The Issue Whether Gary Savage committed the statutory violations alleged in the Amended Administrative Complaint and, if so, what penalty is authorized for such violations.
Findings Of Fact The Parties and Principle Allegations The Department is the state agency charged with the licensing of insurance agents in Florida, pursuant to authority granted in chapter 626, parts I and IX, Florida Statutes, and Florida Administrative Code Chapter 69B-231. Mr. Savage is a 75-year-old registered investment advisor and financial planner who also is licensed to sell life insurance in Florida. The Department’s Complaint seeks to revoke Mr. Savage’s license as an insurance agent. Counts I through III and V through VIII concern eight clients, whereby Mr. Savage earned commissions for selling them annuities and, based on agreements they signed, charged them annual one-percent financial planning service fees tied to the value of their portfolios, including the annuities. Each of these counts alleged the following statutory violations: Engaging in unfair insurance trade practices for knowingly collecting an excessive premium or charge. § 626.9541(1)(o)2., Fla. Stat.; Demonstrating a lack of fitness or trustworthiness to conduct insurance business. § 626.611(1)(g), Fla. Stat.; Demonstrating a lack of reasonably adequate knowledge and technical competence to engage in insurance transactions. § 626.611(1)(h), Fla. Stat.; Engaging in fraudulent or dishonest insurance practices. § 626.611(1)(i), Fla. Stat.; and Misappropriating, converting, or unlawfully withholding moneys belonging to others in conducting insurance transactions. § 626.611(1)(j), Fla. Stat. Count IX charged Mr. Savage with two violations concerning adverse administrative action taken by the Financial Industry Regulatory Authority (“FINRA”) against his securities license: Failing to timely report final administrative action taken by FINRA against his securities license. § 626.536, Fla. Stat.; and Being suspended and fined for violating FINRA’s rules. § 626.621(12), Fla. Stat. At the time of the hearing, Mr. Savage was not working in the financial services industry because FINRA suspended him for several months. During his suspension, Mr. Savage continued to meet with his insurance clients, though he currently has no appointments with life insurers to sell their products. Wearing Two Hats - An Investment Advisor and Insurance Agent Mr. Savage has worked in the investment industry for over 50 years, initially focusing on securities but evolving into financial advising and estate planning work. He has taken numerous courses and examinations relevant to securities law, financial planning, and tax law. Mr. Savage owns two investment advisor businesses: Wall Street Strategies, Inc. (“Wall Street”), is a stock brokerage firm that handles securities transactions; and Advanced Strategies, Inc. (“Advanced Strategies”), is a registered investment advisor firm, offering clients financial planning, tax management, and estate planning advice. In order to provide a wide variety of products to his financial planning clients, Mr. Savage also is licensed as a nonresident agent in Florida to sell life insurance, including annuities.2/ Annuities provide a guaranteed income stream over a term of years, but also come with substantial penalties if they are surrendered or cancelled before the term expires. Fixed index annuities, like those Mr. Savage sold to the clients at issue here, offer portfolios of funds tracking stock market indexes. Owners choose from around six portfolios and can then reallocate by choosing different portfolios each year. Mr. Savage considers himself an investment advisor who is licensed to sell insurance, which is what he tells new clients. Indeed, his businesses are securities and investment advisor firms, not insurance agencies. Mr. Savage’s client base is diverse. Many have portfolios with annuities and other investment products. Some have portfolios with no annuities. Others have portfolios with only annuities, like most of the clients at issue. In order to procure new clients, Mr. Savage held financial planning seminars where diverse speakers discussed financial and estate planning, and tax management. Mr. Savage discussed the types of insurance products he preferred, including fixed index annuities. Other speakers discussed real estate, oil, and investment trusts, which were beneficial from a tax perspective. Most of the clients at issue attended such a seminar and later met with Mr. Savage to discuss their financial plans. When Mr. Savage first met with the clients at issue, he asked them to bring tax returns, investment statements, wills and/or trusts, and other documents relevant for a financial planning discussion. They completed a new client form with information about their assets, investments, and objectives. He often met several times with new clients to develop a plan for them to reach their financial, estate, and tax management goals. To provide financial planning services, Mr. Savage—— like most investment advisors——charged an annual one-percent fee based on the total value of the portfolio. He has reduced or waived his fee if the clients’ situation warranted it or if they continued to purchase products for which he received commissions to compensate him for providing financial planning services. Before that are charged an annual fee, Mr. Savage’s clients signed a “Service Fee Agreement” (“Fee Agreement”), which was on “Advanced Strategies, Inc., Registered Investment Advisor” letterhead and provided as follows: Advanced Strategies charges a 1% (one percent) financial planning retention fee annually. This fee is based upon the total combined value of accounts including annuities, indexed life, mutual funds, income products and brokerage accounts that we manage or provide service for. This amount is tax deductible as a professional fee. The Fee Agreement offered to provide several financial planning services3/: Address, ownership, and beneficiary changes; Duplicate statements and tax returns; Required minimum distribution and withdrawal requests, and deposits; General account questions; One printed analysis per year; Annual review; Asset rebalancing when applicable; Informing client of new tax laws, changes in estate planning, and new exciting products and concepts. The Fee Agreement noted that the non-refundable fee was due on the service anniversary date and that non-payment would result in discontinuation of the planning services until paid in full. Mr. Savage confirmed that the Fee Agreement was voluntary. If clients wanted to purchase a product, but did not want him to manage their portfolio or provide the outlined services, they did not have to sign the agreement. In that event, Mr. Savage would procure the product and not provide financial planning services. All of the clients at issue here purchased annuities from Mr. Savage. He helped them complete the applications with the insurance companies and, if necessary, assisted them with transferring or closing out other investments used to pay the premiums. He ensured that the insurers received the paperwork and the premiums. Once the annuities were procured, he received commissions from the insurers. The Complaint did not allege that he acted unlawfully in recommending annuities to the clients or receiving commissions from the insurers. All of the clients at issue also signed the Fee Agreement and Mr. Savage provided them with services every year.4/ Some of the services were things an insurance agent technically could handle, such as answering client calls, making address and beneficiary changes, providing duplicate statements, assisting with the paperwork for required minimum distributions, withdrawals, and deposits, and asset reallocation. Other services were things that an agent could not provide, such as tax management/credits, duplicate tax forms, assistance with estates, trusts, and wills, and financial planning advice. But, even as to the services an agent technically could provide, Mr. Savage used his financial planning expertise to advise these clients as to a number of decisions relating to their annuities. For instance, although agents can assist with reallocation, required minimum distributions, and withdrawals, Mr. Savage’s securities and financial planning expertise allowed him to make recommendations that took into account an analysis of the stock market, the economy, and the clients’ financial circumstances and overall goals. An agent is not required to have that expertise, which is one reason he charged the clients an annual service fee. Many of these clients did not recall Mr. Savage providing most of the services listed in the Fee Agreement, but the weight of the credible evidence reflects otherwise. He analyzed asset reallocations for these clients every year and, when he believed reallocation was appropriate, he undisputedly made it happen. He provided annual account analyses consolidating the clients’ investment statements. He met with some of them every year to conduct an annual review and, for those he did not meet, he offered to do so in their annual invoice letter. Whenever the clients asked for assistance with questions, address, beneficiary, or ownership changes, withdrawals or required minimum distributions, or deposits, among others, he performed the task. And, as he confirmed and some of the clients acknowledged, the Fee Agreement made it clear that the services were available, even if they did not need all of them in a particular year or did not think to ask. Although some of the clients testified that Mr. Savage failed to tell them that his fee was optional, all of them had a chance to review the Fee Agreement before voluntarily signing it. The agreement noted that the fee was a “financial planning retention fee” based on the value of the accounts “that we manage or provide service for,” and that non-payment “will result in the discontinuation of my/our planning services.” These clients believed they hired Mr. Savage as an investment advisor and many understood that such advisors do charge fees for providing services. More importantly, no client testified that Mr. Savage said his annual fee was required to procure the annuities or was a charge for insurance. Nothing in the Fee Agreement gave that indication either. Mr. Savage credibly confirmed that he did not charge a fee for insurance; rather, the client paid the fees for financial planning services. And, if