The Issue The issue in this case is whether the real estate license issued to the Respondent, James P. Hudson, should be revoked or otherwise disciplined based upon the acts alleged in the Administrative Complaint.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I make the following findings of fact: At all pertinent times, Respondent, James P. Hudson, was a licensed real estate broker in the State of Florida having been issued license No. 0148841 in accordance with Chapter 475, Florida Statutes. Respondent has been operating as a broker from an office at 413 South Federal Highway, Boynton Beach, Florida 33435. Respondent maintains an escrow account No. 018200602689 at Sun Bank in Boynton Beach, Florida into which he deposits trusts funds received in his capacity as a real estate broker. Sometime in the early part of September 1989, Petitioner initiated a random audit of Respondent's business. Prior to the audit, Petitioner's investigator advised the Respondent that he would need to produce all the records related to his escrow account. An investigator for Petitioner visited Respondent's office on or about September 18, 1989 to conduct an audit of Respondent's escrow accounts. Based upon the investigator's review of the records, five different transactions were identified as allegedly involving delays or mishandling of escrow funds by Respondent. Those transactions are the basis for several of the allegations in the Administrative Complaint. Each transaction is addressed separately below. The first transaction involved a contract for the sale and purchase of real property between Fitz as buyer and Kerstin as seller (the "Fitz Contract"). Included in Respondent's files on this transaction was a copy of a contract for sale and purchase that was dated and signed by the buyer on September 6, 1989 and dated and signed by the seller on September 9, 1989. The buyer in the Fitz Contract gave Respondent a check for $1000 as a deposit to be held in escrow in connection with the transaction. The Respondent's written receipt for that check is dated September 7, 1989. The evidence established that this initial deposit check was delivered to Respondent on Thursday evening, September 7, 1989. Respondent was out of town on Friday, September 8 and returned on Monday evening, September 11. The check was deposited on the afternoon of September 12 and is reflected in the bank records as a deposit on September 13. The sellers (the Kerstins) signed the contract on September 9, 1989. However, in executing the contract, they crossed out the $900,000 sales price submitted by the buyer and increased the price to $1,400,000. In other words, the sellers made a counteroffer with respect to this contract. The initial deposit was timely returned to the sellers when the counteroffer was rejected. Petitioner's investigator erroneously assumed that Respondent did not timely collect the additional deposit required under this contract. While Petitioner's investigator considered this signed contract in Respondent's files to be a binding agreement on the parties, it is clear that the change in sales price was only initialed by the sellers and, therefore, there was no enforceable agreement. The parties to the Fitz Contract subsequently executed another written contract. This second agreement provided for a sales price of $1,100,000. That contract was executed by the buyer on September 20, 1989 and by the sellers on September 24, 1989. This second contract called for a $49,000.00 deposit upon acceptance. The buyers gave Respondent a check dated September 25, 1989 in the amount of $49,000.00. That check was deposited by Respondent in his escrow account on the afternoon of September 26, 1989. The $49,000 deposit is reflected in the bank records as being deposited on September 27, 1989. Under the circumstances, there was no undue delay by Respondent in collecting or depositing the funds into escrow. The second transaction identified by Petitioner's investigator involved a contract for the sale and purchase of real property between Campanis as buyer and Hoffman as seller. The buyer in this transaction gave Respondent a check dated September 6, 1990 to be held as a deposit for this contract. A photocopy of the check presented to Petitioner's investigator included a handwritten note that states "hold until Friday 9/8/89." The evidence did not establish who wrote this note. The evidence established that the check was received by one of Respondent's sales associates on September 7 and left on the Respondent's desk on September 8. Respondent is the only company employee authorized to deposit checks or otherwise handle transactions involving the escrow account. As indicated above, Respondent was out of town from September 8 through the evening of September 11. The check was deposited on the afternoon of September 12 and is reflected in the bank records as being credited to the escrow account on September 13. Under the circumstances, the Respondent was not delinquent in depositing these funds. The third transaction involved a contract for the purchase and sale of real property between White as buyer and Adkins as seller (the "White Contract.") The White Contract was executed by the buyer on July 26, 1989 and by one of the sellers on July 27 and by the other seller on Friday, July 28. The contract called for an initial deposit of $500.00 with an additional deposit of $1,700 upon acceptance. The initial deposit check was dated July 26, 1989. That deposit check was attached to the contract executed by the purchaser and presented to a cooperating real estate agent who was to present the proposed contract to the seller. The executed contract was not returned to Respondent until sometime during the weekend of July 29 and 30. The initial deposit check along with the additional deposit were then deposited into Respondent's escrow account on Monday, July 31, 1989. Under the circumstances, the evidence established that there was no undue delay in depositing the escrow money. The next transaction identified by Petitioner's investigator involved a contract for sale and purchase of real property between Milera as buyer and Twillie as seller (the "Milera Contract.") The Milera Contract provided for an additional deposit due upon acceptance. The contract was accepted by Twillie on August 23, 1989. The parties to the contract agreed that the time for making the additional deposit would be extended for two days. The check for the additional deposit was dated and received by Respondent on Friday, August 25, 1989. The check was deposited into Respondent's escrow account on Tuesday, August 29, 1989. Under the circumstances, there was no undue delay in depositing the escrow money. The final transaction involved a contract with the sale and purchase of real property between Gerrety as buyer and the estate of John Walsh as seller (the "Gerrety Contract.") The Gerrety Contract was executed by the purchaser on August 10, 1989. The deposit check was given to one of the Respondent's associates on that Thursday evening. The deposit check was not delivered to Respondent until after business hours on Friday, August 11. The check was deposited into Respondent's escrow account on Monday, August 14. Under the circumstances, there was no undue delay in depositing the escrow money on this transaction. During the audit, Petitioner's investigator determined that Respondent was holding deposits on two separate rental properties in his escrow account. At the time of the audit, Petitioner's investigator was not provided with any leases or other documentation regarding these transactions even though Respondent was supposed to produce records for all sums in the escrow account. Respondent contends that he did not realize he was supposed to produce his rental files, was never specifically asked to produce these files and did not know that Petitioner was questioning these transactions until he received the Administrative Complaint in this action. While there was apparently some miscommunication at the time of the audit, adequate documentation for these rental deposits was produced at the hearing. Therefore, Petitioner's allegation that Respondent did not maintain adequate documentation regarding these deposits is without merit. Petitioner has also charged that Respondent did not produce all of the deposit slips in connection with the escrow account and did not produce any evidence of reconciliation of the escrow account. The evidence at the hearing established that all deposit slips are available even though they were not all kept with the bank statements. Moreover, the evidence failed to substantiate the allegation that Respondent did not reconcile his escrow account. Thus, these charges were not substantiated. At the time of the audit, Respondent advised Petitioner's investigator that the escrow account included some commission money that had not yet been removed. In the past, Respondent would sometimes collect his commissions at the close of a transaction from the funds held in escrow. (Respondent no longer collects commissions in this manner.) In auditing Respondent's escrow account, Petitioner's investigator determined that there was an overage of approximately $8,178.17 in the account. Within thirty days of the completion of the audit, Respondent removed $7,500 of the overage which represented his commission on two previously closed transactions. While Respondent believed that the remaining amount of the overage was also his commission money, he refrained from removing any more money until completion of a year-end audit by his accountant. Respondent's records reflected a slight difference in the amount of the overage than the amount calculated by Petitioner during the audit. Respondent wanted to be absolutely certain that only the proper amount was removed from the escrow account. At the conclusion of the audit on September 18, 1989, Respondent signed an office inspection report form prepared by Petitioner which contained the following pre-printed statement: ...I certify that to the best of my knowledge all records pertaining to my sales escrow/trust account(s) and my rental property management account(s) have been provided to the investigator. The above violations are brought to my attention this date and thoroughly explained. I will take corrective action within thirty days and furnish photo/sketches of corrections and documents on the same... There is some confusion as to what additional documentation Respondent was expected to provide following the completion of the September, 1989 audit. Respondent did not believe he was required to provide any additional evidence to Petitioner or its investigator and no further documentation was provided by Respondent until Petitioner's investigator returned to his office in January of 1990. Petitioner's investigator returned to Respondent's office on January 17, 1990. At that time, $7500.00 of the overage had been removed from the escrow account. The remaining amount of the overage was removed later in January. It does not appear that Respondent provided Petitioner's investigator with copies of the rental agreements or the second contract in the Kerstin transaction during the January visit by Petitioner's investigator. Respondent contends that this information was never specifically requested. It is clear that communication between Respondent and Petitioner's investigator had deteriorated from bad to worse by the time of this January visit. There is no indication that Respondent ever used the escrow account for improper purposes or withdrew money from the escrow account for his own personal or business use. The Florida Real Estate Commission adopted new record keeping requirements regarding escrow accounts in July of 1989. The new rules require a written monthly reconciliation of a broker's escrow account. At the time of the audit, Respondent was not keeping the minimum written statement comparing broker's total liability with the reconciled bank balance of all trust accounts as required by the new rules. Even after the audit in September, Respondent did not keep the written reconciliations in the format required by the new rules. Respondent was reconciling the account on his computer.