Respondents. The Reeses and the Respondents then went to a nearby restaurant where a standard contract form was completed and signed while they were seated in the restaurant. Mr. and Mrs. Reese noted at the time the contract was signed that Respondent Robert Gabor signed it as a realtor and Respondent Frances Gabor signed it as a realtor associate. The Reeses were surprised because they had not known they were dealing with real estate salespersons. In spite of their surprise, Mr. and Mrs. Reese did not terminate the negotiations but proceeded to try to work out arrangements so they could buy the house. The contract was contingent upon the buyers' ability to secure a $25,000 FHA mortgage for thirty (30) years. The sellers were to pay the points, and the closing costs were to be divided equally. At the time of the hearing there was an unresolved dispute as to what the closing costs had been orally estimated to be. On or about March 31, 1978, Mr. and Mrs. Reese gave the Respondent, Robert Gabor, an earnest money deposit of $400.00 which was placed in the Respondent's escrow account. The Reeses and the Respondents signed various documents, including the buyer's estimated closing statement and seller's estimated closing statement. One (1) day prior to the scheduled closing date, May 5, 1978, Respondents learned that the transaction might not be closed because of the Reeses' dissatisfaction with the amounts of the downpayment, closing costs and monthly payments, all of which were in excess of the amounts they had first seen advertised and felt they could pay. Mr. Reese attended the closing on the scheduled day, but refused to close and demanded the return of the $400.00 deposit. The Respondents attempted to make an adjustment and offered to amend the agreement whereby the Respondents would pay all closing costs "allowed by law" for them to pay. Upon the refusal by Mr. Reese to close, the Respondents refused to return the $400.00 deposit. Mr. Reese then informed the Respondents that he would file a complaint with the Florida Real Estate Commission. The Respondents, having proceeded to and attended the closing, felt justified in removing the $400.00 earnest deposit from the escrow account and placing it in the personal account of Respondent Robert Gabor. Respondent Frances Gabor accompanied Respondent Robert Gabor during the foregoing transactions but took no active part in the negotiations other than having been present and having signed documents. Mr. and Mrs. Reese knew or should have known that the costs of the home were in excess of the amounts indicated in the advertisements. They had both signed and received written documents indicating costs well in advance of the scheduled closing date. Respondents submitted a memorandum of law on June 6, 1979, and thereafter, on June 25, 1979, moved to dismiss the cause for failure by the Petitioner Commission to submit memorandum of law as requested by the Hearing Examiner. The Motion to Dismiss was denied.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends dismissal of the charges against Respondent Robert T. Gabor and Respondent Frances Gabor. DONE and ORDERED this 6th day of July, 1979, in Tallahassee, Leon County, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Fred Langford, Esquire Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Royce D. Pipkins, Esquire 292 Highway 17 - 92 Post Office Drawer 965 Fern Park, Florida 32730
The Issue The issue in this case is whether Respondent violated Sections 455.228, 475.25(1)(e), and 475.42(1)(a), Florida Statutes (1997), by operating as an unlicensed broker or salesperson. (All Chapter and Section references are to Florida Statutes (1997) unless otherwise stated.)