they decided they no longer wanted Mr. Savage’s services and stopped paying his fee, they took over management of their annuities without losing access to them or the money in them. The Department concedes that Mr. Savage may wear two hats, as both the agent selling an annuity and the financial advisor managing his client’s portfolio. It contends, however, that Mr. Savage violated the insurance code by selling annuities to these clients and thereafter charging them annual fees——tied to the value of the annuities——to provide services that he should have provided for free after earning commissions on the sale of those annuities. The Department’s investigator, Ms. Midgett, testified about annuities, commissions, and insurance agent services based on her experience in the industry as both a former agent and certified chartered life underwriter.5/ Ms. Midgett confirmed that the Department approves both the premiums and commissions applicable to annuities. Once the premium or deposit is paid, the commission is earned; if an additional deposit is made into the annuity, the agent would earn another commission. Ms. Midgett testified that it is improper for an agent to receive a commission and knowingly charge a client any fees with respect to that annuity under section 626.9541(1)(o). However, she admitted that a financial advisor may charge service fees on annuities if they did not receive a commission on the sale. And, if the annuity is ever rolled into a non- insurance product, that agent could charge service fees on that asset because they are no longer tied to the annuity. Ms. Midgett also testified about the services agents are expected to provide. Once an agent sells a product, he or she becomes the agent of record and does “things such as answer questions, beneficiary changes, address changes, yearly reviews, anything to keep that client and to help them in any way they can.” According to her, “it’s basic 101 insurance that an agent services their clients,” which is “extremely important if you want to build your book of business and to keep a client happy.” Importantly, however, Ms. Midgett conceded that no statute or rule specified what services agents were required to provide once they sold an annuity. “It’s just understood when you’re an insurance agent that you’re going to service your clients. It’s part of the sale of the product.” She believed agents learned this in the course study to obtain a license. Although Ms. Midgett testified that Mr. Savage should have provided most of the services listed in the Fee Agreement for free once he earned commissions on the sale of the annuities, she conceded that at least two of them——duplicate tax forms and informing the client of new tax laws——were not services agents would do. She also agreed that agents could not advise clients as to taking money from an annuity and investing in stocks, mutual funds, real estate trusts, or other investment-related options as “those are all investment advisor functions.” Ms. Midgett initially admitted having no knowledge of whether insurance agents were trained in asset reallocation, though she “would assume so” because “[i]f you have a license to sell the product, then obviously you have to have the knowledge of how to be able to service that product and make the allocations.” When she testified several months later in the Department’s rebuttal case, she stated that the manual used to obtain a license in Florida had a chapter on annuities that “touched on” reallocation. But, she admitted she was not an expert on reallocation or analyzing market conditions, and she had only previously worked with one agent who sold annuities, though he did advise his annuity clients on reallocation. In sum, the Department conceded that no statute or rule articulated the services an agent is required to provide upon receiving a commission. The appointment contracts between the agents and the insurance companies, two of which are in the record, apparently do not specify the services agents are expected to provide. At best, the evidence established what a good agent should do to build a book of business; the evidence did not establish what services an agent, like Mr. Savage, was legally required to provide for receiving a commission. Count I – Kathy Butler Ms. Butler met Mr. Savage while working at a yacht club. In February 2011, they met at his office and she filled out a new client form with financial information. In March 2011, Mr. Savage assisted Ms. Butler with the application for a fixed index annuity for $50,000. On that same day, she signed the Fee Agreement, which she understood to be paying for his services as an investment advisor to manage the annuity and ensure it was being invested correctly; she believed he received income from the insurance company. In January 2012, she purchased another fixed index annuity for $8,000. Mr. Savage procured both annuities. Between 2012 and 2015, Ms. Butler received annual invoices from Mr. Savage and paid about $3,265 in service fees. At this point, Ms. Butler deals directly with the insurance companies, though Mr. Savage is still listed as her agent. The weight of the credible evidence shows that Mr. Savage answered general account questions, made a beneficiary change, conducted annual reviews when requested, sent annual account statements, analyzed reallocation each year and, when he recommended reallocation in 2014 and 2015, he handled the paperwork. Ms. Butler knew she could avail herself of the services in the Fee Agreement, even though she chose not to request many of them. Count II – Beverly Wilcox Ms. Wilcox met Mr. Savage at a seminar in early 2009. In February 2009, they met at his office, she completed a new client form, and she signed the Fee Agreement. She believed he was a financial advisor and that she would owe him money, but she did not read the Fee Agreement before signing it. In March 2009, Mr. Savage assisted Ms. Wilcox with the application to purchase a fixed index annuity for $120,000. He procured the annuity, as requested. Between 2010 and 2016, Ms. Wilcox received yearly invoices from Mr. Savage and paid about $6,500 in fees, after which she decided to deal with the annuity company directly. The weight of the credible evidence shows that Mr. Savage answered questions when asked, offered to conduct annual reviews each year, sent annual account statements, analyzed reallocation each year and, when he recommended reallocation in 2010 and 2012, he handled the paperwork. Count III – Joseph Cerny Mr. Cerny met Mr. Savage while working at a yacht club and knew he was a financial advisor. Mr. Cerny purchased several fixed index annuities and other investments from Mr. Savage, who helped him complete the paperwork and procured the policies. Between 2003 and 2004, he bought two annuities for $100,000 each and two mutual funds for about $30,000 each. In 2008, he bought an annuity for $10,000. In 2010, he bought another annuity for $119,400. Mr. Savage did not charge fees for the first few years. Mr. Cerny believed he received compensation from the companies. However, in March 2010, Mr. Cerny signed the Fee Agreement. Between 2011 and 2012, he received two invoices, paying the first for $1,266.84 but refusing to pay the second. Mr. Cerny and Mr. Savage ended their relationship at that point. The weight of the credible evidence shows that Mr. Savage answered questions, provided annual statements, assisted with making withdrawals when requested, met with Mr. Cerny yearly, analyzed reallocation each year and, when he recommended reallocation in 2010 and 2011, he handled the paperwork. Count V – Marion Albano Ms. Albano met Mr. Savage at a retirement seminar in early 2007. In February 2007, they met at his office to go over her investments, including several annuities. Based on his recommendation, she surrendered her old annuities and purchased a fixed index annuity for about $1.6 million. He assisted her with the application and procured the annuity. In February 2007, Ms. Albano also signed the Fee Agreement. Mr. Savage told her there was a service charge to manage the annuity and she agreed because her brother pays the same rate on his managed brokerage account. She was never worried about losing the annuity if she failed to pay the fee. Ms. Albano received invoices from Mr. Savage every year from 2008 through 2015 and testified that she had paid between $110,000 and $120,000 in fees during that time. She had to pay some of the fees out of her distributions. The weight of the credible evidence shows that Mr. Savage answered account questions, corresponded with her daughter about his recommendations, provided her with an account analysis each year, met with her annually to review her account, and assisted her with required minimum distributions and withdrawals. He analyzed reallocation each year and, when he recommended reallocation in 2010 and 2011, he handled the paperwork. Count VI – Jane D’Angelo Ms. D’Angelo and her late husband, whose son-in-law was an insurance agent, met Mr. Savage at an estate planning seminar in early 2003; they believed he was an investment advisor. In March 2003, he came to their home and they completed a new client form, indicating they had several types of investments, including annuities. Between 2003 and 2016, the D’Angelos invested with Mr. Savage. In 2003, they purchased a tax credit investment for $10,000. In 2005, they purchased a similar investment for $19,000, which resulted in tax credits totaling $17,174. Between 2005 and 2011, they purchased eight fixed index annuities from Mr. Savage. He assisted them with the applications, informing them that the companies paid him directly. He procured the following annuities, some of which were purchased by transferring money from their existing annuities: In April 2005, they bought an annuity for $250,000; in May 2007, they bought an annuity for $32,789.78; in May 2008, they bought an annuity for $29,510; in March 2009, they bought three annuities for $337,554, $550,000, and $6,000; in May 2011, they bought two annuities, one for $40,715 and another for $150,889; and, in June 2011, they bought an annuity for $24,667. Prior to 2010, they paid no service fees. However, in April 2010, they signed the Fee Agreement. Although they were surprised and felt like they had to sign, Ms. D’Angelo agreed they were not coerced or told the annuities would lapse if they failed to do so. Indeed, she never lost access