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Petitioner enter a Final Order finding Respondent not guilty of the allegations contained in Counts I and II of the Administrative Complaint, finding Respondent guilty of Counts III and IV and reprimanding him for minor and techinical violations of those counts and imposing a fine of $100.00. RECOMMENDED in Tallahassee, Leon County, Florida, this 31st day of December, 1991. J. STEPHEN MENTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of December, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-3589 Both parties have submitted Proposed Recommended Orders. The following constitutes my rulings on each of the parties' proposed findings of fact. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Addressed in the preliminary statement. Adopted in substance in Findings of Fact 1. Adopted in pertinenet part in Findings of Fact 3. Rejected as irrelevant. Rejected as irrelevant. Adopted in substance in Findings of Fact 4. 7. Subordinate to Findings of Fact 5. 8. Subordinate to Findings of Fact 6. 9. Subordinate to Findings of Fact 7 and 8. 10. Subordinate to Findings of Fact 6. 11. Subordinate to Findings of Fact 6. 12. Subordinate to Findings of Fact 8 and 9. 13. Subordinate to Findings of Fact 8 and 9. 14. Subordinate to Findings of Fact 8 and 9. 15. Subordinate 23. to Findings of Fact 8, 9 and Subordinate to Findings of Fact 23. This subject is also addressed in paragraph 9 of the conclusions of law. Adopted in substance in Findings of Fact 10. Adopted in substance in Findings of Fact 10. 19. Subordinate to Findings of Fact 11. 20. Subordinate to Findings of Fact 13. 21. Subordinate to Findings of Fact 13. 22. Subordinate to Findings of Fact 13. 23. Subordinate to Findings of Fact 14. 24. Subordinate to Findings of Fact 14. 25. Subordinate to Findings of Fact 15. 26. Subordinate to Findings of Fact 15. Subordinate to Findings of Fact 16. Subordinate to Findings of Fact 17. Rejected as not established by competent susbstantial evidence. The subject matter is addressed in Findigns of Fact 17. Adopted in substance in Findings of Fact 19 and 20. Rejected as not established by competent substantial evidence. The subject matter is addressed to some degree in Findings of Fact 21. Subordinate to Findings of Fact 21 and 22. Subordinate to Findings of Fact 21 and 25. Adopted in substance in Findings of Fact 20. Rejected as irrelevant. Subordinate to Findings of Fact 21. Subordinate to Findings of Fact 21. The Respondent's Proposed Findings of Fact The Respondent's proposed findings of fact are not numbered. The numbers below refer to the numerical sections contained in the findings of fact section of Respondent's Proposed Recommended Order. Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. The first two sentences are adopted in substance in Findings of Fact 6-9. The second two sentences are rejected as irrelevant. This subject matter is addressed in some degree in Findings of Fact 21. The last sentence is rejected as constituting argument rather than a finding of fact. The first two sentencess are subordinate to Findings of Fact 10. The next two sentences are adopted in substance in Findings of Fact 11. The last sentence is rejected as constituting argument rather than a finding of fact. The first two sentence are adopted in substance in Findings of Fact 13. The third sentence is rejected as constituting argument rather than a finding of fact. The first three sentences are adopted in substance in Findings of Fact 14. The last sentence is rejected as constituting argument rather than a finding of fact. The first two sentences are adopted in substance in Findings of Fact 15. The last sentence is rejected as constituting argument rather than a finding of fact. Adopted in substance in Findings of Fact 16. The first sentence is adopted in substance in Findings of Fact 17. The second sentence is rejected as vague. Subordinate to Findings of Fact 17 and 25. The first three sentences are adopted in substance in Findings of Fact 18, 19 and 22. The fourth sentence is rejected as not established by competent substantial evidence. This subject matter is addressed in part in Findings of Fact 19. The fifth and sixth sentences are rejected as constituting argument rather than a finding of fact. Subordinate to Findings of Fact 25. COPIES FURNISHED: Janine B. Myrick, Esquire Senior Attorney Department of Professional Regulation Division of Real Estate 400 West Robinson Street P. O. Box 1900 Orlando, Florida 32802 James P. Hudson 413 South Federal Highway Boynton Beach, Florida 33435 Darlene F. Keller Executive Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street P. O. Box 1900 Orlando, Florida 32802 Kenneth E. Easley, Esquire General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792
The Issue Whether Respondent committed the offenses set forth in the Notice to Show Cause and, if so, what action should be taken.
Findings Of Fact Petitioner is the state agency charged with regulating yacht and ship brokers and salespersons pursuant to Chapter 326, Florida Statutes. At all times material hereto, Respondent was a licensed yacht and ship broker salesman. He has been licensed since 1990. In December 1990, Respondent was issued license number 1322, as a yacht and ship broker salesman for Seafarer Brokerage, Inc. (Seafarer). In October 1998, he renewed his license, which had an expiration date of October 28, 2000. On July 31, 1997, Lorraine Woods, the President of Seafarer, wrote to Peter Butler, section head of the yacht and ship section of the Department of Business and Professional Regulation, notifying him that Respondent was the broker of record for Seafarer. Ms. Woods' license had been suspended, and Respondent knew that her license had been suspended prior to his becoming broker of record for Seafarer. As the broker of record, Respondent knew that he was solely responsible for safeguarding the money of all clients in the brokerage's escrow account. Respondent did not know the details involving the suspension of Ms. Woods' license. He was not aware that Ms. Woods had abused the control of Seafarer's escrow account for her own benefit by taking client funds from the escrow account to pay for Seafarer's operating expenses. Mr. Butler was very concerned with the abuse of Seafarer's escrow account committed by Ms. Woods. He demanded assurance from Respondent that Ms. Woods would not have access to the escrow account, and Respondent provided that assurance. On August 4, 1997, Respondent wrote to Mr. Butler confirming that he (Respondent) was the broker of record for Seafarer. In his written communication, Respondent confirmed certain details of the escrow account of Seafarer, including that he was broker of record and that the account was located at First Union National Bank of Florida, with the address and account number listed. Moreover, Respondent indicated that, as of July 30, 1997, he became the sole signatory on the account. Respondent personally provided the signatory card, showing that he was the sole signatory on the account, to the bank. Even though the bank did not have a record of such a signatory card, the undersigned is persuaded that Respondent's testimony is credible and that he provided the signatory card to the bank. Even though Respondent was the broker of record for Seafarer, Respondent looked upon Ms. Woods as the employer and himself as the employee, resulting in an employer-employee relationship. Seafarer consisted of two persons, Respondent and Ms. Woods. If Respondent was unavailable for a situation in which a check had to be written and executed, he would prepare a blank check with his signature on it and give it to Ms. Woods. She continued to maintain the business records. Ms. Woods maintained all the operating and escrow records, checks, and bank statements in a locked drawer for which she had the only key; Respondent did not have free and unobstructed access to these documents even though he was Seafarer's broker of record. Respondent and Ms. Woods continued this procedure for over a year without incident. On April 2, 1999, Warren Scott made an offer on a 1974 CAL2-46, a 46-foot yacht, with Seafarer. He placed a $6,000.00 deposit on the yacht. Mr. Scott's dealings, regarding the yacht, were with Ms. Woods. He had dealt with Seafarer and Ms. Woods on a prior occasion, had made a deposit, and had his deposit refunded. As a result, Mr. Scott felt comfortable dealing with Seafarer and Ms. Woods even though he had not purchased a yacht from Seafarer. On April 5, 1999, Mr. Scott's check was deposited in Seafarer's escrow account. On April 5, 1999, check numbered 1144, made payable to cash for $4,305.00, bearing Respondent's signature was written. The check bore the notation at the bottom left corner at the "FOR" space: "CAL2-46 (illegible) Enterprises." This check cleared Seafarer's escrow account on April 7, 1999, leaving a balance of $2,512.34. Respondent had signed the check and left it for Ms. Woods to fill-in the details. The check was signed by Respondent in March 1999 for a closing that was taking place at the end of March, but the check was not used at the closing in March. Ms. Woods had written the check to pay the rent for Seafarer. Even though Respondent had signed the check, the undersigned is persuaded that he did not know that Ms. Woods was going to use the check for a purpose other than for what it was written. On April 27, 1999, Respondent signed a check for $100.00, payable to Complete Yacht Service for engine repair to the CAL2-46. This check cleared Seafarer's escrow account on April 30, 1999, leaving a balance of $5,796.36. After a sea trial and survey, Mr. Scott wrote to Ms. Woods on April 30, 1999, indicating that he had decided not to purchase the 1974 CAL2-46 pursuant to their arrangement of April 2, 1999. On May 3, 1999, Mr. Scott again wrote to Ms. Woods that his offer to purchase the 1974 CAL2-46 for $55,000.00 in the conditional acceptance of vessel agreement, dated April 29, 1999, was expiring on May 3, 1999, at 9:00 p.m. Mr. Scott went to Seafarer on May 4, 1999, to obtain a refund of his deposit from Ms. Woods. Respondent informed him that Ms. Woods was out and that they would have to wait for her return, which was going to be in about an hour. Mr. Scott was unable to wait. He left Fort Lauderdale, returning to Nevada, with the understanding that his deposit, less $100.00 for the engine survey, would be returned to him. Mr. Scott expected the monies within a week to ten days. On May 5, 1999, a deposit of $4,700.00 was made to Seafarer's escrow account, leaving a balance of $9,136.36. On May 5, 1999, Seafarer's escrow account contained sufficient monies to give Mr. Scott a full refund of his deposit, less the $100.00. Respondent left for a vacation to the United Kingdom on May 17, 1999, with his return on June 15, 1999. Prior to his leaving, Respondent signed two blank checks, numbered 1153 and 1154, from Seafarer's escrow account. The checks were written for an upcoming business transaction during his absence, regarding a closing and Respondent's commission on the closing. On May 18, 1999, Seafarer's escrow account balance fell to $5,192.21, after three checks cleared the account. Two of the three checks, signed by Respondent, were payable to Seafarer in the amount of $1,360.00 for "comm.