Findings Of Fact Petitioner is the state agency responsible for the regulation and discipline of real estate licensees in the state. Respondent is not licensed in the state as a real estate sales person or broker but has been engaged in the business of real estate investment in Florida for approximately six years. Respondent generally maintains investments in approximately 50 real estate properties in the state at a given point in time. Of those properties, Respondent typically holds approximately 15 properties in his individual name and approximately 35 properties in the name of Results Home Buyers of Melbourne ("Results"), Respondent's wholly-owned Florida corporation. Respondent's real estate investment business generally involves the purchase and sale of real property that is financially distressed. Respondent purchases real property that is either in or near foreclosure or property for which the sellers are experiencing difficulty servicing the existing indebtedness. Respondent purchases properties by assuming the existing debt, paying off the debt at a discount, and then selling the properties to subsequent purchasers for a profit. Closing of the subsequent sale of a particular property may occur simultaneously with the closing of Respondent's purchase of the property or sometime thereafter. Respondent induces subsequent purchasers with non-qualifying financing and purchase prices that are discounted less than the amount of discount Respondent obtains from existing lenders. Respondent begins each real estate investment by obtaining some form of an option on a property for a fixed time period. The option may take the form of a simple option to purchase property. In most instances, however, the option takes the form of a Standard Purchase and Sales Agreement (a "purchase agreement"). The purchase agreement is subject to financing discussed subsequently in this Recommended Order. If Respondent is unable to obtain financing, the seller may retain only that portion of the binder deposit required to pay sales and loan processing costs incurred by the seller. During the option period, Respondent conducts a title search to determine the state of the title, the identity of record lien holders, and the amount of each lien. Respondent also attempts to obtain financing by negotiating with the existing lenders a discounted pay off of the existing indebtedness. If Respondent fails to negotiate a satisfactory discount, Respondent allows the option to lapse. If Respondent negotiates a satisfactory discount, Respondent exercises the option and closes on the property. When Respondent closes on a property, Respondent generally pays all closing costs and utilizes a title company for the closing. Prior to closing, Respondent places the funds required to pay off the discounted indebtedness in escrow. Respondent generally uses his own money to fund the escrow if Respondent has obtained a subsequent purchaser for the property. Respondent generally uses a third party lender to fund the escrow if Respondent has not obtained a subsequent purchaser, if Respondent must incur improvement costs before selling the property, or if the subsequent purchaser must rent the property for some time before the purchaser can close on the property. There is no written escrow agreement. The escrowed funds are subject only to those conditions in the written documents between Respondent and the seller. The title company disburses escrow funds upon Respondent's verbal authorization. When Respondent purchases real property, title generally does not pass by warranty deed to Respondent. Title passes to a land trust. Respondent creates a land trust in three steps. Each step is evidenced by a separate document, but all three documents are executed simultaneously. In the first step, the seller enters into an Agreement and Declaration of Trust with Respondent (the "trust agreement"). The trust agreement names the seller as the beneficiary and either Respondent or Respondent's nominee as the trustee. The trust agreement is intended to preserve Respondent's anonymity and to insulate the assets of Respondent and Results from any claims or litigation that may arise out of Respondent's real estate investment business. In the second step, the beneficiary of the trust, who is also the seller, executes a Warranty Deed to Trustee (the "warranty deed"). The warranty deed is generally recorded in the public records of the county in which the property is located. It reflects record title in the trustee who is generally Respondent's nominee. However, Respondent sometimes acts as trustee. In the third step, the beneficiary of the trust, who is also the seller, assigns his or her beneficial interest in the trust to either Respondent or Results. The assignment transfers all beneficial interest in the property, except legal title, to either Respondent or Results. The recorded legal title remains in the trustee. Respondent believes that he insulates himself and his company from liability for claims by retaining record title in the trustee and assigning beneficial ownership from the seller, as the trust beneficiary, to Respondent or Results. Respondent is the assignee in approximately 15 out of 50 property transactions, and Results is the assignee in approximately 35 of 50 transactions. The assignee has exclusive authority to designate or change the trustee. Petitioner claims that in 1997 Respondent engaged in the practice of real estate on behalf of the owners of four residences. Respondent claims that he engaged in the activities alleged in the Administrative Complaint in his own behalf as the beneficial owner of the four properties or as the sole shareholder of the beneficial owner. Three of the four residences at issue in this proceeding are located in Satellite Beach, Florida. The fourth property is located in West Melbourne, Florida. The three properties in Satellite Beach are located at: 340 Ocean Spray Avenue (the "Ocean Spray property or transaction"); 697 Hedgecock