to the annuities even after she stopped paying Mr. Savage’s fees in 2015. Mr. Savage sent them annual invoices from 2010 through 2015, totaling $54,000 in fees. Mr. Savage agreed to waive the 2010 fee and, ultimately, they only paid about $14,511 total. In 2016, Ms. D’Angelo informed Mr. Savage that she no longer needed his services. She had been dealing directly with the insurance companies herself, though they have provided her with names of individuals if she wanted someone to advise her. The weight of the credible evidence shows that Mr. Savage provided numerous services to the D’Angelos on the investments he managed for them.6/ He had discussions with them, sent them annual statements, and assisted them with deposits and transfers between annuities, required minimum distributions and withdrawals, income riders, and beneficiary and ownership changes. He analyzed reallocation every year and handled the paperwork when he felt it was appropriate. He also offered to meet annually and held those meetings in years in which they were requested. Count VII – Ernest Blougouras Rev. Ernest Blougouras, a Greek Orthodox priest, attended several financial planning seminars with Mr. Savage. They met privately in February 2005, at which he completed a new client form listing his investments, which included fixed annuities, CDs, mutual funds, bonds, and stocks. Rev. Blougouras purchased fixed index annuities and other investments from Mr. Savage. He told Rev. Blougouras that he received commissions for selling the annuities. Mr. Savage assisted with the applications and procured the policies. Over the last 14 years, Rev. Blougouras purchased nine fixed index annuities. In March 2005, he bought an annuity for $347,003; in April 2005, he bought an annuity for $229,458; in August 2005, he bought an annuity for $102,227; in June 2006, he bought an annuity for $8,300; in May 2007, he bought an annuity for $41,143; in June 2009, he bought an annuity for $50,000; in July 2009, he bought an annuity for $14,308; and, though the record is unclear as to the date, he bought another annuity that was worth $40,572 in 2010. Since 2011, he bought an additional annuity and several non-insurance investments, such as real estate trusts and energy funds. Prior to 2010, Mr. Savage did not charge Rev. Blougouras service fees because he continued to purchase annuities. However, in 2010, Mr. Savage decided to start charging an annual service fee and sent Rev. Blougouras the Fee Agreement. Rev. Blougouras believed that Mr. Savage’s services would be cancelled if he failed to pay the fee and he would have to hire another advisor. He signed the Fee Agreement and continues to use Mr. Savage’s services. Mr. Savage has sent annual invoices to Rev. Blougouras every year since 2010. The record only contains the 2010 invoice for $9,883 and Rev. Blougouras could not recall how much he paid overall. However, he confirmed that he has paid every invoice he has received either himself or with distribution checks he received from the annuities. The weight of the credible evidence shows that Mr. Savage provided numerous services to Rev. Blougouras. He prepared paperwork and documents for required minimum distributions and withdrawals, held meetings to review and organize his tax paperwork, copied documents requested, and made address changes when requested. He analyzed asset reallocation every year and, when he recommended reallocation in 2010 and 2011, he completed the necessary paperwork. Count VIII – George Flate Mr. Flate and his wife met Mr. Savage at a financial planning seminar in 2010. In February 2010, they met Mr. Savage and completed their new client form listing their investments, including fixed annuities, CDs, mutual funds, and stocks. They also signed the Fee Agreement, which Mr. Flate believed was a standard service agreement. They thought they hired Mr. Savage as an investment advisor and never believed they would lose access to the annuities if they stopped paying his fees. Based on Mr. Savage’s recommendation, the Flates purchased two fixed index annuities: one annuity was issued in April 2010 for approximately $22,000, and the other annuity was issued in May 2010 for approximately $22,500. Mr. Savage assisted them with filling out the applications and handled the paperwork to ensure the annuities were issued. Between 2012 and 2015, Mr. Savage sent the Flates invoices for his annual service fees every year. In total, they paid approximately $1,506 in service fees. In 2015, the Flates terminated their relationship with Mr. Savage. They have worked with two financial advisors since then, neither of whom charged them service fees relating to the annuities. The weight of the credible evidence shows that Mr. Savage provided numerous services to the Flates. Each year, he met with them to go over their account, provided them with account analyses, analyzed reallocation and, the two to three times they agreed with his recommendations, he handled the paperwork. He handled withdrawals and address changes for them when requested, and he provided them with information as to changes in tax law and estate planning, though they did not believe that was necessary since they had tax and estate lawyers. The Flates understood that Mr. Savage was available to answer their questions and provide the services if they asked. Count IX – FINRA Disciplinary Proceeding On July 14, 2016, two former clients of Mr. Savage’s filed a Statement of Claim with FINRA alleging that he had recommended investments that were not suitable for them. Over Mr. Savage’s objections to proceeding with the hearing as scheduled, the arbitration panel awarded the clients over $725,000 in damages, fees, and costs. The clients filed a petition in Florida circuit court to approve the arbitration award. Mr. Savage responded in opposition and moved to vacate the arbitration award on grounds that it violated his due process rights. On November 9, 2017, the circuit court issued a final judgment awarding over $769,000. On December 4, 2017, Mr. Savage appealed the circuit court’s order to the Second District Court of Appeal. On June 12, 2018, while the appeal was pending, Mr. Savage signed a Letter of Acceptance, Waiver and Consent (“AWC”) with FINRA. The AWC stated that Mr. Savage accepted and consented, without admitting or denying, the following findings: Wall Street failed to apply for a material change in its business operations, i.e., to sell oil and gas interests, private placements, and non-traded real estate investment trusts, before engaging in more than 50 such transactions, many of which were consummated by Mr. Savage; Mr. Savage failed to timely update his FINRA Form U4 within 30 days of the Statement of Claim being filed against him in July 2016; Mr. Savage failed to timely respond to FINRA’s requests for information relating to an upcoming examination of Wall Street; and Wall Street failed to maintain the minimum net capital requirements of $5,000 while engaging in securities transactions. Mr. Savage agreed to three sanctions: (1) a five- month suspension from associating with any FINRA registered firm; (2) a three-month suspension from association with any FINRA registered firm in a principal capacity, to be served following the five-month suspension; and (3) a $30,000 fine. The AWC confirmed that Mr. Savage waived his procedural rights relating to these alleged violations and made clear that it would become part of his permanent disciplinary record that could be considered in future actions brought by FINRA or other regulators. He was precluded from taking positions inconsistent with the AWC in proceedings in which FINRA was a party, but was not precluded from taking inconsistent positions in litigation if FINRA was not a party. The five-month suspension began on June 13, 2018, and ended on November 17, 2018. The three-month suspension began on November 18, 2018, and ended on February 17, 2019. In the interim, on August 16, 2018, FINRA notified Mr. Savage by letter that it was suspending his securities license indefinitely for his “failure to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.” This letter is not in the record and, as such, it is unclear whether Mr. Savage had an avenue to challenge that suspension directly. Mr. Savage had challenged the underlying arbitration award, which remained pending on appeal in the Second District Court of Appeal. On November 7, 2018, the Second District affirmed the circuit court’s arbitration order. On November 20, 2018, Mr. Savage put the Department on notice of the FINRA disciplinary actions, including the AWC from June 2018 and the decision of the Second District affirming the arbitration award.
Conclusions For Petitioner: David J. Busch, Esquire Department of Financial Services Room 612, Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 For Respondent: Michael Buchholtz, Esquire The Law Office of Michael Buchholtz Post Office Box 13015 St. Petersburg, Florida 33777
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services issue a final order suspending Mr. Savage’s license as an insurance agent for twelve months. DONE AND ENTERED this 30th day of September, 2019, in Tallahassee, Leon County, Florida. S ANDREW D. MANKO 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 30th day of September, 2019.
The Issue Whether Respondent’s, State Board of Administration (Respondent or SBA), use of a telephonic hotline to allow eligible public employees to transfer their Florida Retirement System (FRS) assets from the FRS Pension Plan (Pension Plan) to the FRS Investment Plan (Investment Plan) constituted an “unadopted rule” in violation of Section 120.54, Florida Statutes (2009), interpreting the statutory phrase “electronic means” found in Section 121.4501, Florida Statutes (2002).1 Whether the SBA’s interpretation of the statutory phrase “electronic means,” allowing FRS eligible public employees to enroll in the Investment Plan by telephone and without completing and/or signing any form, is within the powers, functions, and duties delegated to the SBA by the Florida Legislature, or exceeded the SBA’s statutory authority, and enlarged, modified, or contravened the specific provisions of Subsection 121.4501(4)(a), Florida Statutes, in violation of Subsections 120.52(8) and 120.57(1)(e), Florida Statutes. Whether Petitioner, Sharon R. Huberty (Petitioner or Huberty), is entitled to an award of reasonable costs and attorney’s fees.