-37'Irwin." During May 1999, checks totaling $6,900.00, which were signed by Respondent, cleared Seafarer's escrow account. Mr. Scott made several telephone calls to Seafarer regarding the return of his deposit. Each time Mr. Scott spoke with Ms. Woods and he was not provided with a satisfactory response from her. On June 16, 1999, Mr. Scott received a check, check numbered 1153, for $5,900.00 from Seafarer. He also received a telephone call that same day from Ms. Woods requesting him not to deposit the check until the end of the month; Mr. Scott agreed. Respondent was not aware that check numbered 1153 was going to be used to refund Mr. Scott's deposit. Respondent was unaware that the check was used for a purpose other than for what it was intended. On June 17, 1999, check numbered 1154, made payable to Seafarer for $1,000.00 for "petty cash" cleared Seafarer's escrow account. The check was used by Ms. Woods to pay Seafarer's telephone and utility bills. Respondent was unaware that check numbered 1154 was going to be used for a purpose other than for what it was written. When Respondent returned from his vacation, he was contacted by Mr. Scott who advised Respondent of the problem with the return of his refund. Respondent checked the bank statements for Seafarer's escrow account and discovered that Ms. Woods had not used the checks for their intended purpose and that she had used funds from the escrow account for improper purposes. On June 25, 1999, Mr. Scott deposited the check that he received from Seafarer. The check, payable to Mr. Scott, was posted to Seafarer's escrow account on June 29, 1999, leaving a negative balance of $2,667.22. For 67 days, between April 5, 1999, when Mr. Scott's deposit of $6,000.00 was deposited in Seafarer's escrow account, and June 29, 1999, the date Mr. Scott's refund of $5,900.00 cleared, Seafarer's escrow account did not have sufficient funds to pay the refund. The period between May 5, 1999, and May 17, 1999, was the only time period, during the 67-day period, that Seafarer's escrow account had sufficient funds to pay the refund. Mr. Scott indicates that his refund was received in his account in July 1999. Respondent remained with Seafarer long enough to ensure that Mr. Scott received his refund. On July 8, 1999, Respondent notified Mr. Butler that he was no longer the broker for Seafarer. Respondent has no prior disciplinary action.
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 Florida Land Sales, Condominiums, and Mobile Homes, enter a final order: Sustaining the Notice to Show Cause and finding that John Scales violated Subsections 326.002(1) and 326.005(1), Florida Statutes (1997). Suspending Respondent's license for three years. Imposing a civil penalty of $5,000.00. DONE AND ENTERED this 14th day of February, 2001, in Tallahassee, Leon County, Florida. ERROL H. POWELL 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 14th day of February, 2001. COPIES FURNISHED: Janis Sue Richardson, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-2202 Tracy J. Sumner, Esquire 1307 Leewood Drive Tallahassee, Florida 32312 Ross Fleetwood, Director Division of Florida Land Sales, Condominiums, and Mobile Homes Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Barbara D. Auger, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issue in this case is whether the allegations of the Administrative Complaints are correct and, if so, what penalties should be imposed.
Findings Of Fact At all times material to this case, Respondent Tailormade Management, Inc. ("Tailormade"), was a corporation registered as a licensed real estate broker in the State of Florida, license #0259180, located at 12811 Kenwood Lane, #218, Fort Myers, FL 33907. The president of Tailormade was R. C. Hendrickson ("Hendrickson"), an unlicensed person. At all times material to this case, Respondent Comprehensive Management, Inc. ("Comprehensive"), was a corporation registered as a licensed real estate broker in the State of Florida, license #0268646, located at 12811 Kenwood Lane, #218, Fort Myers, FL 33907. Until approximately January 30, 1991, the president of Comprehensive was Hendrickson. On or about January 30, 1991, Hendrickson resigned and relinquished her ownership and control to her son, Jay Coffing, an unlicensed person. The rental escrow account for each company was maintained by Hendrickson and the company bookkeeper. On direction of Hendrickson, the bookkeeper did not disclose information regarding rental escrow accounts to the licensed broker-salespersons. All accounts were reconciled by the bookkeeper who would provide the reconciliation data to the broker. The licensed broker- salespersons did not actually reconcile any accounts, but relied on the bookkeeper's data. At all times material to this case, Linda Futch ("Futch") was a licensed real estate broker in the State of Florida, license #0334770. The most recent license issued to Futch was as a broker-salesperson for Rawlings Realty, Inc., 1642 Colonial Boulevard, Fort Myers, FL 33907-1150. From approximately February 20, 1989 through approximately November 16, 1989, Futch was licensed and operating as qualifying broker and officer for Tailormade. On October 10, 1989, Hendrickson issued check #RE-1895 in the amount of $10,000 from the Tailormade rental escrow account to the Tailormade operating account. A check notation indicated that the funds were "advance management fees". Hendrickson admitted to the company bookkeeper that the funds were to be used to pay the outstanding balance owed to the previous co-owner of Tailormade, from whom Hendrickson had purchased the business. At no time during the period Futch acted as qualifying broker and officer for Tailormade did Futch prepare or sign written monthly escrow account statement reconciliations. Futch did not balance escrow liabilities with the escrow assets. Futch failed to make appropriate entries in monthly reconciliation statements which would note whether a shortage existed and whether corrective action had been taken. Futch maintained no records and was unable to provide any account documentation to the Petitioner's investigator. Futch resigned as Tailormade broker-salesperson effective November 16, 1989. Futch was apparently succeeded by Bette K. Potts. In November of 1990, Jeffrey C. Cooner met with a representative of Tailormade and leased a condominium unit, providing a deposit totaling $1,125 of which $350 was a pet and security deposit. Cooner eventually vacated the unit, 2/ and attempted to obtain a refund of the security deposit. By such time, the Tailormade office was vacant and closed. Cooner has received neither an accounting nor a refund of all or part of the security deposit paid to Tailormade. According to the bookkeeper, as of December, 1990, approximately $35,000 of rental escrow funds had been removed from the Tailormade rental escrow account by Hendrickson and had not been replaced. At all times material to this case, Janet Lynn Coffing ("Coffing"), Jay Coffing's wife, was a licensed real estate broker in the State of Florida, license #0268647. Coffing's most recent license was as a broker in limbo, listing her home address as 5410 Ashton Circle, Fort Myers, Florida, 33907-7828. From approximately February 21, 1991 through approximately May 28, 1991, Coffing was licensed and operating as qualifying broker and officer for Tailormade. From approximately February 14, 1991 through approximately June 14, 1991, Coffing was licensed and operating as qualifying broker and officer for Comprehensive. Coffing was aware, almost immediately after taking over as qualifying broker and officer for the companies that the escrow funds were short. She spoke to Hendrickson (her mother-in-law) and Jay Coffing about the situation, but apparently received no assistance from them. Coffing utilized operating funds to cover escrow shortages when escrow refunds were necessary, and continued to do so until all funds were depleted. On March 18, 1991, Charles W. Pease met with a representative of Comprehensive and leased a condominium unit at 13040 Tall Pine Circle in Fort Myers, Florida, providing two checks totaling $1,650 of which $500 was a security deposit. Upon vacating the unit, 3/ Pease attempted to obtain a refund of the security deposit but the Comprehensive office was vacant and closed. Pease has received neither an accounting nor a refund of all or part of the security deposit paid to Comprehensive. At some time in 1991, 4/ Debra and Kevin Campbell met with Coffing and leased a condominium unit located at 5418 Harbor Castle Drive. At the time the lease agreement was signed, the Campbells paid a $500 security deposit to Tailormade through Coffing. Upon vacating the unit, the Campbells attempted to obtain a refund of the security deposit but were unable to locate Coffing, and the Tailormade office was vacant and closed. The Campbells have received neither an accounting nor a refund of all or part of the security deposit paid to Tailormade. At no time during the period Coffing acted as qualifying broker and officer for either Tailormade or Comprehensive, did Coffing prepare or sign written monthly escrow account statement reconciliations. Coffing did not balance escrow liabilities with the escrow assets. Coffing failed to make appropriate entries in monthly reconciliation statements which would note whether a shortage existed and whether corrective action had been taken. Coffing maintained no records and was unable to provide account documentation to the Petitioner's investigator. On several occasions beginning on July 2, 1991, an investigator from the Department of Professional Regulation visited office location identified as the registered offices of the Respondent Tailormade and Comprehensive companies. The offices were vacant and closed. The investigator contacted Hendrickson and Jay Coffing, and attempted to obtain information from them, but was unable to maintain contact with them. The companies are apparently not operational.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Professional Regulation, Division of Real Estate, enter a Final Order determining Linda Futch guilty of the violations set forth herein and providing for a fine of $1,000, and a suspension of 90 days, to be followed by a probationary period of two years. During the probationary period, Futch shall complete 60 hours of continuing education, including a 30 hour management course for real estate brokers, and shall provide to the Florida Division of Real Estate all written monthly escrow account reconciliation statements for which she is responsible. That the Department of Professional Regulation, Division of Real Estate, enter a Final Order determining Janet Lynn Coffing guilty of the violations set forth herein and providing for a fine of $1,000, and a suspension of 180 days to be followed by a probationary period of three years. During the probationary period Coffing shall complete 60 hours of continuing education, including a 30 hour management course for real estate brokers, and shall provide to the Florida Division of Real Estate all written monthly escrow account reconciliation statements for which she is responsible. That the Department of Professional Regulation, Division of Real Estate enter a Final Order revoking the licensure of Respondents Tailormade Management, Inc., and Comprehensive Management, Inc. DONE and ENTERED this 15th day of July, 1992, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1992.
