The Issue The issue is whether Respondent violated various election laws and, if so, what penalty should be imposed.
Findings Of Fact Respondent is a licensed physician. For many years, he practiced as a heart surgeon in Springfield, Illinois. After developing a hand tremor resulting from a medical condition, Respondent relocated to Naples, where he had vacationed for several years. In early 1996, after moving to Naples, Respondent opened a walk-in clinic in Naples. At all material times, Respondent has worked at the clinic about 60 hours weekly. Respondent has never assumed responsibility for financial matters or record-keeping at his home or in his office. At home, these responsibilities are borne by his wife of 28 years. At the office, these responsibilities are assumed by his office manager. Prior to fall 1996, Respondent had never had any significant experience in politics. However, dissatisfied with aspects of the training and qualifications of certain personnel who responded to emergency medical calls, Respondent decided to run in the fall 1996 election for Seat 3 of the North Naples Fire and Rescue Commission. On July 1, 1996, Respondent obtained a "candidate packet" from the Filing Officer of the Office of the Collier County Supervisor of Elections. The packet contained considerable information, including treasurer's report forms; a list of key dates, including filing deadlines; a Division of Elections Candidate Handbook; copies of Chapters 99, 105, and 106, Florida Statutes; itemized contribution forms; and itemized expenditure forms. Without studying any of the information, Respondent signed and filed a Statement of Candidate on the same day that he picked up the candidate packet. The signed Statement of Candidate acknowledges that Respondent received, read, and understood the requirements of Chapter 106, Florida Statutes. On the same day, Respondent signed a form appointing himself as his campaign treasurer and designating The Huntington Bank as his campaign depository. The campaign bank account, which was a checking account, was titled, "Dr. Robert C. McGann Campaign Account for North Naples Fire District" and bore account number 02628208279. The only authorized signatories on the account were Respondent and his wife. The same bank also handled the checking account for Respondent's medical practice. On July 18, 1996, Respondent signed and filed a form titled, "Acknowledgment by Candidate." In this form, Respondent acknowledged that he had reviewed and understood various items, which he initialed. These initialed items included two items concerning the deadlines for filing campaign treasurer reports. On the same day, the Filing Officer provided Respondent with a two-sided document titled, "State of Florida 1996 Calendar and Election Dates." This document summarizes the deadlines for filing election reports and provides report-filing deadlines. For the First Primary, the filing deadlines are: August 2 for the period from July 1 through July 26; August 16 for the period from July 27 through August 9; and August 30 for the period from August 10 through August 29. For the Second Primary, the filing deadlines are: September 13 for the period from August 30 through September 6 and September 27 for the period from September 7 through September 26. The State of Florida 1996 Calendar and Election Dates requires that each candidate whose candidacy terminates as of the Second Primary must file his or her final report by December 30, 1996. Respondent filed six campaign treasurer reports. He signed each of the reports and filed each of the reports on time. The first allegation is that, "on multiple occasions," Respondent failed to timely deposit timely campaign contributions. Petitioner proved that Respondent failed to timely deposit campaign contributions on several occasions. However, Petitioner failed to prove that any of these failures was willful. The modest amounts do not invite a finding of willfulness, nor do the identities of the contributors, none of whom appears to be someone whom Respondent would wish to hide from public scrutiny. The preponderance of the evidence suggests only that Respondent's failures to timely deposit campaign contributions were due to his carelessness, and nothing in the record suggests that this carelessness was studied, purposeful, or otherwise calculated to avoid the requirements of the law. The second allegation is that Respondent failed to include his political party affiliation in a political advertisement. Petitioner proved that Respondent published at least two political advertisements that failed to disclose his political party affiliation. However, Petitioner failed to prove that these nondisclosures were willful. The nondisclosures occurred during the Republican primary elections. Failing to alert potential voters of Respondent's political affiliation could only hurt Respondent, as potential voters who found his campaign literature appealing might not be able to find the particular race in which Respondent was involved. In a larger sense, concealing his Republican affiliation hurt Respondent because he was running in a largely Republican area. The third allegation is that Respondent failed to use, in his political advertisements, the word "for" between his name and the office for which he was running. The stated purpose of this requirement is to alert potential voters that a candidate is not an incumbent. Petitioner proved that Respondent published at least two political advertisements that failed to include the word "for" between his name and the office for which he was running. However, Petitioner failed to prove that the failures were willful. The first advertisement ran during the First Primary, which included Respondent, the incumbent, and another challenger. The advertisement showed the incumbent's name followed by: "Incumbent- committed to the status quo." The advertisement showed the other challenger's name followed by: "Union Candidate." The advertisement showed Respondent's name followed by: "Candidate for Change." The whole thrust of Respondent's campaign in the First Primary was to change the policies of the North Naples Fire and Rescue Commission. Emphasizing his outsider status through the use of "for" would have served this purpose. The omission is thus due to neglect, not willfullness. The second advertisement evidently ran during the Second Primary because it mentions only the challenger, who eventually won this primary. The advertisement again emphasizes the outsider status of Respondent as an agent for change. Given this campaign theme, it is impossible to infer willfulness, rather than carelessness, in the failure of this advertisement to include "for" between Respondent's name and the position that he was seeking. The fourth allegation is that, "on multiple occasions," Respondent made expenditures from campaign funds other than by a check drawn on his campaign depository. Petitioner proved that Respondent made the following expenditures with funds not drawn from his campaign depository: $23 and $110 to Home Depot, $29 to Sam's Club, $6.15 to Mary Morgan, $25 to Office Depot, $30.60 to Office Depot, and $28 to Kinko's. Respondent reported each of these expenditures, but the campaign checking account does not reveal payments of these sums. However, Petitioner failed to prove that these acts were willful. With the exception of $6.15 given to Mary Morgan, the recipients of these sums are commercial establishments that provide goods and services of obvious usefulness to a political campaign. Mary Morgan is the Supervisor of Elections, whose office received $6.15, apparently in payment of some filing fee. Also, these relatively modest sums qualify as petty cash expenditures. The fifth allegation is that, "on multiple occasions," Respondent signed a check drawn on the campaign depository without sufficient funds on deposit in the campaign depository to pay the full amount of the check, to honor all outstanding checks, and to pay all previously authorized but unpaid expenses. Petitioner proved that Respondent's wife, who was an authorized signatory on the campaign checking account, signed a $507.15 check to Sir Speedy. The check is dated August 1, although the evidence does not establish that Sir Speedy received the check on that date. However, the evidence does establish that Sir Speedy presented the check for payment on August 6, at which time the bank honored the check and paid Sir Speedy $507.15. The bank statement for the campaign checking account reveals that the bank credited the account with a $500 deposit on August 2, leaving a balance of $2.30. The next activity was August 6, when the bank debited the account for the Sir Speedy check in the amount of $507.15, leaving a negative balance of $4.85, which increased the next day to a negative balance of $7.35 after the application of monthly checking fees. Although Respondent is responsible for the acts of his wife, as his agent in making this expenditure, Petitioner failed to prove that Respondent or his wife willfully delivered a campaign check without sufficient funds. If this had been their intent, their effort was stymied by the bank's honoring the check. In fact, they had no such intent. Although they probably did not know that this check would cause a negative balance of a few dollars, it is more likely that they delivered the check knowing that the bank would honor the check because the account had sufficient funds or, if it did not, it was short only a few dollars and the bank, consistent with its policy on their accounts, would nonetheless honor the check. Additional evidence that this was bank policy is the absence of any overdraft fee on the August or September bank statement. The sixth allegation is that, "on multiple occasions," Respondent failed to report a contribution required by law to be reported. Petitioner proved that Respondent received numerous contributions that he failed to report, including $500 from himself on August 2, $1000 from himself on August 19, $100 from Barry or Diane Flagg on August 16, $50 from Gordon Radcliff in late September, $50 from Thomas Jewell on September 26, $50 from David Grieder on September 26, and $100 from Peter or Carol Boyd on September 26. The evidence in support of the allegation that Respondent failed to report a contribution consists of seven contributions over a seven-week period. These omissions totaled $1850 out of a total reported contributions of $9414.75 (including $4500 in loans from Respondent); in other words, Respondent failed to report nearly 20 percent of the contributions. Bank records for the campaign checking account record only $6820 in deposits. Reporting contributions is arguably the most basic requirement of the applicable law. Respondent's reports reveal a knowledge of the requirement to report contributions. Respondent even testified that he understood that he was required to report contributions, as well as expenditures. Although he reported numerous contributions, he failed to report a considerable amount of contributions under circumstances that reveal that this failure to report was willful. The seventh and eighth allegations are, respectively, that, "on six occasions" each, Respondent certified to the correctness of a campaign treasurer's report that was incorrect, false, or incomplete and falsely reported or failed to report information required by law. Petitioner has proved numerous inaccuracies and omissions in the campaign reports filed by Respondent. To the extent that the seventh and eighth allegations cover the sixth allegation, Petitioner has proved a willful violation, but the same acts and omissions cannot provide grounds for double discipline under two different statutes. To the extent the seventh and eighth allegations cover other acts and omissions, besides the mere failure to report contributions, Petitioner has failed to prove willfullness. To the contrary, the many inaccuracies and omissions (apart from the violations covered by the sixth allegation) again appear to be the product of Respondent's carelessness, rather than a studied attempt to avoid complying with the reporting requirements imposed by law. Petitioner infers willfullness from Respondent's failure to respond to six certified letters from the County filing officer alerting him to the deficiencies in his previously filed reports. The cited deficiencies consist mostly of 22 contributions or expenditures lacking a date, six contributions or expenditures lacking an address (i.e., one contributor for which Respondent previously supplied an address, Office Depot for which Respondent supplied an address on a later report, the County Supervisor of Elections (twice; this is the employer of the filing officer), Kinko's in Naples, and Desk Top Results in Naples). There are two problems in using the unanswered letters as grounds for inferring willfullness. First, the letters ignore most of the deficiencies on which Petitioner relies. Most of these ignored items are facially evident, and the filing officer's failure to mention them does not assist Petitioner's effort in showing willfullness. Such items include the wrong reporting timeframes; the failure to identify the report as quarterly, first primary, etc.; and the failure to indicate whether the report is an original or amendment. Second, the letters only raise two claimed deficiencies--the failure to disclose dates and addresses for contributions and expenditures. Even as to these matters, the letters provide no basis for an inference of willfullness for several reasons. First, the filing officer sent all of the letters on the same date, December 6. The most recurring failing cited in the letters is the absence of dates for contributions and expenditures. The record suggests that Respondent's carelessness in recordkeeping rendered impossible any accurate amendment of his reports to add the dates. The situation might have been different if the filing officer had sent such a letter after Respondent had filed the first report without the required dates. As to that report, it would have been more likely that Respondent could have reconstructed the dates. As to subsequent reports, it is much more likely that the carelessness defense would have been unavailing, after Respondent would have received a specific demand for this information. Given the outcome of the case, the Administrative Law Judge has examined the sealed exhibit containing copies of Respondent's personal income tax returns for 1996 and 1997. There is no indication in these tax returns that a fine of $1000 would be excessive.