Findings Of Fact Petitioner is an employee of the Florida Department of Corrections and is assigned to the Hendry County Corrections Institute. Huberty has been employed as a corrections officer with the Florida Department of Corrections since 1997 and was so employed as a corrections officer in 2002. Huberty is substantially affected by the SBA’s interpretation of the term “electronic means” in Subsection 121.4501(4)(a)1.a., Florida Statutes. When Huberty petitioned the SBA to return her to the FRS Pension Plan without penalty, the SBA responded that Huberty had effected a valid election to switch from the Pension Plan into the Investment Plan. As a result of Huberty’s enrollment into the Investment Plan, Huberty has lost substantial pension and retirement benefits to which she would otherwise have been entitled under the FRS Pension Plan. As such, Huberty is substantially affected by the SBA’s interpretation and application of Subsection 121.4501(4)(a)1.a., Florida Statutes, and has standing to petition for a determination that the SBA’s interpretation and application of Subsection 121.4501(4)(a)1.a., Florida Statutes, is an invalid unadopted rule. The agency affected by Huberty’s rule challenge is the SBA. In the summer of 2002, state employees became eligible to enroll in the newly created Public Employees Optional Retirement Program (PEORP) known as the “Investment Plan.” The Investment Plan is a defined contribution plan. The member bears the risk of loss of the investments he or she chooses. In contrast, the existing Pension Plan is a defined benefit plan, wherein retirement benefits are calculated based upon a fixed formula, not the performance of the investments, which are selected by the state. Thus, the state, not the member, bears the risk of loss of the Pension Plan investments. Section 121.4501, Florida Statutes, describes the standards by which the SBA must administer PEORP or Investment Plan. Subsection 121.4501(4)(a)1., Florida Statutes, provides in pertinent part: 1. With respect to an eligible employee who is employed in a regularly established position on June 1, 2002, by a state employer: a. Any such employee may elect to participate in the Public Employee Optional Retirement Program in lieu of retaining his or her membership in the defined benefit program of the Florida Retirement System. The election must be made in writing or by electronic means and must be filed with the third-party administrator by August 31, 2002, or within 90 days after the conclusion of the leave of absence whichever is later. This election is irrevocable, except as provided in paragraph (e). . . . Thus, state employees electing to transfer from the Pension Plan into the Investment Plan must do so “in writing or by electronic means.” Further, the election must be “filed” with the third-party administrator. Following the adoption into law of Section 121.4501, Florida Statutes, under the auspices of Subsection 121.4501(4)(a)1., Florida Statutes, the SBA adopted a form (“MyFRS Your Plan Choice Form”), which FRS-eligible public employees could complete in order to elect the transfer of their FRS retirement assets out of the elector’s Pension Plan into the Investment Plan. This form was made available to FRS-eligible public employees as a paper version and as an electronic version on the MyFRS.com website. Under the provisions of Subsection 121.4501(4)(a)1., Florida Statutes, the SBA also implemented a telephone hotline (the “MyFRS Guidance Line”), which allowed for FRS-eligible public employees to effect a “first enrollment” into the Investment Plan by transferring their FRS retirement assets out of their Pension Plans into private equity accounts managed under the Investment Plan. The SBA contracted with a third party for the administration of the telephone hotline and the administration of the Investment Plan. Thus, during the 2002 “initial election” enrollment period, the SBA implemented three ways for a Pension Plan member to elect to join the Investment Plan: (1) by submitting a hard copy of the MyFRS Your Plan Choice Form, (2) by logging into the MyFRS.com website and completing the MyFRS Your Plan Choice Form electronically, or (3) by calling the MyFRS Financial Guidance Line and enrolling verbally over the telephone. In August 2002, Huberty sought to transfer her retirement assets from the Pension Plan to the Investment Plan. Huberty’s deadline to elect membership in the Investment Plan was August 31, 2002. At that time, the SBA utilized the telephone hotline as an alternate procedure by which to “enroll” FRS eligible public employees into the Investment Plan. Huberty’s initial election to transfer into the FRS Investment Plan was made orally by telephone to the third-party administrator on August 27, 2002. The SBA did not, thereafter, require Huberty to complete or sign any form following her “election” to transfer into the Investment Plan by telephone and no form was “filed” with the third-party administrator. Following her “election” to transfer into the Investment Plan by telephone, Huberty did not complete any form that met the requirements of former Florida Administrative Code Rule 19-10.001, 19-10.002, or 19-10.003, which were in effect at the time of Huberty’s election. Former Florida Administrative Code Rule 19- 10.001(2)(d), in effect at the time of Huberty’s election to transfer into the Investment Plan, stated: “‘Effective enrollment in PEORP’ means that the employee has completed the enrollment form; that the TPA [third-party administrator] has entered the employee into its recordkeeping system; and that the TAP has informed the division and the employee’s employer of the employee’s effective date of enrollment in PEORP.” However, the FRS telephone hotline by which FRS- eligible public employees “enrolled” into the Investment Plan did not require that the employee complete an enrollment form in order to effect the transfer of their Pension Plan assets into the Investment Plan. The FRS-eligible employee’s “election” was recorded by the third-party operator during the telephone call, and the FRS-eligible employee’s “election” was thus entered into the third-party administrator’s recordkeeping system. Former Florida Administrative Code Rule 19- 10.001(3)(a)6., in effect at the time of Huberty’s election to transfer into the Investment Plan, stated: “It shall be the TPA’s obligation to ensure that the form in toto is complete and more particularly that the election is clearly indicated.” The MyFRS telephone hotline used to enroll FRS- eligible public employees into the Investment Plan did not require that the third-party administrator ensure that a “form in toto” was complete, as FRS-eligible employees using the telephone hotline were not required to complete a form. Former Florida Administrative Code Rule 19- 10.001(3)(b), in effect at the time of Huberty’s election to transfer into the Investment Plan, stated: “Upon receipt of the completed form by the TPA, the TPA enrolls the employee in the PEORP.” The MyFRS telephone hotline used to enroll FRS- eligible public employees into the Investment Plan did not require that the third-party administrator receive “completed form[s]” from the employee before the SBA enrolled the employee into the Investment Plan. The SBA did not formally “adopt” the MyFRS Guidance Line as a rule, and there were no rules of the SBA in effect at the time of Huberty’s “election” to transfer her FRS assets into the Investment Plan that described the process by which the telephone hotline would be created or administered. Thus, the SBA’s policy and practice of allowing FRS-eligible employees to elect to transfer into the Investment Plan by telephone is an unadopted rule.
The Issue Whether Respondent, Department of Management Services, Division of Retirement (“Respondent”), is entitled to a deduction of the retirement benefits to be paid to Aubrie-Elle Perez, and if Respondent is entitled to a deduction, whether the deduction should be in the amount of the gross disbursements of $19,833.21 or the net payments to Edward Perez (“Lt. Perez”) in the amount of $17,017.80.