Findings Of Fact At all times relevant hereto, Respondent Charles Randolph Lee was the holder of a Florida real estate license number 0455641 in accordance with Chapter 475, Florida Statutes. The license issued was as a broker, c/o Show-N-Save of West Palm Beach, Inc., 1800 Forest Hill Blvd., West Palm Beach, Florida 33406. Christopher and Lee Ann Germano made a written offer to purchase Lot 41, Block 72, Sugar Pond Manor, Palm Beach County, Florida (the "construction site") from Charles and Ruby Collins (the "owners") by executing a Contract for Sale and Purchase of the construction site on April 14, 1987, and submitting a check for $500 payable to and held in escrow by Hank Keene Real Estate Escrow Account. 1/ On April 15, 1987, the Germanos executed an Agreement for Construction of a house that was to be constructed on the construction site by J. Long Construction, Inc. A check payable to J. Long Construction, Inc., in the amount of $3,755, was submitted by the Germanos with the Agreement for Construction, which was expressly contingent upon the Germanos' purchase of the construction site. The check to J. Long Construction, Inc., was an escrow check to be held in escrow for the Germanos until contingencies in the Agreement for Construction, including the purchase of the construction site, either failed to occur or were satisfied. Carol Pearson and Terry Gallagher, the sales agent for Hank Keene Real Estate, were present with the Germanos in a model home of J. Long Construction, Inc., when the Germanos wrote the check, and it was their collectively stated intent that the check was to be held in escrow pending the completion of the purchase of the construction site. The check for $3,755 was labeled by the maker as an escrow down payment for construction of the house. 2/ J. Long Realty, Inc., and Hank Keene Real Estate were acknowledged in the Agreement for Construction as the exclusive brokers in the transaction with commissions to be paid respectively in the amounts of 3.5 and 1.5 percent. 3/ The Agreement for Construction was executed by J. Long Construction, Inc., on April 15, 1987. The Agreement for Construction was null and void if not executed by both parties on or before April 19, 1987. The Germanos executed the Agreement on April 15, 1987. Their copy of the Agreement is not executed by J. Long Construction, Inc. However, the original Agreement, bearing a date of April 15, 1987, shows the signature of the president of J. Long Construction. The original Agreement was admitted by stipulation as Respondent's Exhibit 2. Insufficient evidence was presented to establish that the original was executed at any other time or by any one other than the purported signatory. 4/ Respondent began functioning as the broker for J. Long Realty, Inc., on or about April 16, 1987, 5/ at the request of the previous broker who resigned due to illness on April 15, 1987. The Contract for Sale and Purchase of the construction site was rejected by the owners on April 16, 1989. 6/ The rejection was communicated to the Germanos telephonically by Terry Gallagher on the same day. 7/ The fact that the purchase of the construction site had failed to occur was communicated to Respondent on April 20, 1987, and return of the check to J. Long Construction, Inc., in the amount of $3,755, was requested at that time. Mr. Germano telephoned Mr. Pearson on April 20, 1989, advised him that the offer to purchase the construction site had been rejected by the owners, and requested return of the check. Mr. Pearson testified that upon receiving a telephone call from Mr. Germano, Mr. Pearson communicated those facts to Respondent. Mr. Pearson further testified that Respondent stated there would be no problem but required the request for refund and reasons to be stated in writing. Respondent first knew of the transaction when he received a telephone call from Mr. Germano asking for a return of the check. Respondent further testified that he opened the file, saw the check, and deposited it. The check was deposited on April 21, 1987, to the account of J. Long Construction, Inc. 8/ Respondent testified that the check was not deposited to any account of J. Long Realty, Inc. 9/ J. Long Construction, Inc., had no escrow account at the time of the deposit. Testimony by Ms. Fischer, and Petitioner's Exhibits 7 and 9 established that J. Long Construction, Inc., had no escrow account at the time of the deposit. There was no evidence that Respondent was an officer or director of J. Long Construction, Inc., or that Respondent was authorized to sign on the account to which the check was deposited. Petitioner's Exhibit 9 established that Respondent was authorized to sign on the account of J. Long Realty, Inc., and on the account of J. Long Companies, Inc. Neither the name or account number of either of those accounts corresponded to the name or account number of the account to which the check was deposited. 10/ Respondent functioned in the capacity of accountant, bookkeeper, and employee of J. Long Construction, Inc., prior to functioning as the broker of J. Long Realty, Inc. Respondent and Mr. Long reviewed each contract submitted by sales agents. Respondent received written notice on April 27, 1987, and on May 1, 1987, that the Germanos' offer to purchase the construction site had been rejected by the owners. Jean Keene, Broker, Hank Keene Real Estate, advised J. Long Construction, Inc., by letter dated April 24, 1989, that the Germanos' offer had been rejected and that the $500 in escrow had been returned to the Germanos. 11/ The Germanos also wrote a letter to J. Long Construction (sic) on April 24, 1987, asking for return of the deposit because their offer to purchase the construction site had not been accepted by the owners. The Germanos' letter was by return receipt which was dated May 1, 1987. A letter dated May 11, 1987, from Robert E. Zensen, President, Zensen Homes, Inc., formerly J. Long Construction, Inc., 12/ advised the Germanos that they were in default under the Agreement for Construction. The letter stated the "default has been established by the contingency not being met," but in the next paragraph required documentation that the contingency had not been met. 13/ On May 8, 1987, Carol Pearson removed his license from J. Long Realty, Inc. 14/ Evidence suggests some acrimony between Mr. Pearson and Respondent concerning the conduct of business transactions at J. Long Realty, Inc. 15/ Mr. Pearson testified that deposits were not being returned to customers who were entitled to return of their deposits. On May 16, 1987, Mary E. Bartek, citing ill health, resigned from J. Long Realty, Inc., as Broker-Salesman and as shareholder, and resigned her position as Vice-President, director, shareholder, officer, or agent from J. Long Companies. 16/ On June 15, 1987, Respondent resigned as "Broker of Record" for J. Long Realty, Inc. 17/ The Germanos made numerous requests to Respondent to return their check in the amount of $3,755. Mr. Pearson received at least 3 or 4 calls from the Germanos. Each time Respondent and Mr. Long agreed that the Germanos were entitled to have their check; except the last time when Mr. Long told Mr. Pearson to "forget about it." Mr. Pearson testified that it was his impression that Mr. Long prevented Respondent from returning the check. The Germanos made numerous requests to Mr. Pearson for return of their check. Each time Mr. Pearson stated that Respondent had said he would return the check. On one occasion, Lee Germano met with Respondent to request that the money be returned, but the money was not returned.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent be found guilty of: culpable negligence and breach of trust in violation of Subsection 475.25(1)(b); failure to account and deliver nonescrowed property upon demand of the person entitled to such property in violation of Subsection 475.25(1)(d); and failure to place a check in escrow in violation of Subsection 475.25(1)(k). Since this was apparently Respondent's first offense, involving a single act, it is recommended that Respondent be reprimanded. Since the offense involved the misuse of funds, disregard of the entitlement to funds, and Respondent offered no evidence of restitution, it is recommended that Respondent be fined $1,000 for each violation. In order to enhance Respondent's regard for the entitlement to funds in business transactions and in order to facilitate due care in his future transactions, it is recommended that Respondent be placed on probation for a period not to exceed one year. The conditions of probation may include any of those prescribed in Florida Administrative Code Rule 21V-24.001(2)(a) except those that would require the Respondent to submit to reexamination and to be placed on broker-salesman status. In the event that Respondent fails to pay any fines imposed or to complete the terms of any probation imposed, it is recommended that Respondent's license be suspended for two years. DONE and ENTERED this 19th day of June 1989, in Tallahassee, Florida. DANIEL MANRY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of June, 1989.