Recommendation It is RECOMMENDED that the Florida Elections Commission enter a final order imposing a $1000 fine against Respondent. DONE AND ENTERED this 14th day of July, 1999, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 July, 1999. COPIES FURNISHED: Barbara Linthicum, Executive Director Florida Elections Commission The Capitol, Room 2002 Tallahassee, Florida 32399-1050 Steven Christensen, Clerk Florida Elections Commission The Capitol, Room 2002 Tallahassee, Florida 32399-1050 Michael T. McGuckin Assistant General Counsel Florida Elections Commission The Capitol, Room 2002 Tallahassee, Florida 32399-1050 Robert B. McKay Carney & McKay 1140 Franklin Avenue, Suite 201 Garden City, New York 11530
The Issue Whether Petitioners violated provisions of Chapter 106, Florida Statutes, as alleged in the Order of Probable Cause filed August 23, 2002.
Findings Of Fact Chapters 97 through 106, Florida Statutes, comprise the Florida Election Code (Code). Pursuant to the Code, the Commission is empowered specifically to enforce the provisions of Chapters 104 and 106, Florida Statutes. Mary McCarty was elected to the City Commission of Delray Beach, Florida in 1987. She was elected to the Palm Beach County Commission in 1990. She has been returned to that office in each subsequent election and she is currently a member of the Palm Beach County Commission. In November of 2002, she was elected to her fourth term as Chairman of the Palm Beach County Republican Executive Committee. The Committee to Take Back Our Judiciary was an unincorporated entity. It was a de facto committee, which, for reasons addressed herein, did not ever become a "political committee" as defined in Section 106.011(1), Florida Statutes. Ms. McCarty has run for public office six times and was successful on each occasion. Prior to each election she received from the Florida Secretary of State a handbook addressing campaign financing. She is familiar with the statutes and rules with regard to financing an individual campaign. Sometime before the Thanksgiving Holiday in 2000, Ms. McCarty received a telephone call from Roger Stone of Washington, D.C. Ms. McCarty knew Mr. Stone, who at various times had been a campaign operative for Senator Arlen Specter, had been involved in opposing the sugar tax amendment in Florida, and had been a consultant to Donald Trump, during his short-lived presidential campaign. Ms. McCarty was aware that Mr. Stone and Craig Snyder were principals of IKON Public Affairs, a business entity with offices in Washington, D.C., and Miami Beach, Florida. Roger Stone informed Ms. McCarty that he was forming a committee to raise funds for the purpose of taking action against the Florida Supreme Court. Mr. Stone stated that he had formed The Committee and that he wished for her to be the chairperson. She did not initially commit to undertake this responsibility. A few days after the conversation with Mr. Stone, Ms. McCarty received a facsimile draft of a fundraising letter that The Committee proposed to post. The facsimile was sent by Roger Stone from Washington. She made some suggested changes and returned it to the address in Washington from whence it came. Subsequently, she had a telephone conversation with Lora Lynn Jones of Unique Graphics and Design in Alexandria, Virginia. Ms. Jones was in the business of making mass mailings. Ms. McCarty told Ms. Jones that her name could be used on the fundraising letter although Ms. McCarty did not sign the fundraising letter. Nevertheless, the document was mailed to a large number of people and it bore the printed name, "Mary McCarty, Palm Beach County Commissioner." The first time Ms. McCarty saw The Committee's finished product it was in the form of a "Telepost, high priority communication." She first saw the "Telepost" when it arrived in her mailbox in early December 2000. The wording of the letter was different from the draft Ms. McCarty had seen earlier. Unlike the draft, it targeted specific justices on the Florida Supreme Court. It cannot be determined from the evidence the date the December "Telepost" was posted, but it was posted before Ms. McCarty determined that she had become Chairperson of The Committee. The "Telepost," dated December 2000, solicited funds so that The Committee could, ". . . send a clear message to the Florida Supreme Court that we will not tolerate their efforts to highjack the Presidential election for Al Gore." Later in December 2000, Mr. Stone called Ms. McCarthy and told her that she should be the chairman of The Committee. She agreed. Ms. McCarty signed a "Statement of Organization of Political Committee," which was dated December 19, 2000. This is a form provided by the Division of Elections, which, if properly completed and filed, officially establishes a political committee. She also signed a form entitled "Appointment of Campaign Treasurer and Designation of Campaign Depository for Political Committee." Mr. Stone, or his operatives, provided these forms to Ms. McCarty. She signed them and mailed them to Mr. Stone's address in Washington, D.C., which was the headquarters of the IKON Public Affairs Group. The "Statement of Organization of Political Committee," dated December 19, 2000, was received by the Division of Elections on December 26, 2000. It listed Amber McWhorter as Treasurer. Inez Williams, who works in the document section of the Division of Elections, processed the form. When Ms. Williams received it, she recognized that the form was incomplete because on the face of it the reader could not determine if the committee was an "issue" committee, or a "candidate" committee. Ms. Williams noted that the mailing address on the form dated December 19, 2000, was "c/o VisionMedia," 1680 Michigan Avenue, Suite 900, Miami Beach, Florida. Ms. Williams found a telephone number for that business and dialed it, on December 27, 2000. No one answered so she left a message on VisionMedia's answering machine. In addition to the telephone call, Ms. Williams prepared a letter with the address of, "Mary McCarty, Chairperson, The Committee to Take Back Our Judiciary, 1348 Washington Avenue, Suite 177, Miami Beach, Florida." This letter was dated December 27, 2000, and was signed by Connie A. Evans, Chief, Bureau of Election Records. This is the address found on the "Appointment of Campaign Treasurer and Designation of Campaign Depository for Political Committee," which had also been received by the Division of Elections on December 26, 2000. The letter signed by Ms. Evans on December 27, 2001, informed Ms. McCarty that items 3 and 7 needed to be "rephrased." It further informed Ms. McCarty, that upon receipt of the requested information the committee would be included on the "active" list. The message recorded on The Committee answering machine on December 27, 2001, generated a response from a person who identified himself as Mr. Snyder, on January 2, 2002. Mr. Snyder engaged in a telephone conversation with Ms. Williams. Ms. Williams explained to Mr. Snyder that items 3, 5, 7, and 8, would have to be completed properly as a condition of The Committee's being recognized. A letter dated January 4, 2001, bearing the letterhead of "The Committee to Take Back Our Judiciary," and signed by Amber Allman McWhorter, was faxed to the Division of Elections on January 4, 2001, and received that date. This letter referenced the telephone call between Ms. Williams and Craig Snyder, who was further identified as The Committee's attorney. The letter stated that a corrected Statement of Organization of Political Committee, and a designation of treasurer, would be forwarded to the Division of Elections within the next 72 hours. On January 8, 2001, a filing was received by the Division of Elections that was deemed by the Division to be complete. Subsequently, in a letter dated January 10, 2001, and signed by Connie Evans, informed Ms. McCarty and The Committee that the Statement of Organization and the Appointment of Campaign Treasurer and Designation of Campaign Depository for The Committee complied with the Division of Elections' requirements. The Committee was provided with Identification No. 34261. Posted with the letter was a copy of the "2000 Handbook for Committees," which is published by the Division of Elections. The letter and the handbook were sent to The Committee operation in Miami, not Ms. McCarty, and no one in the Miami Beach operation ever forwarded it to her. Connie Evans, Bureau Chief of Election Records, the entity that supervises the filing of the forms mentioned above, believes that due to a court ruling in Florida Right to Life v. Mortham, Case No. 98-770-Civ-Orl-19A, the language in Section 106.011, Florida Statutes, which defines a "political committee," has been found to be unconstitutional. She believes that a political committee is not required to register with the Division of Elections but that if a committee does register, it must abide by the statutes regulating political committees. Ms. Evans has informed numerous entities of this interpretation of the law in letters. The efficacy of that case, and Ms. Evans' interpretation of it, will be discussed further in the Conclusions of Law, below. Ms. McCarty signed a "Campaign Treasurer's Report Summary"(CTR-Q1) which was filed with the Division of Elections on April 10, 2001. This addressed the period January 1, 2001 until March 31, 2001. Under the certification section of the CTR-Q1 are the words, "It is a first degree misdemeanor for any person to falsify a public record (ss. 839.13, F.S.)." Immediately above her signature are the words, "I certify that I have examined this report and it is true, correct, and complete." The box found immediately above and to the right of her signature, was checked to signify that Ms. McCarty was the chairperson of The Committee. According to Ms. Evans, The Division of Elections regulates several kinds of committees. There are "issues" committees, "candidate" committees," "party executive" committees, and "committees of continuing existence." Depending on the nature of the committee, different rules apply. The Committee was a "candidate" committee so the contribution regulations of a political candidate applied to the committee. That meant that the maximum contribution per person was $500. The CTR-Q1 indicated in the "Itemized Contributions Section" that seven people contributed $1,000 and one person contributed $2,000. Walter Hunter, Neda Korich, Arthur Allen, William Shutze, Caroline Ireland, Henry Allen, and Honore Wansler, contributed $1,000, each. Robert Morgan contributed $2,000. The amounts in excess of $500 were eventually returned to the $1,000 contributors, except that in the case of Henry Allen, the refund was made to Allen Investment corporation. The sum of $1,500 was returned to Robert Morgan, the $2,000 contributor, but the CTR-Q1 listed only a $500 repayment. Therefore, the CTR-Q1 in its expenditures section was incorrect with regard to Mr. Morgan. The CTR-Q1 also listed in the "Itemized Contributions Section" the receipt, on January 2, 2001, of $150,000 for "LOA/INK extension of credit for direct mail services." These words may be interpreted to mean that a loan in the form of an "in kind" service had been provided. This was reported under the name of Creative Marketing, 2760 Eisenhower Avenue, Suite 250, Alexandria, Virginia. The Committee had a bank account at CityBank of Miami, Florida. The sole authorized signatory on the account was Diane Thorne. The Account No. was 3200015694. There was no entry in the bank account of the receipt of $150,000. This indicates that the item was not processed through the bank and it would not have been processed through the bank if it were really an "in kind" contribution. Because the beginning balance was zero on February 8, 2001, it is concluded that the inception date of Account No. 3200015694 was February 8, 2001. Lora Lynn Jones, is the principal of Unique Graphics and Design, which is located in Suite 253, at an address in Alexandria, Virginia, which is not further identified in the evidence of record. Ms. Jones prepared and posted the fundraising letter of December 2000, at the direction of Mr. Stone. Ms. Jones talked on the telephone with Ms. McCarty prior to mailing the fundraising letter and determined that the language in the letter was agreeable to Ms. McCarty. At the direction of Mr. Stone, Ms. Jones requested payment and received payment for her work, but from whom she cannot remember, except that she is sure that Creative Marketing did not pay it. The money for this production was paid in advance by wire transfer. There is no evidence in the record that this was paid from the account of The Committee. In fact, because the payment was made sometime in early December 2000, it could not have been paid from the account because it had not been opened. Ms. Jones is aware of an entity by the name of Creative Marketing Company and she believes it may be located in Northern Virginia, but she is not involved with it. It is found by clear and convincing evidence that the fundraising letter was not paid for by Creative Marketing, 2760 Eisenhower Avenue, Suite 250, Alexandria, Virginia. The bank records of The Committee reflect a $50,000 expenditure made to Unique Graphics and Design, paid with a check dated May 9, 2001. This represents a payment for something other than the fundraising letter dated December 2000. The $50,000 item was reported as an expenditure on the CTR-Q1 that was