Findings Of Fact The FRS is a public retirement system as defined by Florida law. There are approximately 400,000 active members within the FRS. Respondent is charged with managing, governing, and administering the FRS. In 1997, Lt. Perez began employment with the Miami-Dade County Fire Department. For over 16 years, Lt. Perez served as a fire fighter with the Miami-Dade County Fire Department, his last position being a Lieutenant. Lt. Perez was a vested member of the FRS. Upon his initial employment and enrollment with the FRS in 1997, Lt. Perez entered the Investment Plan and made a retirement benefits election designating that if he died before his retirement and chose not to designate a beneficiary, retirement benefits would be paid in accordance with section 121.091(8), Florida Statutes. Lt. Perez chose not to designate a beneficiary. Thus, according to this statute, retirement benefits would first be paid to Lt. Perez’s spouse, and if no spouse, then to his only child, the Petitioner. Tragically, on April 7, 2013, Lt. Perez collapsed at the fire station. Subsequently, Lt. Perez was diagnosed with a grade-four malignant brain tumor known as a glioblastoma multi-forming--a very aggressive and generally terminal form of brain cancer. There is no cure and the median survival rate for adults with this form of brain cancer is 9 to 14 months. Due to his terminal brain cancer and the treatments he had undergone and was undergoing, Lt. Perez was unable to continue his duties with the Miami-Dade County Fire Department. On February 19, 2014, a two-page FRS Investment Plan Application for Disability Retirement Form PR-13 (“application for disability retirement”), and an FRS Investment Option Selection Form PR-11o (“option selection form”), were submitted to Respondent for Lt. Perez. They were sent to Respondent by mail by Lt. Perez’s sister, Alecs Perez-Crespo. The effect of the application for disability retirement and the selection of Option 1 on the option selection form would be to transfer the monies from the Investment Plan into the Pension Plan, and convert Lt. Perez’s accumulated Investment Plan retirement benefits to monthly disability retirement benefits during his lifetime. Then, upon his death, the monthly benefit payments would stop, and the beneficiary would receive only a relatively small amount, if any--a refund of contributions Lt. Perez had paid into the Investment Plan retirement account, which are in excess of the amount he received in benefits, not including the transferred Investment Plan account balance.2/ The two-page application for disability retirement was not completed by the member, Lt. Perez, and was not signed by Lt. Perez in the presence of a notary public. The option selection form was not completed by the member, Lt. Perez, and was not signed by Lt. Perez in the presence of a notary public. Affirmative medical and factual evidence establishes, and rebuts any legal presumption to the contrary, that Lt. Perez was not mentally, physically, cognitively, or legally competent to execute the option selection form or the application for disability retirement in February 2014, or to understand their legal nature and effect. Nevertheless, Respondent processed the application for disability retirement and option selection form. As a result, Lt. Perez was deemed to have retired effective April 1, 2014, and he forfeited approximately $238,000, which was transferred from the Investment Plan to the Pension Plan. Subsequently, two disability retirement benefit warrants were issued by the State of Florida, Department of Financial Services, to Lt. Perez, via the Pension Plan, in care of Alecs Perez-Crespo, POA. The dates of these warrants are April 30, 2014, and May 30, 2014. Both warrants were endorsed by Ms. Perez-Crespo, “POA For Edward Perez.” Respondent made these disability retirement gross benefit disbursements resulting in net payments to Lt. Perez on the following dates and in the following amounts: April 30, 2014: gross disbursement of $4,950.63, less deducted taxes of $413.20, for a net payment to Lt. Perez of $4,537.43; May 30, 2014: gross disbursement of $4,950.63, less taxes of $413.20 and less a medical insurance deduction of $386.00, for a net payment to Lt. Perez of $4,151.43.3/ A direct deposit authorization for electronic transfer of future retirement benefit warrants into a checking account solely in the name of Lt. Perez was signed by Alecs Perez Crespo, “POA for Edward Perez,” on May 9, 2014. Two additional disability retirement gross benefit disbursements resulting in net payments to Lt. Perez were sent to the checking account of Lt. Perez on the following dates and in the following amounts: June 30, 2014: gross disbursement of $4,950.63, less taxes of $413.20 and less a medical deduction of $386.00, for a net payment to Lt. Perez of $4,151.43; July 31, 2014: gross disbursement of $4,981.32, less taxes of $417.81 and less a medical insurance deduction of $386.00, for a net payment to Lt. Perez of $4,177.51, bringing the total sum of the gross disbursements for the four payments made to Lt. Perez $19,833.21, and the total sum of the net disbursements for the four payments made to Lt. Perez $17,017.80. The net sum of $17,017.80 issued by the Pension Plan as disability retirement benefits to Lt. Perez was deposited into Lt. Perez’s checking account. Accordingly, $19,833.21 (gross)/ $17,017.80 (net), was received by Lt. Perez. Lt. Perez died on July 16, 2014, from the cancer. At the time of Lt. Perez’s death, Petitioner was, and remains, his sole surviving child (natural or adopted). Lt. Perez was not married at the time of his death and, thus, left no surviving spouse. Because of the receipt of the four payments during his lifetime, which are applied first to the personal contributions made by Lt. Perez into the Investment Plan during his lifetime, the amount of Lt. Perez’s small contributions into the plan were exhausted by the time of his death. Therefore, if the option selection form is valid, Petitioner, as the sole beneficiary and child of Lt. Perez, would receive nothing. Respondent concedes that notwithstanding the facial appearance of the option selection form and application for disability retirement, the documents are void and invalid because they failed to comply with the statutory, rule, and manual requirements applicable to properly effectuate the Option 1 selection, in that they were not completed by the member, Lt. Perez, and not signed by Lt. Perez in the presence of a notary public. Respondent concedes that due to Lt. Perez lacking the mental, cognitive, physical, and legal capacity to understand the nature and legal effect of executing the option selection form and application for disability retirement, the purported execution by Lt. Perez of the option selection form and of the application for disability retirement are void and invalid. Respondent concedes that the option selection form is invalid and void ab initio, and Lt. Perez’s earlier selection in 1997, pursuant to section 121.091(8), should be reinstated under the FRS Investment Plan. Respondent concedes that with Lt. Perez having died in 2014 with no surviving spouse, and with Petitioner being his sole surviving child at the time of his death, that the full retirement benefits of $234,035.81, to which Lt. Perez was entitled under his Investment Plan designation of beneficiary should be paid directly to Petitioner. Respondent asserts, however, that the payment of the retirement benefits to which Petitioner is entitled should be reduced by the amount of the four payments made by Respondent to Lt. Perez, which gross disbursements total $19,833.21, or net disbursements total $17,017.80, making the retirement benefits to which Petitioner is entitled to be $214,202.60 or $217,018.01, not $234,035.81. Respondent’s position is correct because the gross benefits in the amount of $19,833.21 were received by Lt. Perez when the four payments, after applicable required deductions, were deposited into his personal checking account. At hearing, no persuasive and credible evidence was presented indicating whatever happened, if anything, to the net payments of $17,017.80 deposited into Lt. Perez’s checking account. No persuasive or credible evidence was presented indicating whether any of the monies were withdrawn from the checking account before or after Lt. Perez’s death. No persuasive or credible evidence was presented indicating that Ms. Perez-Crespo used, diverted, or withdrew any of the funds from the checking account. No bank statements were offered into evidence. Petitioner, who is the personal representative of the estate, did not testify. No accounting of the assets of Lt. Perez’s estate was presented. Even if any of the $17,017.80 was used or diverted by Ms. Perez-Crespo after being deposited into Lt. Perez’s checking account, Petitioner, as personal representative of the estate of Lt. Perez, might have a remedy in another forum to recover such funds from Ms. Perez-Crespo. In any event, such a potential claim, not borne by the evidence presented in the instant proceeding, is beyond the scope of this administrative proceeding. Based on the evidence adduced at hearing and the stipulations of the parties, it is clear that $19,833.21 was received by Lt. Perez when $17,017.80 (after the required deductions) was deposited into his personal checking account. To require Respondent to pay the entire amount of $234,035.81 would result in overpayment of $19,833.21. Respondent is, therefore, entitled to a deduction in the amount of the gross disbursement of $19,833.21.4/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Respondent, Department of Management Services, Division of Retirement, enter a Final Order requiring that that the total sum of $214,202.60 be returned by Respondent to the FRS Investment Plan for the benefit of Lt. Perez, deceased, and that pursuant to section 121.091(8)(a), Florida Statutes, that Petitioner, Aubrie-Elle Perez, as the sole surviving child of and the sole beneficiary of Lt. Perez, immediately receive the amount of $214,202.60. The undersigned reserves jurisdiction to address issues regarding Petitioner’s entitlement to, and the amount of, attorneys’ fees, costs, and interest. DONE AND ENTERED this 23rd day of January, 2017, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of January, 2017.