The Issue The issue is whether Mr. Powell should be disciplined for irregularities in the handling of an escrow deposit by a real estate firm for which he was the qualifying broker.
Findings Of Fact The Respondent, Willie Powell, was at all relevant times a licensed real estate broker in the State of Florida, holding license number 0070494. Mr. Powell was the sole qualifying broker of Future Investments & Development II Co., Inc., trading as ERA Thompkins and Saunders Realty Company (hereafter, T & S), 2734 N.W. 183rd Street, Suite 206, Miami, Florida 33056. On or about November 12, 1990, Guillermo Castillo, a licensed real estate broker for Emerald Enterprises, Inc., received a listing agreement from Horace B. Miller to sell residential property (a duplex) owned by Miller located at 2331 N.W. 103rd Street, Miami, Florida. The property was listed with the Multiple Listing Service. On or about February 27 or 28, 1991, Mr. Castillo received a telephone call from Willie J. Thompkins of T & S saying he wanted to show the Miller property to a prospective buyer. On or about February 28, 1991, Mr. Castillo received through the mail slot at his office a written offer from George R. Howell of Dorchester, Massachusetts, to buy the Miller property, with a business card of Jerry Saunders of T & S. On or about March 6, 1991, Guillermo Castillo met with Horace Miller to review the Howell offer. At Miller's request, Castillo made some changes to the contract to reflect that Miller was selling the duplex in "as is" condition. Miller signed the contract and initialed the changes, and Mr. Castillo signed the contract on behalf of Emerald Enterprises, and called Willie J. Thompkins to tell him the contract had been signed. The next day, Mr. Castillo went to the office of T & S and dropped off the contract for the buyer to consider the seller's changes. A day or two later, a representative of T & S telephoned Guillermo Castillo and told Mr. Castillo that the buyer had accepted the seller's changes to the contract; Mr. Castillo then notified Miller. Mr. Castillo later received from T & S the signed contract with Mr. Miller's changes initialed by Mr. Howell. The contract was also signed by Mr. Thompkins of T & S. The contract called for a $1,000 deposit to be held in escrow by T & S (Exhibit 5, Paragraph IIa). Guillermo Castillo contacted T & S to check on the progress of the sale. He learned that J.P. Mortgage was handling the buyer's mortgage loan application. Castillo contacted J.P. Mortgage and was told that the loan was proceeding normally. After the contractual closing date of April 29, 1991, had passed without the closing taking place, Castillo contracted J.P. Mortgage again, but was told that they were no longer processing the loan. Castillo requested that J.P. Mortgage send him a letter to that effect, and he received a letter dated May 2, 1991, stating that J.P. Mortgage was withdrawing as the lender because the buyer failed to return the mortgage loan application. Castillo informed Horace Miller of the situation and Miller instructed Castillo to write to T & S making a claim to the buyer's deposit under the contract of sale. On May 4, 1991, Castillo sent a letter to T & S claiming the deposit for the seller. Paragraph Q of the contract provided for the seller to retain the buyer's deposit as liquidated damages if the buyer failed to perform the contract. On or about May 9, 1991, Guillermo Castillo received from Mr. Thompkins, the manger of T & S, a letter dated May 1, 1991, but postmarked May 6, 1991, ". . . requesting that the . . . file be cancelled" due to ". . . communication problems with . . . Mr. Howell," and citing unsuccessful attempts to contact Howell by telephone and by mail. When Castillo received that letter he contacted T & S to point out the seriousness of the matter and to press for forfeiture of the buyer's deposit. On May 9, 1991, Castillo received a telefax from Mr. Thompkins of T & S stating that the Howell deposit check had been returned for insufficient funds and attaching a copy of the returned check. Prior to his receipt of this telefax, Castillo had not taken any independent steps to verify whether T & S had actually received the Howell deposit. He had relied on the contract, which had been executed by a licensed salesman and believed he did not require further verification that the escrow deposit had been made. Neither Mr. Castillo nor Mr. Miller dealt with the Respondent, Mr. Powell, at any time concerning the sale of the Miller property. T & S received George Howell's $1,000 deposit in the form of a check on March 4, 1991, drawn on a Massachusetts bank and deposited it in its account with First Union National Bank which was used as the escrow account, account number 15462242336, on March 5, 1991. The check was charged back to the account twice, on March 11, 1991, and on March 26, 1991. Mr. Powell was a signatory on that escrow account. After Guillermo Castillo received the May 9, 1991, telefax, he notified Horace Miller. Mr. Miller had not taken any steps on his own to verify whether T & S had received the deposit because he had confidence in his broker to let him know right away if there were any problems with the sale. By May 9, 1991, Horace Miller had already incurred expenses preparing the property for closing, and had lost rent by terminating a tenancy in the property. Because the transaction never closed, Mr. Miller sustained financial damage, some of which he might have avoided if he had been notified earlier of the buyer's dishonored escrow deposit check. On or about May 28, 1991, Miller filed a complaint with the Department of Professional Regulation, which Sidney Miller investigated. He found that the person introduced to him during his investigation at T & S as Willie Powell was not actually the Respondent. In March 1991, Mr. Powell had not seen the bank statements for the T & S escrow account for several months, and had not signed the written monthly escrow account reconciliation statement for the month of October 1990 or for any subsequent month. Mr. Powell was serving as the qualifying broker of T & S for a salary of $75 per month and no commissions. He was not active in the management of the firm. He would come to the office of T & S approximately three days per week to check files and sign listing agreements, and he would call in to see if there were any problems, messages or documents to sign. He essentially loaned his brokers' license to those who operated T & S as an accommodation because he had known the Thompkins family for 25 years. Mr. Powell argues in his proposed order that "the adequacy of [Mr. Powell's] monthly reconciliations were impeded by frauds perpetrated upon him by persons at [T & S]" (PRO at page 9, paragraph 5). It is obvious that there were problems at T & S, since a person there misrepresented himself to the Department's investigator as Mr. Powell. The full extent of the misconduct there is unclear. There is no proof in this record that salespersons at T & S had fabricated escrow account statements for Mr. Powell. Had Mr. Powell proven that he performed monthly reconciliations with what turned out to be falsified records of T & S, his argument might be well taken. The record, unfortunately, shows that no reconciliations were done. Had Mr. Powell done them, the problem here should have been uncovered.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be issued finding Willie Powell guilty of violating Section 475.25(1)(b), Florida Statutes, finding him not guilty of violating Section 475.25(1)(d), Florida Statutes, and taking the following disciplinary action against him: Issuance of a reprimand. Imposition of an administrative fine in the amount of $1,000 to be paid within 30 days of the date of the final order adopting the recommended order. Placement of the license of Mr. Powell on probation for a period of one year beginning on the date of the final order and providing that during that period he shall provide satisfactory evidence to the Florida Department of Professional Regulation, Division of Real Estate, Legal Section, Hurston Building, North Tower, Suite N-308, 400 West Robinson Street, Orlando, Florida 32801-1772, of having completion a 30-hour postlicensure education course in real estate brokerage management, in addition to any other education required of him to remain current and active as a real estate broker in the State of Florida, and that he be required to submit to the Commission during that year his monthly trust account reconciliations. Cf. Rule 21V-24.002(3)(i), Florida Administrative Code, on penalties for violation of Rule 21V-14.012(2), Florida Administrative Code. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 16th day of July 1992. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of July 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-0192 Rulings on Findings proposed by the Commission: Adopted in Findings 1 and 2. Adopted in Finding 2. Adopted in Finding 3. Adopted in Finding 4. Adopted in Finding 5. Adopted in Finding 6. Adopted in Findings 7 and 8. Adopted in Finding 9. Adopted in Finding 12. Adopted in Finding 13. Adopted in Finding 11. Adopted in Finding 15. Rulings on Findings proposed by Mr. Powell: Adopted in Finding 1 with the exception of the license number. Adopted in Finding 3. Adopted in Finding 2. Adopted in Finding 4. Rejected as unnecessary. Adopted in Finding 5. Adopted in Finding 4. Adopted in Finding 6. Generally adopted in Finding 6. Implicit in Finding 10. Adopted in Finding 6. Adopted in Finding 6. Adopted in Findings 7 and 8. Adopted in Finding 9. Adopted in Finding 10. Rejected as subordinate to Finding 10. Adopted in Finding 13. Rejected as unnecessary, the reconciliation was not one done shortly following the month of March reconciling the account for March 1991. It was done during the investigation conducted by Mr. Miller and took place between approximately June 20 and July 10, 1991. Adopted in Finding 15. Rejected as unnecessary. Adopted in Finding 14. Rejected as unnecessary, or subordinate to Finding 10. Rejected as unnecessary. Rejected as unnecessary. COPIES FURNISHED: Theodore R. Gay, Esquire Department of Professional Regulation Suite N-607 401 Northwest 2nd Avenue Miami, Florida 33128 Harold M. Braxton, Esquire Suite 400, One Datran Center 9100 South Dadeland Boulevard Miami, Florida 33156 Darlene F. Keller Division Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792
Findings Of Fact At all times relevant hereto, Phyllis A. Crosby, Respondent, was registered as a real estate broker by the Florida Board of Real Estate, and was qualifying broker for Crosby Realty Corporation, a corporate real estate broker (Exhibit 4). Crosby had actual knowledge of the hearing scheduled to be heard September 3, 1986, and failed to appear. William Nolte and Marilyn Nolte owned a duplex in Tampa, Florida that they desired to sell. They talked with Wade Black and Dale Peterson, real estate salesmen with American Realty Company, and agreed to give American Realty Company an exclusive right of sale agreement, a listing agreement to list the property for rent before sale, and to pay a $100 commission for each tenant. The exclusive listing agreement dated February 26, 1985 was attached to Exhibit 2, deposition of Marilyn Nolte, as Exhibit 2. Pursuant to these agreements, tenants for each of the apartments were obtained and a buyer for the property was subsequently found. In March 1985, Crosby purchased American Realty's assets which included the Nolte agreements. Salesmen licenses of Black and Peterson were transferred to Crosby Realty. Rental and deposit checks from the two tenants, totalling $1,130.00, were obtained by Black and/or Peterson and delivered to Respondent. This money was never deposited into Respondent's escrow account. The Noltes demanded remittance of the $1,130.00 minus $200 (commission), or $930.00 from Respondent on numerous occasions and made numerous phone calls to the Crosby Realty Company office to obtain this money without success. On March 13, 1985, a buyer for the Nolte property was secured by Tam- Bay Realty, and the property was sold with the closing taking place June 9, 1985. Prior to the closing, Nolte wrote to the American Title Company, who closed the transaction, regarding the $930.00 owed Nolte by Respondent and this $930.00 was deducted from the commission paid Respondent. At the closing, Respondent appeared, took the check representing Crosby Realty's Commission less the $930.00 deducted to pay Nolte, and left before the final papers were signed. No commission for the rentals of the sale was ever paid by Respondent to Black or Peterson. Respondent, during 1985, had three accounts in the Citrus Park Bank in Tampa. One was the Crosby escrow account, one was the Crosby Realty general account, and one was the Phyllis A. Crosby personal expense account. Numerous overdrafts were drawn on the general account and personal expenses account and the bank notified the Respondent that these overdraft charges would be deducted from her escrow account as a set-off to keep the bank from losing money because of these overdraft charges. During June 1985, the bank debited the escrow account $88.50 (debit memo Exhibit 1), the July statement contained a debit memo of $283.00, and in August, debit memos of $126.76 and $62.88 appeared. In September 1985, Citrus Park Bank closed all of Respondent's accounts. On April 29, 1985, Respondent leased office space and a townhouse from Carlton Properties in Tampa. She signed a three-year lease effective May 1, 1985, which provided for two months free rent for the office, with tenant to make a security deposit in the amount of $817.79 (which equals one month rent) due June 1, 1985. This deposit was never made and she was evicted in July. The townhouse lease provided for two weeks free rent with the security deposit due May 15, 1985. Respondent made this payment and one additional payment, but the check for the second payment was returned marked insufficient funds. She was evicted July 22, 1985. Respondent leased office space on July 9, 1985, from Ayers-Siera Insurance Association in the Carrolwood Village Center for a broker's office. She gave the lessor a check for $842.00 for the August rent and a security deposit. She moved into the office space and the check, written on the Crosby Realty general account, bounced. It was returned for collection twice, marked insufficient funds. When run through a third time, the check was returned marked "account closed." Eviction proceedings were instituted and Respondent's furniture was moved out of the office by the Sheriff in early October. The lessor has never received any monies from Respondent. In September or early October 1985, Respondent entered into a three year lease agreement with Paramount Triangle to lease office space commencing November 1, 1985. She moved her offices into that space and occupied the premises until April or May 1986 when she departed. During the period that Respondent occupied this office space, only one rental check from her was honored by the bank. Numerous checks given to Paramount Triangle for rent were not honored by the bank. Finally, the last check from Respondent dated March 6, 1986, which Paramount Triangle tried to deposit, was returned showing the account on which the check was drawn was closed on March 4, 1986. Pamela Glass was employed as a secretary by Respondent from July 6, 1986 through August 6, 1986. During this period, Respondent refused to accept certified mail and became very angry with Glass when she once signed for a certified letter addressed to Respondent. Glass received numerous phone calls from people complaining about not being paid for billing sent to Respondent. When her pay was not forthcoming at the end of the month, Glass quit. Glass also testified, without contradiction, that Respondent held accounts for utilities under various aliases she used for this purpose. Frank Maye, investigator for Petitioner, failed to get escrow account records from Respondent when requested and made appointments with her to audit her escrow accounts which were not kept by Respondent. Failing to obtain the records from Respondent, Maye subpoenaed the records from the bank.