reported to have been made on March 12, 2001. It was reported as having been made to Creative Marketing as payee. The only check in the amount of $50,000, reflected in The Committee checking account for the period February 8, 2001, to June 30, 2001, was payable to Unique Graphics and Design and was dated May 9, 2001. Therefore, it is found that the CTR-Q1 is incorrect when it was reported as having been made on March 12, 2001, to Creative Marketing. Ms. Jones believes there is a company by the name of Creative Marketing Company, which she believes may be located in Northern Virginia, but she is not involved with it. Contributions remitted in response to the fundraising letter were forwarded to one of Mr. Stone's two addresses. Because the address of 1348 Washington Avenue, Suite 177, in Miami Beach, Florida, is the address listed on the fundraising letter, it is likely that contributions in response to the fundraising letter went to Mr. Stone's Miami Beach operation. In any event, it is found as a fact that Ms. McCarty did not personally receive or have any contact with any of the contributions remitted to The Committee. The people handling the receipt of funds and the deposits were Roger Stone and people paid by his organization, including Diane Thorne, the secretary; Amber McWhorter, the treasurer; and Craig Snyder. Just as Ms. McCarty was not involved in the receipt of income to The Committee, she was also not involved in the disbursement of funds. The CTR-Q1 was completed by The Committee's staff in either Miami Beach or Washington, D.C., but Ms. McCarty had no input into its preparation. When Ms. McCarty signed the CTR-Q1 she was without knowledge as to whether the report was truthful, correct, or complete. It is further found that she made no effort to ascertain whether the report was truthful, correct, or complete. She believed it to be true and correct because she trusted Mr. Stone's operatives to accurately prepare the report. Ms. McCarty, excepting the current litigation, has never been the subject of a Commission action. Ms. McCarty has an income of approximately $80,000. She owns a residence jointly with her husband which is valued at approximately $300,000 and which is subject to a mortgage of approximately $200,000. She owns a vacation home in Maine jointly with her husband that is valued at approximately $25,000. She and her husband own three automobiles. She owns stocks, annuities, mutual funds or certificates of deposit of an indeterminate value.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered dismissing the Orders of Probable Cause entered in the case of both Mary McCarty and The Committee to Take Back Our Judiciary. DONE AND ENTERED this 21st day of April, 2003, in Tallahassee, Leon County, Florida. HARRY L. HOOPER 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 21st day of April, 2003. COPIES FURNISHED: Kendall Coffey, Esquire Coffey & Wright, LLP 2665 South Bayshore Drive Grand Bay Plaza, Penthouse 2B Miami, Florida 33133 J. Reeve Bright, Esquire Bright & Chimera 135 Southeast 5th Avenue, Suite 2 Delray Beach, Florida 33483-5256 Mark Herron, Esquire Messer, Caparello & Self, P.A. Post Office Box 1876 Tallahassee, Florida 32302-1876 Eric M. Lipman, Esquire Florida Elections Commission 107 West Gaines Street Collins Building, Suite 224 Tallahassee, Florida 32399-1050 Barbara M. Linthicum, Executive Director Florida Elections Commission 107 West Gaines Street Collins Building, Suite 224 Tallahassee, Florida 32399-1050 Patsy Ruching, Clerk Florida Elections Commission 107 West Gaines Street Collins Building, Suite 224 Tallahassee, Florida 32399-1050
The Issue The issues are 1) Whether the Department of Health and Rehabilitative Services (HRS) properly rejected all bids on Lease Bid No. 590:2133, and 2) Whether either Petitioner is entitled to award of Lease Bid No. 590:2133 as the lowest and best responsive bidder.
Findings Of Fact On October 16, 1989, HRS issued an Invitation to Bid (ITB) on Lease Bid No. 590:2133 for 43,634 net square feet of office space in Ocala, Marion County, Florida. The bid package contained specifications, evaluation criteria, and numerical weight to be assigned to each criteria. The bid package indicated the area of emphasis placed on the facility by HRS which focused on client safety, public access, availability of public transportation, and parking. The emphasis on each area was indicated by the weighted points to be given in each area. On January 24, 1990, HRS received bids from both Wharton and Curtis. Both bids were responsive. Curtis submitted the apparent low bid and Wharton submitted the apparent second lowest bid. Curtis, as Trustee, is the owner of the property which is presently occupied by HRS in Ocala, Florida. The lease on these premises was awarded in 1980 and expires in 1990. Curtis purchased the leasehold in April of 1988 while HRS was a tenant and subject to the existing lease. Philip J. Procacci is the President of Procacci Development which is the general partner in Wharton Investment Group. The actual bids submitted were not offered into evidence by any party in this proceeding. Susanne Casey, the District Administrator of HRS District 3, is ultimately responsible for the leasing of all HRS facilities in the district, including facilities in Marion County. Casey appointed a bid evaluation committee to review and evaluate the responsive bids based on the criteria stated in the bid package. The committee was to make a recommendation regarding the lowest and best bidder. Before the bids were opened, the bid evaluation committee met and agreed upon objective parameters for each of the evaluation criteria. These parameters established standards against which each committee member could independently evaluate and award points on each bid. The evaluation criteria in the bid package assigned points in three major categories: associated fiscal costs, location, and facility. Associated fiscal coasts were further broken down into (a) rental rates for the basic lease term, (b) rental rates for optional renewal terms, and (c) associated moving costs. The maximum points available in each of these categories were fixed in the bid package and could not be altered by the committee. These criteria are standard in a lease procurement through out the state. State regulations require that all bids for lease space in the state evaluate rental rates using present value methodology. See Rule 13M-1.029, Florida Administrative Code. This means that the proposed rental rates in all bids are calculated to present value dollars for the purpose of comparison. The Department of General Services has a computer program, the sole function of which is to calculate the present value of the rental rates. The program has nothing to do with the assignment of points under the criteria, but is used as a tool to allow comparison of the bids. The present value of the Curtis bid was $662,464 lower than the present value of the Wharton bid. The rental rates were awarded points under criterion 1a of associated fiscal costs. The committee awarded the full 20 points to Curtis and awarded 5 points to Wharton. The committee members awarded these points in accordance with the standards and formula they had agreed on prior to the bid opening. The formula the committee used was not the more commonly used formula, but it was reasonable and rational and it was fairly applied to the bids in this case. There is no rule or policy of HRS or of the Department of General Services (DGS) that mandates that a particular formula be used in awarding points for the rental rate criterion 1a. There is a formula that HRS and DGS recommend as guidance of a methodology that is appropriate and reasonable, but the recommendation is not binding on the committee or on the District Administrator. There was another criterion of associated moving costs considered as part of the associated fiscal costs. Each committee member awarded 10 points to Wharton and 8 points to Curtis on this item. Wharton received 10 points because it sent a letter with its bid in which it offered to pay all moving costs incurred by HRS in a move to its building. Curtis received 8 points because HRS already occupied two of its buildings and would have limited moving costs in moving into the two additional buildings included in its bid. The bid specifications and bid package contained no indication that a bidder could offer to pay all moving costs as part of its bid. In fact, Wharton submitted its letter offering to pay all moving costs as a result of its discussion with one committee member, T.C. Little. Mr. Little is also the General Services Manager for HRS District 3 and is involved with all bids in the district. Mr. Little interpreted the bid specifications to permit such an offer even though the bid specifications were silent on the issue. At page 5 of the bid package, it is clearly stated that questions concerning the bid are to be directed to the project contact person. It further states: Any questions which might be prejudicial to other bidders will be answered in writing in the form of a clarification to the bid and will be sent to all prospective bidders. On that same page, the bid specifications address proposal of alternatives by stating: For evaluation purposes each bid submitted will be evaluated as to adherence to the specifications requested. If a bidder desires to propose alternatives to the specified specifications, he/she may do so by attaching a sheet to the bid submittal document titled Alternatives. However, these alternatives will not be presented to the bid evaluation committee for use in comparison of bids and can only be considered after an award of bid is made. The project contact person was Donald J. Cerlanek and any request for clarification should have been addressed to him and not to Mr. Little. Mr. Little's gratuitous advice and interpretation of the bid specifications made to Wharton and not to all bidders was incorrect, violated the terms of the bid specifications, and was improper. The bid specifications do not permit an offer to pay all moving costs to be considered in the award of points under the associated moving costs criteria. Such an offer can only be considered as an alternative proposal and cannot be considered by the bid evaluation committee in comparing the bids. Under the standards established by the committee, Wharton should have received 5 points on the associated moving costs criterion instead of 10 points. The committee members individually evaluated each bid and awarded points within the parameters they had established. Except for the incorrect award of points on the associated moving costs criteria, the scoring method and award of points by each committee member was rationally and reasonably related to the relative importance of each criterion as established in the bid package and was neither arbitrary nor capricious. Each committee member came to the conclusion that the Curtis bid was the lowest and best based on the award of points in each member's independent evaluation. On February 13, 1990, they recommended in writing that Curtis be awarded the bid. On February 19, 1990, the District Administrator adopted the committee's recommendation and reported the recommendation to Steven Gertel, the assistant staff director for HRS Facilities Services in the Office of General Services. On March 7, 1990, Mr. Gertel sent a memo to the District Administrator. The memo said: Review of the bid evaluation committee's recommendation has disclosed that the committee used a non-standard method of evaluating present value of rental rate for the lease term. Please provide an explanation of this variation to accepted practice. In fact, the committee used the established DGS formula to calculate the present value of rental rates. However, the committee used its own formula to award points based on the present value of rental rates. There was nothing impermissible about the committee's actions or formula. Because of a fear of a bid protest, Ms. Casey, the District Administrator, sent a notice rejecting all bids on the project. No other reason was articulated for rejecting all bids. The fear of a bid protest is not a legally sufficient reason to reject all bids, particularly because it is not stated in the bid specifications and is based on speculation about a future event which may never occur. HRS did reserve the right to reject all bids in the bid package, but it may not do so for an improper purpose. Fear of a bid protest is not a proper purpose. Wharton alleged and attempted to show some level of collusion between Curtis and Mr. Cerlanek of HRS. While Mr. Curtis had several contacts with Mr. Cerlanek about the project, such contacts are not per se inappropriate because Mr. Cerlanek is the District 3 Lease Coordinator and is the proper person to discuss future projects with potential bidders. No competent, substantial evidence was presented to show that Mr. Cerlanek discussed anything that was not public record or anything that gave Mr. Curtis any advantage in the bid process. Mr. Cerlanek did not tell Mr. Curtis what would be in the bid package or what would be needed to insure award of the bid to Curtis.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order awarding the bid in Lease No. 590:5133 to Gail Curtis, as Trustee, as the lowest and best bidder. DONE and ENTERED this 27th day of September, 1990, in Tallahassee, Florida. DIANE K. KIESLING Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of September, 1990. APPENDIX TO THE RECOMMENDED ORDER IN CASE NOS. 90-2459BID AND 90-2666BID The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Wharton 1. Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 2-4(5) and 19(27). 2. Proposed findings of fact 1, 5, 11-17, 20, 29, 30, 38, 39, 45, 46, 51, and 57 are subordinate to the facts actually found in this Recommended Order. 3. Proposed findings of fact 6, 8-10, 18, 21, 24, 25, 27, 31-34, 37, 40-44, 48- 50, 52, and 55 are irrelevant. Proposed findings of fact 7, 28, 56, 58, and 59 are unsupported by the competent, substantial evidence. Proposed findings of fact 22, 23, 26, 35, 36, 38, 47, 53, and 54 are mere summaries of testimony and are not appropriately framed as proposed findings of fact. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Curtis, as Trustee Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 4(11), 7&8(13), 9(14), and 15(25). Proposed findings of fact 1-3, 5, 6, 10-12, and 16-26 are subordinate to the facts actually found in this Recommended Order. Proposed findings of fact 13, 14, and 27-29 are unnecessary. Specific Rulings on Proposed Findings of Fact Submitted by Respondent, Department of Health and Rehabilitative Services Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: Part I paragraphs 2(1&2), 3(4), 4(8), 5(30), Part II paragraphs 2(1&2), 3(3), 4(4), 5(8), 6(9), 8(10), 19(25), and 20(26). Proposed findings of fact Part I paragraphs 1 and 6 and Part II paragraphs 1, 7, 9, 10, 12-18, and 21-24 are subordinate to the facts actually found in this Recommended Order. Proposed finding of fact 11 is irrelevant. Copies furnished to: Robert A. Sweetapple Attorney at Law 465 East Palmetto Park Road Boca Raton, FL 33432 Harry R. Detwiler, Jr. Attorney at Law Holland & Knight Post Office Drawer 810 Tallahassee, FL 32302 Gloria Fletcher Attorney at Law 515 North Main Street, Ste. 300 Gainesville, FL 32607 Frances S. Childers District Legal Counsel Department of HRS 1000 Northeast 16th Avenue Gainesville, FL 32609 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue The issue presented for decision in this case is whether Respondent committed the violations of Sections 106.07(5) and 106.19(1)(c), Florida Statutes (1995), as set forth in the Order of Probable Cause and accompanying Statement of Findings issued by the Florida Elections Commission on August 13, 1998.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following findings of fact are made: Respondent John Morroni is a member of the Florida House of Representatives, representing District 50. He was first elected in 1992, and has been reelected subsequently. In 1995, Representative Morroni was serving his second term and beginning his reelection campaign for 1996. Representative Morroni appointed Robert P. Symanski, a certified public accountant, as his campaign treasurer. Representative Morroni designated himself as deputy treasurer for the campaign. Prior to the commencement of each campaign, Representative Morroni signed a "Statement of Candidate" form, attesting that "I have received, read, and understand the requirements of Chapter 106, Florida Statutes." Thomas Carey is a trial lawyer from Clearwater. Representative Morroni had known Mr. Carey before 1992. After Representative Morroni was elected, Mr. Carey served as the liaison between the Florida Academy of Trial Lawyers and Representative Morroni. Mr. Carey is nationally known as a leader in efforts to prevent drunk driving, having served as a local and a national officer of Mothers Against Drunk Driving. Mr. Carey had worked with Representative Morroni in connection with drunk-driving issues. Representative Morroni was reelected without opposition in 1994. After that election, Mr. Carey approached Representative Morroni and offered to throw a kick-off party for his next campaign, telling Representative Morroni to let him know when the time was right to plan such a function. At some point in the summer of 1995, Representative Morroni called Mr. Carey and told him the time was right to plan the kick-off party for the 1996 campaign. Mr. Carey told Representative Morroni that his home could not be used for the party, but that his sister’s house would be ideal for the party. Mr. Carey and Representative Morroni decided that the party would be held on the last week of August. Mr. Carey obtained the consent of his sister, Patricia Rowan, and her husband, Dr. Patrick Rowan, to use their home on Clearwater Beach for the party. The Rowans also agreed to contribute $500 each as an in-kind contribution to defray the costs of the party. In July 1995, Mr. Carey was in the midst of a large jury trial, and did not have the time to oversee the details of the party. At this time, Mr. Sandy Golden was working as a volunteer for Mr. Carey on drunk driving issues, and was beginning to take on some paid personal duties for Mr. Carey. Mr. Carey delegated the planning of the party to Mr. Golden and his friend, Marilyn Curtis. Mr. Golden testified that he had nothing to do with the planning of the party, beyond getting his friend Ms. Curtis involved. Mr. Golden testified that he found Ms. Curtis and that Mr. Carey hired her to coordinate the party. Mr. Carey testified that he had no recollection of "hiring" Ms. Curtis. He testified that he believed Ms. Curtis was volunteering her services, and that it was only after the fact that he agreed to pay her, at the urging of Mr. Golden. Ms. Curtis testified that she had no discussions with Mr. Carey concerning payment for her services. She testified that Mr. Golden assured her that she would be paid. Mr. Carey testified that at the outset he established a budget of $1,500 for the party, and that he based this number on the fact that he and each of the Rowans could lawfully provide $500 as in-kind contributions to the Morroni campaign. Neither Mr. Golden nor Ms. Curtis remembered a firm dollar amount being established before the party. Ms. Curtis telephoned Representative Morroni to obtain a list of invitees and other information for the party. Representative Morroni testified that he knew Ms. Curtis had planned major events for corporate clients, including the president of Outback Steakhouse, and he was concerned that his campaign kickoff party not be too ostentatious. Representative Morroni cautioned Ms. Curtis that this was not a fundraiser, but a party for his campaign co-chairs and friends, and that a "fancy" party was not required or wanted. Ms. Curtis designed and mailed the invitations. She was reimbursed for the printing and mailing of the invitations by personal check from Mr. Carey, in the amount of $106.44, dated August 16, 1995. The party was held at the Rowans’ house on August 26, 1995. Mr. Carey testified that he arrived early and was presented with invoices from the various vendors who provided goods and services for the party. It is undisputed that Mr. Carey paid the following amounts by personal checks dated August 26, 1995: $52.50 for valet parking services; $296.80 for bartending services; and $900 for catering services and dinner buffet; $100 for photography services. By check dated September 13, 1995, Mr. Carey paid an invoice of $79.18 for floral arrangements. At Mr. Golden’s urging, Mr. Carey wrote a check for $300 to Ms. Curtis to compensate her for 15 hours' work on the party, at a rate of $20 per hour. This check was written on August 27, 1995, the day after the party. Thus, Mr. Carey wrote checks totaling $1834.92 to cover expenses for the party, including the $300 payment to Ms. Curtis and the late payment of $79.18 to the florist. There was some dispute at the hearing as to how Mr. Carey came to write these checks and whether he was reimbursed for his outlay of all the expenses for the party. Representative Morroni testified that it was obvious the party cost more than the $500 an individual is allowed by law to contribute, and that he remembered a passing conversation in which he complimented Mr. Carey on the party and expressed the hope that someone was sharing the expenses with him. Representative Morroni testified that a more detailed discussion as to the division of expenses would have been improper, given that this was a party and there were 28 other campaign people present. He also considered Mr. Carey to be knowledgeable and experienced in political matters, and thus not in need of a lecture about contribution limits. Mr. Golden testified that he was present during the brief conversation between Mr. Carey and Representative Morroni. Mr. Golden’s recollection was similar to that of Representative Morroni. Mr. Golden recalled Representative Morroni complimenting Mr. Carey on the party, then reminding Mr. Carey of the $500 limitation and telling Mr. Carey to be sure he "split out" the costs of the party. Mr. Carey testified that a more detailed conversation took place. As noted above, Mr. Carey testified that he had established a $1,500 budget for the party, based on $500 contributions from him and from each of the Rowans. As the invoices rolled-in during the party, Mr. Carey became concerned that the $1,500 budget was going to be exceeded, and concerned as to the logistics of paying the invoices. Mr. Carey testified that he discussed these matters with Representative Morroni in the presence of Mr. Golden and Mrs. Rowan. One option discussed was for Mr. Carey and the Rowans to write $500 checks to the Morroni campaign, which would in turn pay the invoices. Another option was to divide each invoice three ways and write three separate checks to cover each one. Mr. Carey testified that Representative Morroni suggested that, because Mr. Carey had already paid some of the invoices, he keep writing his personal checks to cover them, then have the Rowans reimburse him. Mr. Carey thought this the most workable option, and so continued paying the invoices by personal check. Mr. Carey testified that the group still had to deal with the contingency of the expenses exceeding the $1,500 budget. Mr. Carey testified that, at Representative Morroni’s suggestion, Mr. Golden agreed that any amount over $1,500 would be attributed to him, and that Mr. Golden would reimburse Mr. Carey by working for him without pay on drunk-driving issues. Mr. Golden flatly denied ever agreeing to such an arrangement or agreeing to make a contribution of any kind to the Morroni campaign. As noted above, Representative Morroni testified that he had no recollection of this detailed conversation taking place, let alone suggesting the payment/reimbursement plan outlined by Mr. Carey. Representative Morroni’s testimony, as corroborated by Mr. Golden's, is credited on this point. Representative Morroni testified that he had a difficult time getting hold of Mr. Carey to obtain the contribution details for inclusion in his campaign finance report. As the reporting deadline approached, Representative Morroni made several telephone calls to Mr. Carey. At length, he reached Mr. Carey, who gave him the needed information over the telephone. Representative Morroni relayed the information to Mr. Symanski, his campaign treasurer, who in turn included the information in the campaign treasurer’s report for the period July 1, 1995 through September 30, 1995, filed October 10, 1995. Mr. Carey testified that he had no clear recollection of providing the numbers to Representative Morroni, and that he believed Mr. Golden had provided the information to the Morroni campaign. Mr. Carey testified that if he did call Representative Morroni with the information, he simply would have been relaying information provided to him by Mr. Golden. Representative Morroni’s testimony is credited, and it is found that Mr. Carey provided the numbers to Representative Morroni. It was undisputed that the figures included in the referenced treasurer’s report accurately reflected Mr. Carey’s oral report to Representative Morroni. The relevant figures related to the kick-off party were as follows, all listed as "in-kind contributions" and dated August 26, 1995: Name Amount Description Dr. Patrick Rowan $500 Kick-off Party Expenses Mrs. Patrick Rowan $500 Kick-off Party Expenses Mr. Tom Carey $500 Kick-off Party Expenses Ms. Marilyn S. Curtis $79.26 Kick-off Party Expenses Mr. Sandy Golden $300 Kick-off Party Expenses Thus, the total reported expenses for the party were $1,879.26, as compared to $1,834.92 in actual paid invoices. Representative Morroni testified that he took these figures from Mr. Carey at face value, seeing no reason to question their accuracy or completeness. He knew that all the individuals listed as contributors were present at the party and were involved in its organization. Representative Morroni testified that he took down the figures and reported them directly to Mr. Symanski. Mr. Symanski testified that he had no previous experience serving as a campaign treasurer, and felt that it was not his position to "challenge" someone who claimed to have made an in-kind contribution. His practice was to refer any questions regarding in-kind contributions to Representative Morroni. Mr. Symanski testified that $1,800 "seemed like a lot more than what we would have spent, but if that’s what they said they spent, that’s what I recorded." He testified that the $500 allocations for the party did not raise concerns in his mind, because he knew beforehand that the costs of the party would have to be split up in some fashion. Both Representative Morroni and Mr. Symanski testified