The Issue Whether Petitioner transferred to the Florida Retirement System (FRS) Investment Plan from the FRS Pension Plan, pursuant to section 121.4501, Florida Statutes (2012).1/
Findings Of Fact Petitioner is a 32-year-old former employee of the Florida Department of Corrections. Petitioner was employed as a correctional officer at the Northwest Florida Reception Center in Washington County, Florida from June 14, 2004, until he resigned on July 23, 2012. Petitioner is a fully vested member of the State of Florida Retirement System (FRS). Respondent, State Board of Administration, is the agency with the duty and responsibility to administer the State of Florida Retirement System Investment Plan. See § 121.4501(8), Fla. Stat. In mid-2011, Petitioner decided to look for other employment and began researching his retirement options. Petitioner discovered he needed to be employed by the State for six years to be fully vested in the FRS and have the option to transfer from the FRS Pension Plan (a defined benefit plan) to the FRS Investment Plan (a defined contribution plan). Sometime between May 1 and 10, 2012, Petitioner accessed the FRS website, either downloaded or printed the FRS “second election form” –- the paperwork required to transfer his retirement account to the Investment Plan -- and completed the form. Although Petitioner does not remember the exact date, Petitioner approached Ms. Charity Pleas, Secretary Specialist for the Chief of Security, and asked her to file his second election form for him by facsimile transmission (fax). Ms. Pleas testified she faxed the document to the number on the form. Petitioner observed Ms. Pleas place the paperwork into the fax machine, dial a fax number, complete the fax transmission, and retrieve a fax transmission confirmation report. Ms. Pleas handed the confirmation report to Petitioner. Petitioner cannot be certain what became of the confirmation report or his original second election form. Petitioner did not contact anyone with the Florida Retirement System to confirm receipt of his second election form. Ms. Pleas often sends faxes on behalf of employees at the Reception Center where she has been employed since 2007. Ms. Pleas occasionally receives complaints from employees that a fax she has sent on their behalf was not received by the other party. Sometimes this happens despite the fact that she has received a fax confirmation report. Petitioner began employment in the private sector with Power South on July 30, 2012. In early August 2012, Petitioner contacted the FRS to find out if the retirement funds were available to move into a 401K account with his new employer. He spoke with someone named “Jason” who said there was no record of a second election having been made by Petitioner. An investigation ensued. Aon Hewitt is the Plan Choice Administrator for the FRS Investment Plan. Aon Hewitt provides services to the SBA in connection with the Investment Plan, including processing enrollments and second elections. Lynette Murphy is Benefits Operations Manager for Hewitt Associates, LLC, a division of Aon Hewitt. Ms. Murphy researched the issue of whether Petitioner’s second election form was received by Aon Hewitt. She conducted several searches of the company’s files, including a search by Petitioner’s name (both first and last names) and social security number. In case the second election form had been received without a member name or social security number, Ms. Murphy also conducted a search on the numbers “99” and “90,” the codes assigned to forms received which are unidentifiable. Ms. Murphy’s search included not only forms received between April 1, 2012 and July 30, 2012, but also all dates covering the life of Petitioner’s eligibility and enrollment in the FRS. Ms. Murphy was unable to find any record of a second election form filed by Petitioner.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the State Board of Administration enter a final order denying the relief requested in Petitioner’s Petition for Hearing. DONE AND ENTERED this <day> day of <month>, <year>, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK 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 <day> day of <month>, <year>.
The Issue The issue in this matter is whether Respondent has forfeited his rights and benefits under the City of Tampa General Employees Retirement Fund pursuant to section 112.3173, Florida Statutes (2009).1/
Findings Of Fact The Fund is a public retirement system as defined by Florida law. The Fund is charged with administering and managing a pension plan for employees of the City of Tampa (the “City”). Respondent was employed with the City from August 1, 1994, through March 16, 2009, when the City terminated his employment. Respondent worked as an Automotive Equipment Operator II in the City’s parks and recreation department. Respondent worked a total of 15 years for the City. By reason of his employment with the City, Respondent was enrolled in the pension plan administered by the Fund. After six years of employment, Respondent vested in the pension plan. According to a Notice of Disciplinary Action, dated March 16, 2009, the City terminated Respondent based on a complaint that he had stolen City property. Specifically, in February 2009, the City received information that Respondent was in possession of a City-owned lawn mower at his residence. After receiving the complaint, the City notified the Tampa Police Department (“TPD”). TPD searched Respondent’s home. TPD did not find a City lawn mower. However, during its search, TPD did discover a spool of weed eater line on Respondent’s porch that he admitted belonged to the City. During a subsequent interview with TPD, Respondent confessed to taking the spool from the City’s supplies without permission. Respondent also divulged that he did occasionally take a lawn mower owned by the City and use it on his property. Following the TPD interview, Respondent was arrested and charged with theft of the City property under section 812.014, Florida Statutes. Respondent, however, was never prosecuted for the crime. After completing a pre-trial intervention program, Respondent’s theft charge was dismissed. The City, however, terminated Respondent’s employment based, in part, on his admission to stealing the weed eater line. Kimberly Marple, an Employee Relations Specialist Supervisor for the City, testified on behalf of the City and explained that the City maintains a zero tolerance policy for removal of or taking City property for personal use. Consequently, when the City learned of Respondent’s admission to TPD that he took City property, he was fired. At the final hearing, Petitioner admitted to “borrowing” the City lawn mower from time to time to use at his home. He expressed, however, that he always returned it to the City. Respondent claimed that he never considered permanently taking the lawn mower. Respondent did, however, confirm that he took the weed eater line from the City, without authority, for personal use and did not intend to return it. Respondent relayed that a spool of weed eater line costs approximately $80. Respondent voiced that he was an exemplary employee for the City during his 15 years of employment. Respondent represented that, prior to this incident, he had never received any disciplinary action from the City. Respondent’s testimony is supported by his annual performance evaluations which record that he dependably and diligently performed his responsibilities for the City parks and recreation department. Respondent’s performance was frequently marked as excellent or outstanding. Based on the evidence and testimony presented at the final hearing, the preponderance of the evidence establishes that the City terminated Respondent’s employment by reason of his admission to theft of City property. Therefore, the Fund met its burden of proving that Respondent must forfeit all rights and benefits to the Fund’s pension plan.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the City of Tampa General Employees Retirement Fund enter a final order finding that Respondent, Robert Ramshardt, a public employee who, by reason of his admitted commission of a “specified offense” under section 112.3173(2)(e), forfeited all rights and benefits in the pension plan administered by the Fund. DONE AND ENTERED this 22nd day of February, 2017, in Tallahassee, Leon County, Florida. S J. BRUCE CULPEPPER 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 February, 2017.
The Issue Whether or not the Respondent failed to immediately place, upon receipt, a five hundred dollar ($500.00) earnest money deposit entrusted to him (as a broker) into an escrow account in violation of Chapter 475.25(1)(k), Florida Statutes, and whether Respondent failed to account or deliver, upon demand from the depositors, the five hundred dollar ($500.00) earnest money deposit which was given to Respondent and which he was not entitled in law or equity to retain.