Square North (the "Hedgecock property or transaction"); and 479 Skylark Boulevard (the "Skylark property or transaction"). The property in West Melbourne is located at 633 Manor Place (the "Manor property or transaction"). On February 22, 1997, Respondent executed separate purchase agreements for the Hedgecock, Manor, and Skylark properties. On March 6, 1997, the parties executed separate trust agreements, warranty deeds, and assignments in the Hedgecock and Manor transactions. On March 17, 1997, the parties executed the trust agreement, warranty deed, and assignment in the Skylark transaction. The warranty deed in each transaction expressly stated that the interests of the beneficiaries were personal property. In the Hedgecock transaction, Respondent was designated as the trustee. The warranty deed transferred title to Respondent, and the seller assigned her beneficial interest in the property to Results. The warranty deed was not recorded because the seller remained in possession of the property while she attempted to purchase a replacement residence. In the Manor and Skylark transactions, Ms. Sonia Souza, an unrelated nominee of Respondent, was designated as the trustee. The warranty deeds transferred title in both properties to Ms. Souza. Neither property was occupied, and the warranty deeds were recorded in both transactions. The seller of the Manor property assigned her beneficial interest in the property to Results. The seller of the Skylark property assigned her beneficial interest to Respondent. Respondent paid the outstanding indebtedness on the Manor and Skylark properties and sold the Skylark property sometime in September or October 1997. Respondent still owns the Manor property and has made improvements to the property totaling approximately $30,000. At the seller's request, Respondent transferred title in the Hedgecock property back to the seller in November 1997, when the seller's attempt to purchase a replacement residence failed. On May 19, 1997, Respondent executed an Option to Purchase the Ocean Spray property. The option terminated on August 19, 1997. Between May 19 and August 19, 1997, Respondent attempted to secure a buyer for the property. However, intervening legal claims against the property prevented the seller from conveying clear title, and Respondent allowed the option to lapse. The seller of the Ocean Spray property eventually resolved the pending claims and has subsequently attempted to sell the property to Respondent. However, Respondent has declined to purchase the property pending the outcome of this proceeding. As the Administrative Complaint alleges, in relevant part, Respondent attempted to sell the four properties at issue in this proceeding between August 7 and 19, 1997. Respondent distributed flyers to licensed real estate brokers and salespersons concerning each property. Each flyer included a statement that the owner wanted offers, details of the particular property, and a statement that the owner would pay brokers and salespersons a $500 referral fee or a four percent commission for the sale of each property. Between August 7 and August 19, 1997, Respondent was not acting as a broker within the meaning of Section 475.01(1)(a). Respondent was not acting "for another." Respondent or Respondent's wholly owned corporation was the beneficial owner of the Hedgecock, Manor, and Skylark properties even though Respondent was the record owner of only the Skylark property. In the Ocean Spray transaction, the Option to Purchase gave Respondent a contractual right to sell the property in his own behalf. The sellers of all four properties at issue in this proceeding did not enter into a listing agreement with Respondent. The sellers did not promise, either in writing or verbally, to pay a commission or other compensation to Respondent. Respondent did not promise to pay the sellers any portion of the sale proceeds Respondent received from subsequent purchasers. Respondent was solely liable for the commission and referral fee described in the brochures that Respondent distributed to licensed real estate brokers and salespersons. The only economic benefit for Respondent to sell the properties to subsequent purchasers was the difference between the sale price received by Respondent and the discounted indebtedness paid by Respondent. The gross profit thus derived by Respondent was reduced by the commissions, if any, paid by Respondent to licensed real estate brokers and salespersons. The sellers in all four transactions at issue in this proceeding had no legal right to approve the discounted payoff of the existing indebtedness or the sale price at which Respondent sold the properties. Nor did the sellers have any right to approve any other terms or conditions of any sale by Respondent. Finally, the sellers did not have the right to transfer title to the property. Except for the Ocean Spray transaction, the risk of loss and the economic risk of not selling the property in each transaction was borne by Respondent during the time that Respondent was marketing the properties. In fact, Respondent was unable to sell the Manor property, and Results has paid for approximately $30,000 in improvements to the property.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a Final Order finding Respondent not guilty of violating Sections 455.228, 475.42(1)(a), and 475.25(1)(e). DONE AND ENTERED this 22nd day of December, 1999, in Tallahassee, Leon County, Florida. DANIEL MANRY 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 22nd day of December, 1999. COPIES FURNISHED: Herbert S. Fecker, Division Director Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Barbara D. Auger, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Sunia Y. Marsh, Esquire Department of Business and Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, Florida 32802-1900 Michael R. Riemenschneider, Esquire O'Brien, Riemenschneider, Kancilia and Lemodidia, P.A. 1686 West Hibiscus Boulevard Orlando, Florida 32901