that, as a general matter, they reported in-kind contributions based upon the word of the contributor. They did not ask for receipts or other verification of the amount claimed by the contributor, provided those amounts seemed reasonable. Neither man was aware of any legal requirement that a candidate or campaign obtain documentation of the value of in-kind contributions. Other factual issues were raised by the parties that are ultimately tangential to the resolution of this case but nonetheless require resolution to complete the record. First, the Commission questions the veracity of Mrs. Rowan’s testimony regarding the $500 contributions made by her and her husband, because Dr. and Mrs. Rowan initially executed affidavits, on forms sent by the Commission’s investigator, attesting that they made no contributions to the Morroni campaign. Mrs. Rowan’s explanation of this seeming contradiction is credited. She testified that her husband has been extremely ill, having been diagnosed with a brain tumor in January 1998. In fact, as of the date of the hearing, Dr. Rowan had already outlived his initial prognosis of one year. The Rowans learned of Dr. Rowan’s condition at roughly the same time they executed the original affidavits. Mrs. Rowan testified that under the circumstances neither she nor Dr. Rowan paid much attention to the affidavits. Mrs. Rowan testified that someone later mentioned to her a newspaper article listing her as a contributor to the Morroni campaign. The article jogged her memory regarding the party and caused her to execute a corrected affidavit reflecting her $500 in-kind contribution. She had no explanation as to why the corrected affidavit was not provided to the Commission until the date of the hearing. On the date of the kick-off party, Mrs. Rowan wrote a check to her brother, Mr. Carey, in the amount of $4,200. She testified that $1,000 of this amount was the contribution of her and her husband to the party expenses, and the remainder was payment for legal services performed by Mr. Carey. Her testimony is credited on this point. Respondent presented testimony regarding a subsequent falling-out between Mr. Carey and Mr. Golden over tactics in the crusade against drunk driving, as well as testimony regarding Mr. Golden’s feeling that Representative Morroni had "sold out" on the drunk-driving issue. Respondent’s purpose was to provide an ulterior motive for Mr. Golden’s filing the confidential complaint in this matter some two years after the events occurred, and to at least imply that Mr. Golden is mentally unstable and unreliable as a witness. It is found that the facts concerning the Carey/Golden feud, all of which occurred after the events here at issue, are irrelevant to this proceeding, except as they provide some indicia that both Mr. Carey and Mr. Golden have reasons, rational or otherwise, to make each other look as bad as possible. Mr. Golden’s motive in filing the confidential complaint is irrelevant. As to Mr. Golden’s reliability as a witness, the only relevant point on which his testimony is contradicted concerns whether he agreed to have the party expenses exceeding the purported $1,500 budget attributed to him, to be "worked off" at a later time. For the reasons set forth in the Conclusions of Law below, it makes no difference to the resolution of this case whether Mr. Golden or Mr. Carey is credited as to whether this arrangement was made. The relevant point is whether Representative Morroni was aware of any such arrangement, such that he could be found to have willfully signed a false or incorrect report. Representative Morroni’s testimony that he was not aware of such an arrangement is credited.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that the Florida Elections Commission enter a final order dismissing the charges against the Respondent, Representative John Morroni. DONE AND ENTERED this 28th day of April, 1999, in Tallahassee, Leon County, Florida. LAWRENCE P. STEVENSON 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 28th day of April, 1999. COPIES FURNISHED: Michael T. McGuckin Assistant General Counsel Florida Elections Commission The Capitol, Room 2002 Tallahassee, Florida 32399-1050 Chris Haughee, Esquire Greene, Donnelly & Schermer 102 West Whiting, Suite 201 Tampa, Florida 33602-1480 Barbara Linthicum, Executive Director Florida Elections Commission The Capitol, Room 2002 Tallahassee, Florida 32399-1050 Steven Christensen, Clerk Florida Elections Commission The Capitol, Room 2002 Tallahassee, Florida 32399-1050
The Issue The issues to be resolved are whether Respondent committed the acts alleged in the Administrative Complaint and if so, what penalties should be imposed?
Findings Of Fact From 1999 until his termination in December 2007, Respondent was registered with the Office of Financial Regulation as an associated person of ProEquities, Inc. (ProEquities). At all times material hereto, Respondent engaged in both the sale of insurance and the sale of securities products from his Daytona Beach office. His activities with respect to the sale of securities were supervised from ProEquities' Orlando branch office. In the fall of 2006, Respondent appeared as a guest in a short segment of a radio program. He did not obtain prior approval from ProEquities for this appearance. ProEquities received an inquiry from the National Association of Securities Dealers (NASD) regarding the radio appearance, and asked Respondent to explain his participation. He responded by letter stating, I was a guest on the radio show to provide educational information. The show is about a wide range of educational information for seniors, and since it wasn't my own show I didn't feel I needed to get approval. I was only on for about 6 minutes, and of course as we discussed this should have been approved. In the future I will submit approval for any advertising or other appearances that I participate in. As a result of the November 2006 radio appearance, ProEquities issued a Letter of Caution to Respondent for providing his contact information and offering his services to listeners without prior firm approval. Respondent signed the Letter of Caution on December 7, 2006, and agreed to comply with ProEquities' advertising policies. Sometime after the Letter of Caution was issued, Respondent discussed with ProEquities' Compliance Officer, Michael Moore, the possibility of having his own radio show. Moore told him the firm would have to review and approve the scripts. Although initially Respondent forwarded the scripts to Moore, at some point he stopped doing so and Moore assumed that Respondent had stopped doing the show.1/ ProEquities received a second inquiry from the Financial Industry Regulatory Authority (FINRA), formerly NASD, regarding Respondent's radio show and both print and radio ads that Respondent was using. On November 2, 2007, Respondent submitted an e-mailed statement to the firm stating, "I thought the radio ads had been approved last November. As far as the print ad goes, it was so generic and didn't state any specific product information that I assumed it did not need to be approved." In addition, Respondent submitted a copy of a print advertisement and the transcripts of two 30-second radio commercials. The scripts for the radio commercials stated as follows: Great news for those who are planning for retirement or already retired. David Tucker has been showing the people of Daytona Beach how to retire in comfort for 32 years. David will show you the tools needed to help meet your retirement goals. Call David Tucker of David Tucker & Associates at (386) 761-9401. Be sure to listen to Investment Strategies with David Tucker every Sunday from 12:00 to 12:30 PM on WNDB 1150 AM. If you are unhappy with your investments call David Tucker at (386) 761-9401. He can show you how to benefit from any market gains, and safeguard 100% of your principal, and interest earned, regardless of market fluctuations. Be sure to listen to Investment Strategies with David Tucker every Sunday from 12:00 to 12:30 PM on WNDB 1150 AM. The print advertisement submitted to ProEquities stated in part, We offer stocks, bonds, annuities, mutual funds, life & health insurance, and long-term care. Ask Us How To Guarantee Income for Life. The print advertisement submitted by Respondent also contained the required disclosure that Respondent sold securities through ProEquities, which stated: Securities offered through ProEquities, Inc., A Registered Broker-Dealer. Member, NASD and SIPC. David A. Tucker & Associates is independent of ProEquities, Inc. Securities offered through ProEquities, Inc., like all investments, are subject to risks. Past performance is not a guarantee of future returns. In reliance upon Tucker's submission of the print advertisement described above, and believing that was the advertisement used, ProEquities submitted the print advertisement to FINRA in response to the November 2, 2007, inquiry. On November 26, 2007, ProEquities issued a "Letter of Warning" to Respondent, based on the fact that prior approval had not been obtained for the print advertisement or the radio spots. The Letter of Warning reminded Respondent of the previously issued Letter of Caution, and stated in part: By signing that Letter of Caution, you agreed that you would comply with all firm policies regarding advertising and sales literature, including but not limited to, print material, personal and business websites, radio broadcasts, television broadcasts, seminars and other advertising or promotional events. The firm's policies, as well as FINRA Rule 2200, regarding communications with the public, are clear - any and all sales and promotional materials must be pre-approved by the firm's compliance department. The firm intends to maintain strict compliance with securities industry rules and regulations; and we expect our representatives to uphold the same standard. This particular area of communications with the public is the focus of heightened regulatory scrutiny; therefore violations of this rule hold the increased possibility of regulatory action against the firm, your OSJ and you. The Letter of Warning imposed a $500 fine; an immediate three-month suspension of all forms of advertising and/or promotional events, with the exception of certain identified, previously scheduled events; and the option at the end of the three-month period to either pay another fine of $1,500 or continue the suspension of advertising privileges for another three months. Respondent acknowledged the Letter of Warning in writing and paid the $500 fine on November 26, 2007. Following the issuance and acknowledgment of the Letter of Warning, ProEquities conducted an unannounced audit of Respondent's Daytona Beach office. During the audit, Mr. Moore discovered that there was print advertisement that was used by Tucker that did not match the print advertisement submitted to ProEquities and in turn supplied to FINRA in response to its inquiry. This additional print advertisement did not include the securities disclosure quoted in Finding of Fact 11. It simply states, "We Offer Stocks, Bonds, Annuities, Mutual Funds, Life and Health Ins. and Long-Term Care. Ask Us How to Guarantee Income for Life." It is not clear whether both print ads were being used simultaneously, whether the disclosure language was added deliberately before submitting the advertisement to ProEquities, or whether failing to send it was, as Respondent contends, an oversight. What is clear is that Respondent used the advertisement without the disclosure language on numerous occasions and saw no problem with its use. The advertisement which contains no disclosure statement was published 110 times. The radio commercials, which also failed to include any type of disclosure regarding the name of the member, ProEquities, aired 120 times. The statement "ask us how to guarantee income for life" in the print advertisement required disclosures so that it was fair and balanced and not misleading to the public. It also needed to clarify what product it was advertising, and that any guarantee was subject to the claims paying ability of the issuing insurance company if the advertised product is an annuity. Respondent asserted that the claim is meant only for annuities products, such as equity indexed annuities. However, nothing in the advertisement indicates that the guarantee is limited to this type of product, as opposed to the array of products mentioned in the advertisement, and Respondent indicated that the consumer would not receive that information until they came in for an appointment to discuss what type of investment the consumer might with to purchase. Forcing a consumer to come in for an appointment in order to receive information that should have been disclosed in the advertisement is misleading and a waste of the consumer's time.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That a final order be entered finding that Respondent violated the provisions of Conduct Rule 2210(b)(1), (c)(7), (d)(1)(A), and (d)(2)(C)(i), and thereby violated Section 517.161(1)(a) and (h), Florida Statutes, and Florida Administrative Code Rule 69W-600.013(2)(h); That Respondent be ordered to cease and desist from any further violations of Chapter 517, Florida Statutes; and That Respondent be ordered to pay an administrative fine of $15,000.00. DONE AND ENTERED this 22nd day of May, 2009, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of May, 2009.