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received, post-hearing memoranda and the entire record compiled herein, the following relevant facts are found. By its Administrative Complaint signed approximately June 26, 1981, the Petitioner, Department of Professional Regulation (formerly Board of Real Estate and presently the Florida Real Estate Commission), seeks to suspend, revoke or take disciplinary action against Respondent, James E. Weiss, as licensee, and against his license as a real estate broker under the laws of Florida. Respondent, a real estate broker, has been issued license number 0094382 and was so licensed with Petitioner during times material herein. Respondent advertised a house for sale and Charles Raulerson, Jr., and his wife Rhonda, contacted Respondent to see about purchasing the house. Respondent advised Rhonda Raulerson that the house was owned by a James Spurgeon who would finance Raulerson's purchase of the house with a purchase money mortgage. The Raulersons were also to assume the existing mortgage in effectuating the purchase of the house within three (3) years pursuant to a contract for deed. To effectuate the purchase, Respondent and the Raulersons entered into a contract for the purchase and sale of the real estate which Respondent advertised. In connection therewith, Rhonda Raulerson gave Respondent a five hundred dollar ($500.00) cash deposit. (Petitioner's Exhibit No. 1) The deposit was received from Rhonda Raulerson on April 28, 1980, and is evidenced by a receipt from Respondent to Rhonda Raulerson on that date. During this period of time, the Spurgeons had agreed to purchase the subject property; however, prior to the time that the transaction for purchase was closed, the Spurgeons were transferred from the Duval County area to Fort Lauderdale, Florida. While it appears that the Spurgeons initially agreed to complete the purchase of the subject property, inasmuch as they had been approved for a purchase money mortgage with Duval Federal Savings and Loan Association, they later reconsidered and did not purchase the property. Therefore, the Raulersons were without a mortgage to assume as had been contemplated in their offer to purchase. The Raulersons were advised of the Spurgeons' decision not to close the real estate transaction to purchase the subject residence during July of 1980. The Raulersons thereafter immediately demanded that Respondent return their earnest money deposit. Respondent refused to return the Raulerson's deposit as demanded in their letter to Respondent dated December 6, 1980, and advised therein that the Spurgeons had not released their contractual rights pursuant to the deposit receipt contract and that the Raulersons should pay attention and review paragraphs 9, 23A and 23B of the deposit receipt contract. Respondent indicated to the Raulersons that he would submit their request for release of their deposit to the Spurgeons if he could locate them and obtain a release of the funds "which they have an interest"; that in the event the Florida Department of Professional Regulation would indemnify him from any loss arising from the Spurgeons' forfeiting (his) contract rights and if they (Raulersons) would dismiss, through the Department, their complaint which prompted Petitioner's investigation into the matter, he (Respondent) would be happy to disburse to them the Spurgeons' liquidated damages. (Petitioner's Exhibit No. 4.) In this connection, the Raulersons' initiated a complaint with Petitioner on approximately September 9, 1980. (Petitioner's Exhibits Nos. 5 and 6) Petitioner thereafter followed through by investigating the matter which resulted with an interview of Respondent on at least three (3) occasions during the period December through February, of 1980/81. As a result of those interviews by Petitioner's investigator, Robert Maxwell, Respondent submitted a request for an escrow disbursement order which was received by the Petitioner initially during mid-December of 1981. In the Petitioner's handling of Respondent's request for an escrow disbursement order, Respondent was advised of the following procedures which he should follow in instances wherein he either entertained doubt as to the proper disbursement of funds entrusted to him or had received conflicting demands respecting the disbursement of funds entrusted to him. The following procedures were outlined to Respondent: Request that the Board issue an escrow disbursement order which will advise you to whom to give the deposit; or With the consent of all parties, submit the matter to arbitration; or By interpleader or otherwise, seek adjudication of the matter by a court of competent jurisdiction. [Chapter 475.25(1)(d), Florida Statutes (1979). Subsequent to the demands by the Raulersons and Respondent's failure to return the earnest money deposit to the Raulersons, the Raulersons retained counsel and instituted a civil complaint in the Duval County Court (Case No. 81- 918CC, Division G) which resulted in a settlement of the matter through which the Raulersons issued a General Release to Respondent based upon the payment of consideration of the sum of five hundred dollars ($500.00). Additionally, the Raulersons, through their attorney, filed a notice of dismissal of the action with prejudice on approximately October 26, 1981. (Petitioner's Composite Exhibit No. 3) Respondent admits that he did not place the earnest money deposit received from the Raulersons into an escrow account for more than a year after receipt. That deposit by Respondent was not made until April 14, 1981, or one (1) day after Respondent met with Mr. Hoskins of the Petitioner's investigative unit. (Tr. 65 and Respondent's Exhibit No. 2) Respondent admits that the five hundred dollars ($500.00) was a cash deposit which, according to him, was left in his file through error and that it was not placed into an escrow account until April 14, 1981. (Tr. 73-74) Finally, Respondent contends that he failed to return the Raulersons earnest money deposit to them based on the advice of his attorney to the effect that the Spurgeons, pursuant to the deposit receipt contract, in fact had a contract interest in the deposit and without a release by the Spurgeons of such rights, the Spurgeons could turn to him (Respondent) and demand a return of the deposit. (Tr. 70-71) Respondent, in this regard, testified that he attempted to get releases from the Spurgeons via telephone and by three (3) written requests; however, no documentary or other supportive evidence was offered to support his claim in this regard. (Tr. 71)
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby RECOMMENDED: That the Respondent's license number 0094382 be suspended for a period of ninety (90) days. RECOMMENDED this 9th day of September, 1982, in Tallahassee, Florida. JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of September, 1982.
The Issue Whether Petitioner, Heike Stoll (f/k/a Heike Bybee), has standing to assert a claim or right to any portion of her former husband’s Florida Retirement System (“FRS”) benefits as an “innocent spouse” pursuant to Article II, Section 8(d) of the Florida Constitution, and section 112.3173, Florida Statutes (2017).1/
Findings Of Fact Mr. Bybee is a member of the FRS Investment Plan by virtue of his former employment as a deputy with the Sarasota County Sheriff, an FRS participating employer. On October 6, 2017, in Sarasota County Circuit Court Case Number 2017CF001018, Mr. Bybee was found guilty by jury verdict of the following felonies under Florida law: Kidnap- Commit or Facilitate Commission of Felony; Crimes Against Person-Exploitation Elderly or Disabled Adult $20,000 to $100,000 dollars; Fraudulent Use of Personal Identifying Information (8 counts); and Computer Crime to Defraud or Obtain Property (3 Counts) (referred to collectively as the “felony convictions”). On October 6, 2017, judgment was entered against Mr. Bybee adjudicating him guilty of the felony convictions. The SBA notified Mr. Bybee that his felony convictions required forfeiture of his FRS benefits under section 112.3173(2)(e), Florida Statutes. Mr. Bybee did not file a petition for hearing to challenge the Notice of Forfeiture or otherwise assert that his felony convictions did not warrant forfeiture of his FRS benefits under the forfeiture statute. Mr. Bybee’s interest in his FRS benefits is subject to forfeiture due to his commission of the crimes, and his felony convictions. Ms. Stoll was married to Mr. Bybee on August 27, 1994. On or about May 9, 2017, Ms. Stoll filed her Petition for Dissolution of Marriage in Manatee County (Circuit Court Case Number 2017-DR-2067) asserting her interest in, inter alia, Mr. Bybee’s FRS benefits. On December 8, 2017, Ms. Stoll filed an “FRS Investment Plan Petition for Hearing” asserting her claim of entitlement to her spousal share of Mr. Bybee’s FRS benefits as an “innocent spouse.” On February 26, 2018, Mr. Bybee and Ms. Stoll executed a Marital Settlement Agreement. As to retirement accounts, Mr. Bybee and Ms. Stoll agreed to the following: Retirement Accounts/Pension. Wife shall receive as her sole property, and all equity and value therein, all retirement accounts and/or pensions in the Husband’s sole name, in the joint name of the parties, and/or in the Wife’s sole name, free and clear of any claims or interest which Husband may have thereto. Specifically, Husband has a pension and/or retirement account through the County of Sarasota Sheriff’s Department, State of Florida. Wife shall receive as her sole property, and all equity and value therein, in said pension and/or retirement account, free and clear of any claims or interest which Husband may have thereto. Further, Husband assigns, transfers, and relinquishes any legal or equitable claims, causes of action, or remedies of any nature against the pension and/or retirement account through the County of Sarasota Sheriff’s Department, State of Florida; and Husband shall fully cooperate with Wife in any and all respects as necessary for Wife to pursue any such legal or equitable claims, causes of action, or remedies related any manner said pension and/or retirement account. Ms. Stoll was not charged with or convicted of any crimes related to Mr. Bybee’s felony convictions. Ms. Stoll’s testimony was credible that she was unaware of Mr. Bybee’s crimes, and had not benefited from them in any fashion. On April 16, 2018, a Final Judgement of Dissolution of Marriage was entered in Manatee County Circuit Court Case Number 2017-DR-2067 that “approved, ratified and incorporated” the marital settlement agreement.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the State Board of Administration issue a final order finding that Petitioner is not entitled to her former husband’s retirement benefits, because he was a public employee convicted of specified offenses; and pursuant to section 112.3173, he forfeited all of his rights and benefits in his Florida Retirement System Investment Plan account upon committing the crimes. DONE AND ENTERED this 23rd day of May, 2018, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK 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 23rd day of May, 2018.
The Issue The central issues in this case are (1) whether Petitioner is eligible for membership in and retirement benefits from the Teachers' Retirement System; and (2) whether Petitioner is entitled to receive as a refund contributions paid by his employing agency and, if so, how much and at what interest rate.