Findings Of Fact At all times material to this case, Respondent, Antonio Prado, has been a licensed real estate broker in the State of Florida, license no. 0138312. Respondent, Antonio Prado, is the President and qualifying broker for a real estate company called Bayside International Realty, Inc. Respondent, Bayside International Realty, Inc., has been issued real estate license no. 1001760. The Department is the state agency charged with the responsibility of regulating real estate licensees. On January 13, 1995, an investigator employed by the Department conducted an office inspection and audit of the Respondents' place of business. During the course of the audit, the investigator discovered that the escrow account for the business contained $1,000.00. None of the $1,000.00 was, in fact, "trust funds" owed or belonging to a third party as Respondents have not held "trust funds" since August, 1990. The investigator advised Respondent that he was not allowed to hold personal funds in excess of $200.00 in the company escrow account. Based upon that information, Respondent immediately, on January 13, 1995, removed $800.00 from the escrow account leaving a balance of $200.00. The purpose of holding $1,000.00 in the account related to a Barnett Bank policy which required the minimum balance of $1,000.00 to avoid service charges on the account. Respondent, Antonio Prado, has not been active in the real estate practice for several years and was unaware of changes to the escrow policy dating back to December, 1991, which prohibit more than $200.00 of personal funds in an escrow account. Respondent, Antonio Prado, has been licensed for 19 years and has never been disciplined for any violations of the real estate law.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Florida Real Estate Commission enter a final order determining the Respondent, Antonio Prado, committed only a minor technical violation of Section 425.25(1)(e), Florida Statutes, and, in recognition of Respondent's exemplary record as a broker, which, along with his willing, immediate action to correct the error, demonstrates sound judgment, issue a letter of reprimand and guidance regarding escrow account rules and regulations. All other allegations against these Respondents should be dismissed. DONE AND ENTERED this 15th day of May, 1996, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of May, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-0038 Rulings on the proposed findings of fact submitted by Petitioner: None submitted. Rulings on the proposed findings of fact submitted by Respondent: Paragraphs 1 and 2 are rejected as statements of fact as they are restatement of argument or comment made at the hearing. Paragraphs 3 through 6 are accepted. COPIES FURNISHED: Henry M. Solares Division Director Division of Real Estate Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399 Theodore R. Gay Senior Attorney Department of Business and Professional Regulation Division of Real Estate Rhode Building Phase II 401 Northwest Second Avenue N607 Miami, Florida 33128 Antonio Prado, pro se and as President of Bayside International Realty, Inc. 1390 Brickell Avenue, Suite 230 Miami, Florida 33131
Findings Of Fact The Department is the state agency charged with the licensing and regulation of real estate brokers. Respondent's real estate broker license number 0325307 was active in Florida between October 1985 and November 1987. During this period, the business address registered at the Department for AmBest Realty was: 333-31st Street North #24, St. Petersburg, Florida 33713. Respondent was the qualifying broker for this real estate firm. The real estate office at the above-mentioned address was officially closed by Respondent in November 1987. At this particular time, there had been a decrease in real estate sales throughout the state. Respondent changed careers and became a long haul trucker in order to provide for his family under the then prevailing real estate market conditions. Post Office Box 12811, St. Petersburg, Florida 33733, was acquired by Respondent in November 1987 so that he could continue to receive communications regarding his former real estate practice, if necessary. His current profession as a long haul trucker frequently required his absence from the state for days at a time. The use of the post office box allowed him to review all correspondence regarding AmBest Realty whenever he returned to St. Petersburg, Florida from his trucking route. Respondent did not surrender or account for his license to the Real Estate Commission when he closed or moved his real estate business to his home in November 1987. By statute, Respondent was required to do so within 10 days of the address change or office closure. Notification to the Board should have been done by Respondent on a form provided by the Real Estate Commission for that purpose. Respondent's license ceased to be in force when he closed the real estate office at 333-31st Street North #24, St. Petersburg, Florida. In March 1988, Respondent attempted to allow his broker license to automatically revert to inactive status, pursuant to Section 475.182(3), Florida Statutes [1987]. Although this decision ignored the previous deactivation of the license, it corroborates Respondent's testimony that the office closed in November 1987. When Respondent attempted to place the license in an inactive status in March 1988, it was his intention to reactivate his license within a four-year period if the real estate market recovered from its slump. Respondent notified the Department of his new mailing address at the post office box prior to his attempted placement of the license in an inactive status. Respondent's failure to notify the Board of the change in his business address caused the Board to improperly rely on that business address as the proper location for office inspections and the Department's review of escrow/trust accounts. In August of 1990, an investigator with the Department unsuccessfully attempted to contact the Respondent at the registered business address at 333- 31st Street North #24, St. Petersburg, Florida. The real estate office and a real estate sign were no longer at the location. Respondent was later contacted by the investigator through the home address previously listed on his license that had been replaced in March 1988 by the post office box number. The investigator requested Respondent make his escrow trust account records and supporting documentation available for inspection. Respondent advised that he was unable to comply with the request as his original escrow trust account records had been stolen in a garage burglary in late November 1987. No effort was made by Respondent to reconstruct or to aid in the reconstruction of the missing records. No additional mitigating factors were presented at hearing other than the break-in to the location where Respondent stored his original escrow trust account records.
Recommendation Based upon the foregoing, it is RECOMMENDED: That Respondent, James E. Willis t/a AmBest Realty be found not guilty of Count I of the Administrative Complaint. That Respondent be found guilty of violation of Section 475.25(1)(e), Florida Statutes, as set forth in Count II, based upon his failure to preserve and make available to the Department all escrow trust account records with supporting documentation, as required by Rule 21V-14.012(1), Florida Administrative Code. That the privilege of Respondent Willis to reinstate his real estate broker's license be suspended for three years, subject to a reduction in the suspension term if the escrow trust account records are reconstructed and presented to the Board. DONE and ENTERED this 14th day of January, 1992, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of January, 1992. COPIES FURNISHED: JAMES H GILLIS ESQUIRE DPR - DIVISION OF REAL ESTATE 400 W ROBINSON ST ORLANDO FL 32801 1772 JAMES E WILLIS, AMBEST REALTY PO BOX 12811 ST PETERSBURG FL 33733 2811 DARLENE F KELLER/EXECUTIVE DIRECTOR DPR - DIVISION OF REAL ESTATE 400 W ROBINSON ST ORLANDO FL 32801 1772 JACK McRAY ESQ/GENERAL COUNSEL DEPT OF PROFESSIONAL REGULATION 1940 N MONROE ST TALLAHASSEE FL 32399 0792
The Issue Whether the Respondents committed the offenses alleged in the Amended Administrative Complaint and the penalties, if any, that should be imposed.
Findings Of Fact Petitioner is the agency of the State of Florida charged with the responsibility and duty to administer the statutes and rules regulating the real estate profession in Florida. At all times pertinent to this proceeding, the Respondent, Jose A. Queipo, Jr., was licensed by the Petitioner as a real estate broker, having been issued license numbers 0415475 and 3001474. At all times pertinent to this proceeding, the Respondent, Queipo International Realty, Inc. (REALTY), was licensed by the Petitioner as a real estate brokerage corporation, having been issued license number 0271997. At all times pertinent to this proceeding, Mr. Queipo was the sole corporate officer, sole owner, and sole broker of record for REALTY. At all times pertinent to this proceeding, until January 27, 1995, REALTY's offices were located at 2320 Red Road, Miami, Florida. In 1994, Mr. Queipo made the business decision to form Queipo International Realty Group, Inc., (GROUP) as a separate corporation and, through GROUP, to open a real estate office on Crandon Boulevard, Key Biscayne, Florida. Andrew Marrero, a licensed real estate broker had been a long term friend of Mr. Queipo and had worked with him at REALTY. Mr. Queipo gave Mr. Marrero 50 percent ownership interest in GROUP and had Mr. Marrero act as the qualifying broker of record for GROUP. In December, 1994, Mr. Queipo became ill. On medical advice, he took an extended vacation, leaving Mr. Marrero in charge of REALTY and GROUP. Mr. Queipo and Mr. Marrero agreed that the REALTY offices on Red Road would be closed and that all pending transactions for which REALTY was responsible (15 to 20 in number) would be closed by GROUP. The GROUP office was thereafter opened on Key Biscayne. Before he left on his vacation, Mr. Queipo signed a number of blank checks on REALTY's various trust and operating bank accounts and he signed several sheets of stationery with REALTY's letterhead. Mr. Queipo turned these signed blank checks, signed sheets of stationery, and all books and records of REALTY over to Mr. Marrero. Mr. Queipo also pre-signed checks on GROUP's bank accounts and executed a corporate document that allowed Mr. Marrero to change those accounts so that only Mr. Marrero's signature was necessary. On January 27, 1995, Mr. Queipo was still out of state on his vacation. On that date, Mr. Marrero closed the REALTY offices without advance notification to the sales persons and other personnel employed at that office. Mr. Marrero took possession of all equipment, furniture, files, and corporate records and moved these items either to the GROUP office on Key Biscayne or to his personal residence. Between the time he left on his vacation in December 1994, and March 1995, Mr. Queipo returned to Miami only for a day to attend the closing of the sale of the REALTY office building on Red Road. While he was away from Miami between December 1994 and March 1995, Mr. Queipo stayed with relatives in New York and rested. During this period, Mr. Marrero was in control of REALTY and GROUP. Mr. Queipo did not return to Miami permanently until March 1995. When he returned to Miami in March 1995, Mr. Queipo sought an accounting from Mr. Marrero as to the status of REALTY and GROUP. Mr. Marrero responded by locking Mr. Queipo out of the offices of GROUP. Mr. Queipo filed suit in circuit court in Miami against Mr. Marrero in May 1995. In June 1995, Mr. Marrero was ordered by the presiding circuit judge to turn all books and records of GROUP and of REALTY to the Century 21 Regional Offices so that an accounting could be performed. It was not until August 1995 that Mr. Queipo regained control of REALTY and of GROUP. Petitioner determined that it would be appropriate to audit the escrow accounts and other books and records of REALTY in January 1995, prior to the abrupt closing of the REALTY offices on January 27, 1995. Two of Petitioner's investigators, Kenneth Rehm and Roberto Castro, went to the REALTY office during regular business hours prior to January 27, 1995, for the purpose of conducting the audit. The investigators asked to see Mr. Queipo and were told by a receptionist that Mr. Queipo was not available. The investigators were unable to conduct the planned audit. Shortly after the REALTY office on Red Road was closed on January 27, 1995, the Petitioner was notified of this fact by sales persons who had worked at that office. REALTY never maintained or operated an office at any other location after January 27, 1995. Petitioner's investigators made diligent efforts to subpoena the REALTY records so that they could perform an audit and they attempted to communicate with Mr. Queipo through his brother-in-law and through Martha Lara, a secretary who worked for REALTY. 