The Issue Whether the Respondent committed the violations alleged in the Order of Probable Cause entered August 26, 2009, and, if so, the penalty that should be imposed.
Findings Of Fact Because Ms. Fresen failed to respond to the Petitioner's First Request for Admissions, the matters of which admissions were requested are deemed conclusively established for purposes of this administrative proceeding. See Fla. R. Civ. P. 1.370. The Petitioner's First Request for Admissions is attached to this Final Order, and the matters of which admissions were requested are adopted herein as findings of fact.
The Issue Whether Respondent, James Jennings, violated Subsections 106.021(3), 106.07(5), or 106.19(1)(b), Florida Statutes (2002), as alleged in the Amended Order of Probable Cause dated February 20, 2004, and, if so, what is the appropriate penalty.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing, the following findings of facts are made: Respondent has taught in the public schools of Lee County, Florida, for 31 years. He has a bachelor of science degree. Respondent was a first-time candidate for public office, although he had limited political experience as a precinct committeeman and president of the Sanibel-Captiva Republican Club. He had not been actively engaged in any previous campaign as a campaign treasurer or deputy. Incidental to becoming a candidate he met with appropriate municipal and county election officials and received a campaign handbook which included the following: A Compilation of The Election Laws of the State of Florida (2001), published by the Department of State; 2002 Handbook for Candidates, published by the Department of State; 2002 Handbook for Treasurers, published by the Department of State; Chapter 106, Florida Statutes, published by the Department of State; various Sanibel municipal ordinances related to city elections; a calendar listing important dates for filing campaign documents. Respondent signed a Statement of Candidate which advised that he had received a copy of Chapter 106, Florida Statutes, and that he had read and understood same. It is apparent that Respondent did not understand the Florida Election Law as embodied in Chapter 106, Florida Statutes. Respondent designated a campaign treasurer and a deputy campaign treasurer. Notwithstanding the fact that Subsection 106.021(3), Florida Statutes (2002), clearly states that no campaign expenditure shall be made except through the duly- appointed campaign treasurer, Respondent personally signed 30 campaign checks. In fact, he signed all campaign checks with the exception of one check. On that particular check he directed his wife, the deputy campaign treasurer, who was statutorily authorized to sign the campaign check as deputy campaign treasurer, to sign his name. Inexplicably, Respondent believed that he, personally, was obligated to sign all campaign checks because he was the candidate. Respondent prepared his own Campaign Treasurer's Reports. It is suggested that he received some limited assistance from his wife. On February 28, 2003, Respondent was required to file a Campaign Treasurer's Report for the reporting period of February 8, 2003, through February 27, 2003. Two previous Campaign Treasurer's Reports for periods January 1, 2003, through January 24, 2003, and January 25, 2003, through February 7, 2003, had reporting dates which were seven days after the reporting period ended (January 31, 2003, and February 14, 2003). Respondent believed that the Campaign Treasurer's Report due on February 28, 2003, covered the period from February 8, 2003, through February 21, 2003. The campaign calendar presented by a city elections official clearly indicated the accurate reporting period. On February 28, 2003, immediately prior to filing the subject Campaign Treasurer's Report, Respondent discovered that the report should have included activity through February 27, 2003. He did not include appropriate information for February 21, 2003, through February 27, 2003, because he did not have time to return to his home, obtain the additional information, make appropriate inclusions, and file the report before 5:00 p.m. at the Sanibel City Hall. He merely changed the end of the reporting period on the Campaign Treasurer's Report from February 21, 2003, to February 27, 2003, knowing that it was inaccurate. The Campaign Treasurer's Report failed to include 24 contributions that should have been reported. During the telephone conversation in which he discovered the actual reporting period, he testified that he was advised by a Lee County elections official to file the report even though it was inaccurate, and then immediately file an accurate amended report. This is not credible. February 28, 2003, was a Friday. Respondent filed an Amended Campaign Treasurer's Report on Wednesday, March 5, 2003. The election was on Tuesday, March 4, 2003. Unfortunately, the Amended Campaign Treasurer's Report was not accurate. On June 2, 2003, Respondent filed a Second Amended Campaign Treasurer's Report, which included seven previously unreported contributions. This particular inaccuracy was attributed to the fact that two pages in the spiral notebook used to record contributions had stuck together for some unknown reason concealing these seven contributions. Petitioner failed to present evidence in testimony or stipulated facts as to the amount of unreported contributions. Respondent acknowledged his failure to report 24 contributions, but not the amount of each contribution or of a total amount of unreported contributions. While the orders of probable cause contain specific reference to the amount of each unreported contribution, this is not evidence. It may be possible to sift through the Campaign Treasurer's Reports and estimate the unreported amounts by comparing each report. An examination of the various Campaign Treasurer's Reports suggests that obtaining an accurate figure would be problematic and not exact. I find that there is no basis for an administrative fine predicated on the amount of unreported contributions. Respondent's attempts at campaign bookkeeping mirrored his understanding of the election laws. He, at first, attempted to keep contributions and expenditures in a checkbook register. When this proved inadequate, he started recording contributions and expenditures in a spiral notebook and on lined paper. These records were received into evidence. After a cursory examination of these documents, it is easy to understand why there was confusion. Respondent's campaign bookkeeping lacked basic organization. There does not appear to be any ulterior motive for Respondent's glaring errors, in particular his lack of basic understanding as to who should sign campaign checks. No one was deceived by the candidate's signing his name to the campaign checks. Equally as baffling and disappointing is his failure to understand the reporting periods and his response to his discovery of the error in the time covered by the reporting period in question. While it is argued that the voting public is deceived by Respondent's failure to disclose contributions, it is unlikely that any voters were waiting to examine the Campaign Treasurer's Report on the Monday before a Tuesday election. Clearly, Respondent did not comply with Subsection 106.021(3), Florida Statutes (2002), when he signed 30 campaign checks. This failure is obviated by granting the motion to dismiss the counts related to this violation. He also certified the correctness of the Campaign Treasurer's Report for the February 8, 2003, through February 27, 2003, reporting period knowing that the report was inaccurate and did not accurately reflect contributions. The March 5, 2003, Amended Campaign Treasurer's Report was similarly inaccurate. The real issue regarding Respondent's filing inaccurate Campaign Treasurer's Reports is whether or not these activities were "willful" as defined by Section 106.37, Florida Statutes (2002). Notwithstanding his written assertion that he understood the Florida Election Law, he did not. This is demonstrated by the fact that he clearly did not understand the law regarding who could sign campaign checks. The fact that he directed his wife to sign his name to a campaign check when she was a deputy campaign treasurer and an statutorily authorized signer, demonstrates that he just did not understand the law. Signing a Campaign Treasurer's Report, knowing it did not accurately reflect required reportable activity, clearly violates the law, and cannot be attributed to misunderstanding the law. Even if it is believed that he was advised to file an inaccurate report and file an immediate amended report, which is not credible, Respondent knowingly violated the law. He filed an inaccurate report and certified that it was true and correct when it was not. He should have waited until the following Monday, filed an accurate report, and suffered the fine and potential attendant political repercussions. The Amended Campaign Treasurer's Report filed March 5, 2003, failed to report seven campaign contributions that were ultimately reported on the Second Amended Campaign Treasurer's Report filed on June 2, 2003; this inaccuracy was not done knowingly; however, it does reflect reckless disregard for the law. Respondent's excuse that the pages were stuck together by fruit juice is unacceptable. Respondent did an inexcusably sophomoric job in his campaign record keeping; this failure as a record keeper rises to the level of recklessly filing an inaccurate Campaign Treasurer's Report. Respondent's Statement of Financial Interests (CE Form 1) for the 2002 calendar year reflects an annual income of $51,279, from the Lee County School Board, joint-residential home ownership, modest tax sheltered annuities, and typical debt. This is the only financial information presented. In addition, Respondent has no previous history of involvement with Petitioner and was fully cooperative with the investigation.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent be found to have violated Subsections 106.07(5) and 106.19(1)(b), Florida Statutes (2002), and fined $3,900. DONE AND ENTERED this 24th day of September, 2004, in Tallahassee, Leon County, Florida. S JEFF B. CLARK 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 September, 2004.
The Issue The issue is whether Respondent willfully violated Section 106.07(5), Florida Statutes (2004), by certifying to the correctness of five campaign treasurer's reports (CTRs), which did not disclose payments that Respondent's media consultant made to two television stations on Respondent's behalf.
Findings Of Fact Petitioner has jurisdiction to investigate and enforce Chapter 106, Florida Statutes. Respondent was an unsuccessful candidate for the Walton County Commission in 2004. Respondent was defeated in the August 31, 2004, primary election. Respondent is not an experienced politician. The 2004 campaign was his first and only attempt to run for public office. Respondent's campaign was entirely self-funded. Guy Davidson was the political consultant for Respondent's opponent. On or about August 22, 2004, Mr. Davidson filed a sworn complaint with Petitioner against Respondent. The complaint alleged that Respondent was running television ads (requiring cash in advance) although no expenditures to stations for airtime appeared on Respondent's CTRs. On March 10, 2004, Respondent signed a Statement of Candidate form as required by Section 106.023, Florida Statutes (2003). The statement indicates that Respondent had received, read, and understood the requirements of Chapter 106, Florida Statute (2003). On March 10, 2004, Respondent filed his Appointment of Campaign Treasurer and Designation of Campaign Depository for Candidates. Respondent appointed his personal and business bookkeeper, Iris Schipper, to serve as his campaign treasurer. Respondent had confidence in Ms. Schipper, who had accounting experience, but no experience with political campaigns. On July 15, 2004, Respondent appointed himself as his deputy campaign treasurer. In the spring of 2004, Respondent hired Steven Petermann, the owner of Petermann Corporation, as his campaign media consultant for the purpose of creating, producing, distributing and disseminating political advertisements for Respondent's campaign. Mr. Petermann was in charge of all media aspects concerning Respondent's campaign. Respondent had known Mr. Petermann for years. Prior to the 2004 campaign, Respondent employed Mr. Petermann for advertising services concerning business ventures unrelated to Respondent's campaign. Mr. Petermann was experienced in providing campaign advertising for local political races. He had done so for approximately 30 campaigns. Mr. Petermann provided Respondent with advertising services which were similar to the services that Mr. Petermann provided to other political candidates. Respondent never specified to Mr. Petermann what advertising to buy or how much to spend. Respondent and Mr. Petermann had no specific payment or billing terms in mind when Mr. Petermann agreed to act as Respondent's media consultant or at anytime during the campaign. Generally, Mr. Petermann did not expect his political clients to pay him until the end of their campaigns. However, Respondent attempted to pay Mr. Petermann in full in accordance with the balance due on Petermann Corporation statements or in advance on those occasions when Respondent knew about projected campaign costs. In other words, Respondent tried to make sure that Mr. Petermann was paid in advance or promptly reimbursed for campaign expenses. In this regard, Respondent acted consistently with his prior private business relationship with Mr. Petermann. With regard to Respondent's campaign advertising budget, Respondent told Mr. Petermann to do "whatever it took to run a successful campaign." Respondent trusted Mr. Petermann's professional judgment as to how much advertising was needed and in which mediums the advertising was to run. Respondent knew Mr. Petermann was making expenditures on behalf of the campaign. Respondent was aware of each and every expenditure his campaign made to Mr. Petermann because he was very involved in his campaign finances. Mr. Petermann wrote the following checks on his business account directly to WJHG-TV and WBBM-TV for advertising time on behalf of Respondent's campaign: Date of Check Check Number Payee Television Station Amount of Petermann Expenditure for Perry 06-11-04 025246 WMBB-TV $442.00 06-14-04 025247 WJHG-TV $450.50 06-29-04 025294 WJHG-TV $450.50 06-29-04 025297 WMBB-TV $446.25 07-26-04 025405 WJHG-TV $743.75 07-26-04 025406 WMBB-TV $956.25 08-12-04 025491 WJHG-TV $743.75 08-12-04 025492 WMBB-TV $956.25 08-30-04 025548 WJHG-TV $331.50 Respondent made no expenditures from his campaign account directly to a television station. Additionally, no expenditures to television stations were listed on Respondent's CTRs. Mr. Petermann purchased all of the television airtime on behalf of Respondent's campaign. Mr. Petermann periodically sent Respondent statements for campaign services and expenses. The statements did not itemize each expenditure for television airtime. The statements did list television advertising and various other advertising purchases in general. Respondent did not list the checks that Mr. Petermann paid directly to WJHG-TV and WMBB-TY for Respondent's television airtime on any CTR during his 2004 campaign. A member of the public could not look at Respondent's CTRs and determine the following: (a) which television stations Respondent paid for campaign advertising; (b) how much Respondent paid for television advertising; and (c) how much Respondent paid for Mr. Petermann's professional services. During the course of the campaign, Respondent reported making several payments to Petermann Advertising or Petermann Corporation. Respondent listed each payment made to Mr. Petermann on his CTRs. Respondent did not break down the expenditures and itemize the components of the expenditures on his CRTs, including how much was paid to Mr. Petermann for his professional services. In a letter dated June 24, 2004, Mr. Beasley, Walton County Supervisor of Elections, advised all candidates, including Respondent, to read an enclosed memorandum from Phyllis Hampton, Chief of the Bureau of Election Records for the Department of State, Division of Elections. Mr. Beasley requested all candidates to sign an enclosed statement and return the statement to his office in the enclosed stamped and addressed envelope. Ms. Hampton's memorandum was dated June 17, 2004. It specifically referred to "2004 Campaign Finance Legislative Changes." The memorandum discussed the disclaimer that candidates were required to use on campaign advertising effective July 1, 2004. The last two paragraphs of Ms. Hampton's memorandum stated as follows: Enclosed is a copy of Chapter Law 2004- 252 (CS/SB 2346 &516). Section 5 of this law amends Section 106.143, Florida Statutes. We are also enclosing a handout that contains Section 106.143, Florida Statutes, as amended, as well as examples of political disclaimers under the new law. There are other changes in this law that affect campaign financing for candidates and a summary of those changes is enclosed. The Division of Elections of the Department of State has posted all enacted legislation that affect The Florida Election Code, Chapters 97-106, Florida Statutes, on its web site. That web site is http://election.dos.state. fl.us. If you have any questions, please feel free to call us at 850-245-6240. When Mr. Beasley received Ms. Hampton's memorandum, it included a copy of Public Law 2004-252. Mr. Beasley did not duplicate the law when he sent Ms. Hampton's memorandum to candidates in Walton County. If any candidate had requested a copy of the new law, Mr. Beasley would have obtained a copy for the candidate or referred the candidate to the Internet. Respondent received Ms. Hampton's memorandum regarding the changes in the law, but he did not read it over in detail. Instead, Respondent continued to direct his attention to campaign issues. There is no evidence that Respondent took any affirmative steps to inquire which sections of the law were amended in addition to the requirements for political disclaimers. Respondent did not go to the Department of State, Division of Elections' website to review the law or a copy of the updated candidate's handbook. All Respondent did was to send a copy of the letter to Mr. Petermann. Respondent did not give Ms. Schipper a copy of Ms. Hampton's June 17, 2004, memorandum during the campaign. Ms. Schipper received the memorandum and filed it in one of Respondent's campaign files after the campaign ended. Respondent wrote a personal check dated June 30, 2004, made payable to Peterman Corp. in the amount of $7,500. The check does not state its purpose. Mr. Petermann deposited this check in his business account on July 1, 2004. Respondent wrote the June 30, 2004, personal check to Petermann Corp. because he was in Mr. Petermann's office and wanted to make sure Mr. Petermann was paid promptly for his services and expenses on Respondent's behalf. On June 30, 2004, Respondent had not yet appointed himself as his deputy campaign treasurer and did not have a campaign check signed by Ms. Schipper. Respondent's Q2 CTR, which covered the period from April 1, 2004, to June 30, 2004, was due to be filed on July 12, 2004. The report listed no expenditure to Mr. Petermann. The report did not disclose that Mr. Petermann had spent $1,789.25 on behalf of Respondent's campaign to pay for advertisements on two television stations during the reporting period. On July 24, 2004, Respondent, as deputy campaign treasurer, wrote a check on his campaign account. The check was payable to Petermann Advertising in the amount of $10,000. The check did not state its purpose. On August 5, 2004, Ms. Schipper wrote a check on Respondent's campaign account. The check was payable to Respondent in the amount of $7,500. The purpose of the check was to reimburse Respondent for the amount Respondent paid to Mr. Petermann out of Respondent's personal account on June 30, 2004. On August 6, 2004, Ms. Schipper wrote a check on Respondent's campaign account. The check was payable to Petermann Advertising in the amount of $10,000. The check states that its purpose was advertising. Respondent's F2 CRT, which covered the period from July 24, 2004, through August 6, 2004, was due to be filed on August 13, 2004. The F2 CRT listed the following payments as expenditures: (a) a check dated July 24, 2004, to Petermann Advertising for campaign advertising in the amount of $10,000; (b) a check dated August 5, 2004, to Petermann Advertising/mlp (Respondent's initials) for campaign advertising in the amount of $7,500; and (c) a check dated August 6, 2004, to Petermann Advertising for campaign advertising in the amount of $10,000. The August 5, 2004, check, listed as payable to Petermann Advertising/mlp, was a reimbursement to Respondent for the personal check he wrote on June 30, 2004. Respondent's F2 CTR did not disclose that Mr. Petermann spent $1,700 on behalf of Respondent's campaign to pay for advertisements on two television stations during the reporting period. Ms. Schipper contacted someone in Mr. Beasley's office in Santa Rosa Beach, Florida, by telephone on August 13, 2004, before she filed Respondent's F2 CRT. Ms. Schipper inquired about the proper method of reporting the August 5, 2004, payment of campaign funds to reimburse Respondent for his personal check dated June 30, 2004, to Mr. Petermann. During the hearing, Ms. Schipper testified as follows: Okay. I called the -- there was a question about this particular expense because the nature of the check that I just explained because I wasn't sure. I knew I had to report it, but I wasn't sure how I should report it. So I called the supervisor of elections office and I told them what had happened, including the fact that Lee Perry was totally self-funding his campaign and that he had a paid check personally that we need to record as an expenditure on the campaign account and I told her that I had to -- to fund the campaign account and then pay it back to Lee and it was just like an in and out transaction, but I had to report it, but it was to Petermann Advertising. We had other checks to Petermann Advertising. It was all the campaign advertising. How did I need to do that. After speaking with an unidentified female in Mr. Beasley's office, Ms. Schipper was not comfortable with the answer to her inquiry. Ms. Schipper decided to list the check as payable to Petermann Advertising/mlp. Ms. Schipper did not call anyone else regarding the proper method of reporting the June 30, 2004, check, which reimbursed Respondent for reimbursing Mr. Petermann for advertising services and advertising expenses paid to television stations. On August 20, 2004, Ms. Schipper wrote a campaign check payable to Petermann Advertising for campaign advertising in the amount of $15,000. Respondent's F3 CTR, covering the period from August 7, 2004, through August 26, 2004, was due to be filed on August 27, 2004. Respondent's F3 CTR listed one expenditure to Petermann Advertising for campaign advertising in the amount of $15,000. Respondent's F3 CTR did not disclose that Mr. Petermann had spent $1,700 on behalf of Respondent's campaign to pay for advertisements on two television stations during the reporting period. On September 10, 2004, Ms. Schipper wrote a campaign check payable to Petermann Advertising for campaign advertising in the amount of $11,422.23. Respondent's G1 CTR, covering the period from August 27, 2004, through September 10, 2004, was due to be filed on September 17, 2004. Respondent's G1 CTR listed a check payable to Petermann Advertising as an expenditure. The check, dated September 10, 2004, was for campaign advertising in the amount of $11,422.23. Respondent's G1 CTR did not disclose that Mr. Petermann spent $331.50 on behalf of Respondent's campaign to pay for advertisements on one television station during the reporting period. On October 19, 2004, Ms. Schipper wrote a campaign check payable to Petermann Advertising for the "Perry Campaign" in the amount of $9,100. After filing Respondent's F3 CTR, Ms. Schipper realized that Mr. Petermann never