1/ Petitioner's investigators were unable to perfect the service of a subpoena for REALTY's records until Mr. Rehm served Mr. Queipo in person at the Dade County Courthouse on May 30, 1995. Mr. Queipo was at the Courthouse for a hearing pertaining to the litigation he instigated against Mr. Marrero. This subpoena required Mr. Queipo to produce the following records of REALTY: . . . brokerage records for the period January 1, 1994 to present including: All listing agreements. All sales/purchase agreements/rental/ lease agreements. All escrow account monthly bank state- ments, bank deposit slips and cancelled checks. Operating account bank statements, deposit slips, and cancelled checks. Monthly reconciliations showing broker's total trust liability. In response to that subpoena, counsel for Mr. Queipo responded by letter dated June 12, 1995, that stated, in pertinent part, as follows: Please be advised that the undersigned represents Jose Queipo, broker, owner of a corporation no longer in business called Queipo International Realty, Inc. Mr. Kenneth Rehm personally served a subpoena . . . upon Mr. Queipo in relation to Queipo International Realty, Inc. . . . * * * . . . all matters contained within the body of the subpoena are presently lodged with and or controlled by Queipo International Group, Inc. and Mr. Andrew Marrero. As Mr. Kenneth Rehm knows, Queipo Inter- national Group Inc. has been controlled by a Mr. Andrew Marrero since a dispute arose with Mr. Queipo. As of this date Mr. Marrero retains all of the relevant records of Queipo Inter- national Realty Inc. that were taken by him in January of 1995 to Queipo International Group, Inc.'s new headquarters on Crandon Blvd. as part of the merger and formation of the new company . . . . As of the time of the formal hearing, the Respondents had not provided Petitioner with records that would enable Petitioner to audit the REALTY escrow accounts. At the times pertinent to this proceeding, REALTY had more than one escrow account. One of these escrow accounts was account number 0024012750 at the Interamerican Bank. Petitioner established that as of January 31, 1995, the account liability (at least $28,200) exceeded the account balance ($13,794.41). This discrepancy was detected after Mr. Queipo had given Mr. Marrero control of the escrow accounts and had given him signed, blank checks that enabled him to make withdrawals from the escrow accounts. Although Respondents established that REALTY had more than one escrow account, that fact does not explain the apparent discrepancy in account number 0024012750 at the Interamerican Bank. At all times pertinent to this proceeding, Respondents knew that the records of REALTY were subject to audit by the Petitioner. REALTY's records had been routinely audited on three separate occasions prior to 1995 with no errors having been detected. Prior to October 1994, REALTY had a listing agreement for the sale of property owned by Wilma Sue Lawton. The REALTY sales persons for this transaction were Ann Freeman and Yolanda Rocabado. On October 19, 1994, a contract for the sale of the Lawton property was executed between Ms. Lawton as seller and Mario N. and Elisa V. Machin as buyers. This contract provided for REALTY to receive a six percent commission when the sale closed. Since the sales price equalled $100,000, the amount of the real estate commission was $6,000. In connection with this transaction, the Machins paid to REALTY a deposit in the amount of $10,000, which was placed in account number 0024012750 at the Interamerican Bank. After REALTY closed its office on January 27, 1995, Ms. Freeman became associated with a real estate company named Vision International Realty (VISION) and Ms. Rocabado became associated with GROUP. On January 31, 1995, REALTY's listing agreement with Ms. Lawton expired. On February 3, 1995, Ms. Lawton executed a listing agreement with VISION. This listing agreement provided for VISION to receive the six percent real estate commission. On February 3, 1995, Ms. Lawton and Mr. and Ms. Machin executed a "Release on (sic) Deposit Receipt" that released the $10,000 deposit that had been placed in escrow by REALTY pursuant to the contract dated October 19, 1994. By an instrument executed by the Machins on February 3, 1995, and by Ms. Lawton on February 8, 1995, the parties entered into a second contract for the purchase and sale of the Lawton property. There were no material differences between the contract executed in February 1995 and the contract dated October 19, 1994. This second contract provided that VISION and GROUP would evenly split the six percent commission. The closing for this transaction was scheduled for on or before March 4, 1995. Approximately two weeks prior to the scheduled closing, VISION asked that REALTY transfer the $10,000 escrow deposit to a VISION escrow account so that the funds would be available for the closing and provided a copy of the "Release on Deposit Receipt". At the time REALTY received the "Release on Deposit Receipt" and the request to transfer those funds, Mr. Marrero was in de facto control of both REALTY and GROUP. Thereafter, a REALTY check that had been pre-signed in blank by Mr. Queipo and an unsigned cover letter on REALTY letterhead were sent to the attorney who as acting as the closing agent for the transaction. The amount of the check sent to the closing agent was $7,000. The unsigned transmittal letter referenced the Lawton to Machin transaction and provided, in pertinent part, as follows: Receipt is hereby acknowledged in the amount of $6,000 (Six Thousand Dollars) as a professional fee for the above referenced property. Please be advised that the [sic] $3,000 of the above captioned in dispute is being forwarded to the title agent as agreed until this matter is settled among the brokers. The closing agent correctly understood the cover letter to mean that REALTY was keeping $3,000 of the $10,000 that had been deposited as part of its commission and that REALTY was also claiming it was entitled to receive an additional commission of $3,000 from the $7,000 check it forwarded to the closing agent. There was no dispute that the total commission, in the amount of $6,000, was to be paid from the $10,000 deposit that had been placed in REALTY's escrow account in October 1994. There was also no dispute that either REALTY or GROUP was entitled to $3,000, representing one half of the total real estate commission. The other half of the commission was in dispute and was forwarded by REALTY as part of the $7,000 it forwarded to the closing agent. Since Mr. Marrero was in control of REALTY and GROUP, it is concluded that REALTY's claims to the entire commission effectively waived any claim GROUP may have had to half of the commission. As a result of the commission dispute between REALTY and VISION, the closing agent treated $3,000 of the $7,000 as being in dispute and not available for use in closing the transaction. VISION objected to the transaction closing without it being paid the $3,000 commission it was claiming. The transaction closed because the buyers paid into the closing agent's escrow account an additional sum of $3,000, which was used to pay VISION's commission. The sum of $3,000 remains in the closing agent's escrow account pending resolution of the dispute over this part of the commission. Depending on the resolution of REALTY's commission claim, the sum belongs to either REALTY or to the Machins. No formal action has been taken to resolve the dispute over this commission. The sum of $3,000 remained in the closing agent's escrow account at the time of the formal hearing. In conjunction with a transaction involving a seller named Sergio Rodriguez and a buyer named Aristomanis Atheras, REALTY received an escrow deposit in the amount of $15,500. Respondents thereafter received conflicting demands for that deposit. On November 17, 1994, REALTY filed an interpleader action in Dade County Circuit Court. REALTY was represented in this matter by an attorney named Raymond Albo. On June 6, 1995, REALTY was ordered by the circuit court to deposit the escrowed funds into the registry of the court "forthwith". Respondents did not comply with that order. Mr. Queipo testified, credibly, that Mr. Albo failed to advise him of that order. On October 19, 1995, the circuit court entered an "Order to Show Cause" which ordered Mr. Queipo to show cause at a hearing scheduled for November 9, 1995, why he should not be held in contempt of court for failing to comply with the order if June 6, 1995. On November 8, 1995, Mr. Albo contacted Mr. Queipo for the first time in a year and told him about the Order to Show Cause. Mr. Queipo determined that the remaining REALTY escrow account had a balance of $11,000. He withdrew the sum of $11,000 from the escrow account, added $4,500 of his personal funds to that figure, and paid into the registry of the court the sum of $15,500 on November 9, 1995, thereby avoiding the contempt proceeding. i 33. Jorge Areces was acting as the general counsel for Respondents in November 1994. It was Mr. Areces who recommended that Mr. Albo be retained to represent REALTY in the interpleader action. Both Mr. Areces and Mr. Queipo made repeated efforts to contact Mr. Albo about the status of the interpleader action, but they were unable to locate him. Respondents relied on the advice of their attorneys in dealing with the interpleader action.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order that incorporates the findings of fact and conclusions of law contained herein, that finds Respondents guilty of the offenses alleged in Counts XIII, XIV, XVII, and XVIII, and that dismisses the remaining counts of the Amended Administrative Complaint. It is recommended that for the violations found herein, Respondents be fined in the total amount of $4,000 and that their respective licenses be placed on probation for a period of five years. DONE AND ENTERED this 21st day of October, 1996, in Tallahassee, Florida. CLAUDE B. ARRINGTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 21st day of October, 1996.