received the August 20, 2004, campaign check in the amount of $15,000. Therefore, Ms. Schipper cancelled the check and filed an Amended F3 CTR on October 22, 2004. Respondent's Amended F3 CTR indicated that $15,000 was subtracted from Respondent's expenditures. The Amended F3 CTR listed the October 19, 2004, check as an expenditure. The check was payable to Petermann Advertising for campaign advertising in the amount of $9,100. Mr. Beasley has two offices. The main office is located in Defuniak Springs, Florida. The satellite office is located in Santa Rosa Beach, Florida. Neither office has a written record of inquiries concerning the reporting of expenditures for Respondent's campaign. As a general office practice, Mr. Beasley's staff does not make notes or records of telephone conversation with candidates or other individuals who call regarding campaign issues. Ms. Schipper called Mr. Beasley's office in Santa Rose Beach, Florida, when she had a question about her duties as campaign treasurer. If she could not get an answer to her question, Ms. Schipper called Mr. Beasley's office in Defuniak Springs, Florida. Ms. Schipper's office during the 2004 campaign was in Respondent's residence, which had two telephone lines. During the hearing, Respondent presented telephone records showing seven telephone calls from the residence to Mr. Beasley's main office in Defuniak Springs, Florida, on the following dates: July 1, 2004; July 7, 2004; July 16, 2004; July 17, 2004; August 27, 2004; August 30, 2004; and September 9, 2004. The telephone records do not show any calls made to Mr. Beasley's office in Santa Rosa Beach, Florida. Ms. Schipper called Mr. Beasley's Santa Rosa Beach office to inquire about reimbursing Respondent for the June 30, 2004, personal payment to Mr. Petermann. However, there is no evidence that Ms. Schipper called either of Mr. Beasley's offices to inquire specifically about the proper method of reporting campaign expenditures, paid directly to Mr. Petermann, part of which included indirect payments or reimbursements for advertising on television stations. Mr. Beasley has no independent recollection of speaking with Ms. Schipper during the campaign. There is no evidence that anyone on Mr. Beasley's staff remembers speaking with Respondent or Ms. Schipper about campaign finance reports during the 2004 campaign. Mr. Beasley's office provided Respondent with a copy of the 2004 Candidate and Campaign Treasurer Handbook (published November 2003)(handbook) and Chapter 106, Florida Statutes (2003). Respondent and Ms. Schipper referred to these resources from time to time during the campaign on an as needed basis. The handbook did not specifically require a candidate to "itemize" expenditures to media consultants. The handbook contains the following statement on the first page: Important Notice The information contained in this publication is intended as a quick reference guide only and is current upon publication. Chapter 97-106, Florida Statutes, the Constitution of the State of Florida, Division of Elections' opinions and rules, Attorney General opinions, county charters, city charters and ordinances, and other sources should be reviewed in their entirety for complete information regarding campaign financing and qualifying. In addition, the following publication produced by the Florida Department of State, Division of Elections should be reviewed for further information regarding candidates and committees: 2004 Federal Qualifying Handbook 2004 Committee and Campaign Treasurer Handbook 2004 Handbook on Filing Campaign Reports 2004 Election Cycle Calendar of Reporting Dates for Candidates, Political Committees and Committees of Continuous Existence 2004 Election Cycle Calendar of Reporting Dates for Political Party Executive Committees. All forms and publications provided by the Division of Elections are available on our web site at http://election.dos.state.fl.us. Please direct any questions to either your county supervisor or elections or the Florida Department of State, Division of Elections at (850) 245-6240. (Emphasis included) Chapter 7 of the handbook states as follows regarding the duties and responsibilities of campaign treasurers: IMPORTANT: No contribution or expenditure, including contributions or expenditures of a candidate or of the candidate's family, shall be directly or indirectly made or received in furtherance of the candidacy of any person for nomination or election to political office in the state except through the duly appointed campaign treasurer of the candidate. (Emphasis included) Chapter 10 of the handbook states as follows regarding campaign expenditures: An expenditure is a purchase, payment, distribution, loan, advance, transfer of funds by a campaign treasurer or deputy campaign treasurer between a primary depository and a separate interest-bearing account or certificate of deposit, or gift of money or anything of value made for the purpose of influencing the results of an election. * * * A candidate shall: 1. Pay all campaign expenditures by a check drawn on the campaign account (except petty cash); (emphasis included) Chapter 14 of the handbook states as follows regarding the filling of campaign reports: Reporting Expenditures Form DS-DE 14, Itemized Expenditures is used to report all expenditures made, regardless of the amount and must contain: Full name an address of each person to whom expenditures have been made along with the amount, date and clear purpose of the expenditure. Name, address and office sought by each candidate on whose behalf such expenditure was made. Full name and address of each person to whom an expenditure for personal services, salary or reimbursed expenses was made along with the amount, date and clear purpose of the expenditure. A candidate or any other individual may be reimbursed for expenses incurred for travel, food and beverage, office supplies, and mementoes expressing gratitude to campaign supporters as provided for in section 106.021(3), F.S. * * * 5. Amount and nature of debts and obligations owed by or to the candidate, which relate to the conduct of any political campaign. (Emphasis included) On July 1, 2004, amendments to Chapter 106, Florida Statutes (2004), became effective, including the addition of Section 106.07(4)(a)13., Florida Statutes (2004), which states as follows: (4)(a) Each report required by this section shall contain: * * * 13. The primary purpose of an expenditure made indirectly through a campaign treasurer for goods and services such as communications media placement or procurement services, campaign signs, insurance, and other expenditures that include multiple components as part of the expenditure. The primary purpose of an expenditure shall be that purpose, including integral and directly related components that comprises 80 percent of such expenditure. After July 1, 2004, the Department of State, Division of Elections, revised and published the 2004 Candidate and Campaign Treasurer Handbook (effective July 2004)(amended handbook). The preface to the amended handbook states as follows: "This publication has been amended in July of 2004 to reflect changes as provided by Chapter Law 2004-252. New language is displayed in red." The notice on the first page of the amended handbook was not revised. Chapter 7 of the amended handbook states as follows regarding the duties and responsibilities of campaign treasurers: IMPORTANT: No contribution or expenditure, including contributions or expenditures of a candidate or of the candidate's family, shall be directly or indirectly made or received in furtherance of the candidacy of any person for nomination or election to political office in the state except through the duly appointed campaign treasurer of the candidate, subject to the following exceptions: * * * Reimbursements to a candidate or any other individual for expenses incurred in connection with the campaign by a check drawn upon the campaign account and reported pursuant to Section 106.07(4), F.S. After July 1, 2004, the full name and address of each person to whom the candidate or other individual made payment for which reimbursement was made by check drawn upon the campaign account shall be reported pursuant to Section 106.07(4), F.S., together with the purpose of such payment; Expenditures made indirectly through a treasurer for goods or services, such as communications media placement or procurement services, campaign signs, insurance or other expenditures that include multiple integral components as part of the expenditure and reported pursuant to Section 106.07(4)(a)13 . . . . (Emphasis included) Chapter 10 of the amended handbook states as follows regarding campaign expenditures: An expenditure is a purchase, payment, distribution, loan, advance, transfer of funds by a campaign treasurer or deputy campaign treasurer between a primary depository and a separate interest-bearing account or certificate of deposit, or gift of money or anything of value made for the purpose of influencing the results of an election or making an electioneering communication. An expenditure for an electioneering communication is made when the earliest of the following occurs:A person executes a contract for applicable goods or services;A person makes payment, in whole or in part, for applicable goods or services ; orThe electioneering communication is publicly disseminated. * * * A candidate or other individual may be reimbursed for expenses incurred in connection with the campaign by a check drawn on the campaign account and reported pursuant to section 106.07(4), F.S. After July 1, 2004, the full name and address of each person to whom the candidate or other individual made payment for which reimbursement was made by check drawn upon the campaign account shall be reported pursuant to Section 106.07(4), F.S., together with the purpose of such payment. * * * A candidate shall: 1. Pay all campaign expenditures by a check drawn on the campaign account (except petty cash); (Emphasis included) Chapter 14 of the amended handbook states as follows regarding the filling of campaign reports: Reporting Expenditures Form DS-DE 14, Itemized Expenditures is used to report all expenditures made, regardless of the amount and must contain: Full name an address of each person to whom expenditures have been made along with the amount, date and clear purpose of the expenditure. Name, address and office sought by each candidate on whose behalf such expenditure was made. Full name and address of each person to whom an expenditure for personal services, salary or reimbursed expenses was made along with the amount, date and clear purpose of the expenditure. A candidate or any other individual may be reimbursed for expenses incurred for travel, food and beverage, office supplies, and mementoes expressing gratitude to campaign supporters as provided for in section 106.021(3), F.S. (Emphasis included) * * * 5. Amount and nature of debts and obligations owed by or to the candidate, which relate to the conduct of any political campaign. * * * 7. The primary purposes of an expenditure made indirectly through a campaign treasurer for goods and services such as communications media placement or procurement services, campaign signs, insurance, and other expenditures that include multiple components as part of the expenditure. The primary purpose of an expenditure shall be that purpose, including integral and directly related components, that comprises 80 percent of such expenditure. (Emphasis included) For the 2004 campaign, reporting forms applicable to candidates did not provide for "itemization" of payments made by media consultants to various component providers of goods and services. In contrast, forms applicable to political parties and committees required and provided a reporting mechanism for itemizing payments made by third party consultants to the providers of the component services. Those forms did not specifically apply to individual candidates. At the time of the hearing, the Department of State, Division of Elections, was in the rulemaking process to develop standards and reporting forms for candidates to use when itemizing component parts of an expenditure made to a campaign consultant or vendor. Respondent and Ms. Schipper never called the Florida Department of State, Division of Elections, to make campaign finance report inquiries. After reviewing the handbook as published in November 2003, Ms. Schipper believed she had a fair understanding of campaign reporting requirements. Ms. Schipper did not review Chapter 106.07(4), Florida Statutes (2004), or the amended handbook. Respondent also reviewed Chapter 106, Florida Statutes (2003), and the handbook as published in November 2003. He did not review Section 106.07(4)(a), Florida Statutes (2004), but primarily relied on Ms. Schipper to properly report campaign expenditures. All checks written on Respondent's campaign account were reported on Respondent's CTRs. Respondent's CTRs reflect that Respondent's total campaign account receipts equaled his total expenditures. During the hearing, the parties stipulated that Respondent had the ability to pay the maximum fine possible if it was determined that he committed the violations charged.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Petitioner enter a final order finding that Respondent violated Section 106.07(5), Florida Statutes (2004), as charged in Counts 1-5 of the Order of Probable Cause, dismiss Count 6 of the Order of Probable Cause, and impose a civil penalty in the amount of $5,000. DONE AND ENTERED this 30th day of June, 2006, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD 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 30th day of June, 2006.