Findings Of Fact Petitioner, currently sixty-six years old, was employed as a professor of economics and finance at the University of South Florida (USF), Tampa, Florida, from September 1965 through August 31, 1981, when he terminated employment. As a member of the teaching faculty, Petitioner automatically became a compulsory member of the Teachers' Retirement System (TRS) and remained a member throughout his tenure at USE. When Petitioner originally enrolled in the TRS in September 1965, he signed an enrollment form entitled "Teachers' Retirement System of Florida, Enrollment Blank New Teachers." The form provided general information concerning the TRS, and included information about contributions, service credit, and service retirement benefits under the TRS. The enrollment form provided in part the following: I understand that the full amount of deductions from my compensation for annuity purposes with compound interest will be returned to me if I leave the service without a retirement benefit or will be paid to my beneficiary if I die in active service. At all times relevant hereto, the TRS required that members make contributions of six-quarter percent of their total salaries to their retirement accounts. Of this amount, six percent went into the TRS member's retirement account and the quarter percent was allocated to the Survivors' Benefits Fund. In addition to the contributions made by TRS members, employers were required to contribute matching funds to the TRS Retirement Fund. While employed at USF, the prescribed six quarter percent of Petitioner's salary was deducted, with six percent appropriately posted to his TRS retirement account. During the time Petitioner was employed at USF, the employer contribution paid by USF to match Petitioner's contribution was $23,846.06. Had Petitioner remained a member of TRS, he would have been eligible to begin receiving benefits in February 1993. While employed at USF, Petitioner was given the option to transfer from the TRS to the newly created Florida Retirement System on five different occasions: December 1970; June 1971; July 1972; January 1975; and January 1979. Through information disseminated by Respondent, TRS members were notified that by transferring to the "new" Florida Retirement System, they would become mandatory members of the federal Social Security System. Petitioner chose to remain in TRS rather than transfer to the Florida Retirement System, thereby foregoing membership in the federal Social Security System. In August 1981, prior to his normal age of retirement, Petitioner terminated his employment with USF and requested that Respondent refund Petitioner's retirement contributions. In making the request, Petitioner completed and signed a form entitled, "Request for Refund," FRS M81. Completion of this form is a requisite for receiving retirement refunds and applies to members of any of the Florida retirement systems. The Request for Refund states: I hereby make application for refund of my accumulated contributions in the Florida Retirement Systems. I do waive for myself, my heirs and assignees all rights, title and interest in the Florida Retirement Systems. On the reverse side of the Request for Refund card, is the following: Under the provision of the Florida Statutes, a member MUST terminate employment before he can obtain a refund. * * * The refund process may be started upon receipt of this application. It may be necessary to issue a second refund after all payrolls on which a member's name appears are received and audited by the Retirement System Office. A member who has ten or more years of creditable service has a vested interest in retirement and may leave his contributions on deposit indefinitely and qualify for deferred retirement. Pursuant to Petitioner's request, the Division refunded $22,153.10 to Petitioner in October 1981. The refund, which was provided in three warrants, included all employee contributions and earned interest posted to Petitioner's retirement account as of the date of the refund. Petitioner's refund was provided in three separate warrants because the system in place, in 1981, was incapable of generating a single check for an amount in excess of $9,999.99. In late 1995 or early 1996, Petitioner called the Division of Retirement to inquire about his benefits under the TRS. Petitioner made after this call after he reviewed his Social Security wage earning history and learned that no contributions had been posted to his Social Security account during the sixteen years he had been employed at USF. Upon reviewing the Petitioner's request, Respondent discovered that $1,692.96 remained in Petitioner's TRS account. Of the amount remaining in Petitioner's account, $292.63 represented Petitioner's employee contributions, and $1,400.33 was earned interest. Respondent's failure to refund Petitioner's $292.63 and the interest earned thereon as soon as these moneys were posted to Petitioner's account was the result of an unintentional accounting error. Under the procedures used by the Division at that time, Petitioner's most recent employee contributions were not posted to his account until November or December 1981. The interest earned on Petitioner's employee contributions were not posted to Petitioner's account until the end of the 1981/1982 fiscal year. This matter is addressed in the Request for Refund which notified members that "it may be necessary to issue a second refund" after all payrolls on which the member's name appears have been posted. After discovering this inadvertent accounting error, Respondent initially agreed to refund Petitioner the outstanding $1,692.96. Subsequently, the Division of Retirement agreed to pay Petitioner $1,692.96 plus six a-half percent interest from October 1981, for a total amount of $4,088.31. The six and a- half percent interest rate is the current rate established by Respondent. Pursuant to Petitioner's request, Respondent has not yet refunded Petitioner's outstanding employee contributions and interest, pending the culmination of this proceeding. At the time Petitioner completed and signed the Request for Refund, it was his intention to obtain all of his contributions and interest. It was not until Petitioner's inquiry in 1995 or 1996 that he became aware that a small amount of his employee contributions and interest thereon had not been refunded. Petitioner believes that because Respondent did not refund all moneys due him, some $1,692.96, he retained membership in the TRS and is now able to retire from that system with a partial benefit. Alternatively, Petitioner asserts that he is entitled to receive as a refund, all contributions paid into his retirement fund, including the contributions paid by USF. According to Petitioner, his understanding and belief in this regard is based on an explanation provided to him by Dr. John Milliken, the Dean of the College of Business at USF. Petitioner's understanding in this regard was not correct. At some point prior to Petitioner's terminating his employment at USF, he reviewed a Summary Plan Description (SPD) which was issued by the Division of Retirement in 1980. One section of the SPD, Refund of Contributions, provides in relevant part: If a member terminates employment he may elect to receive a refund of all the contributions he has made to the retirement system, except those made to the Survivors' Benefit Trust Fund. Furthermore, the first paragraph of the Summary Plan Description states: This brochure contains basic information on the Teachers' Retirement System, established by Ch. 238, Florida Statutes. It is not intended to be a comprehensive review of the Teachers' Retirement System and should not be used in place of the law on questions of interpretation and appli-cation. Any question which are not answered by this brochure may be addressed to the Div. of Retirement, . . . . Based on Petitioner's reading of the provision of the SPD quoted in paragraph 20 above, it was his "judgment" and "impression" that any refund prior to retirement, would include both employee and employer contributions and the interest on these contributions. At no time did Petitioner verify his interpretation with the Division of Retirement or the USE Personnel Office.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division of Retirement enter a final order finding that Petitioner, John C. Deiter, is (1) ineligible for retirement benefits under the Teachers' Retirement System and (2) is not entitled to receive employer contributions and interest thereon. DONE AND ENTERED this 3rd day of September, 1997, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELDK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of September, 1997. COPIES FURNISHED: Murray B. Silverstein, Esquire POWELL, CARNEY, HAYES and SILVERSTEIN, P.A. Barnett Tower One Progress Plaza, Suite 1210 St. Petersburg, Florida 33701 Stanley M. Danek, Senior Attorney Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399 A. J. McMullian, III, Director Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399
The Issue The issue is whether, pursuant to section 112.3173, Florida Statutes, Respondent has forfeited his rights and benefits under the City of Tampa General Employees Retirement Plan (Fund).
Findings Of Fact The Fund is a public retirement system as defined by Florida law and is charged with administering and managing a pension fund for employees of the City. Respondent was employed by the City from February 2, 2000, until April 18, 2012, when he was terminated. He worked in various positions, most recently as Acting Lead Specialty Equipment Operator in the Solid Waste and Environmental Program Management/Quality Control program. By reason of his employment with the City, Respondent was enrolled in the pension plan administered by the Fund and was a vested participant. On April 18, 2012, the City terminated Respondent based on a violation of three items in the City's Personnel Manual: neglect of duty by using a City vehicle for an unauthorized purpose; moral turpitude involving the violation of the City Code relating to use of public property; and moral turpitude by engaging in an illegal enterprise. The events leading to his termination are described below. On July 11, 2011, City of Tampa Detective DeGagne was investigating environmental crimes (illegal dumping) in the East Tampa area. After being alerted that illegal dumping had occurred on a vacant lot in the Highland Pines neighborhood, and the debris was immediately picked up by a City vehicle, Detective DeGagne located the City truck involved. Because the truck was under the supervision of Respondent, Detective DeGagne spoke to Respondent who initially explained that code enforcement had told him to pick up the debris. Because Respondent could not identify anyone in code enforcement who gave him that instruction, he was arrested. During a recorded interview with Detective DeGagne later that day, Respondent admitted that on at least two occasions, he was paid $40.00 to pick up the illegally-dumped debris as a favor to a friend. This conduct is a violation of section 838.016(1), which makes it unlawful for a public employee to receive compensation for performing an illicit act. Based on his admission of guilt, the City terminated Respondent effective April 18, 2012.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the City of Tampa General Employees Retirement Fund enter a final order determining that Respondent has forfeited his rights and benefits in the pension fund. DONE AND ENTERED this 28th day of July, 2017, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER 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 28th day of July, 2017. COPIES FURNISHED: Luis A. Santos, Esquire Ford & Harrison LLP Suite 900 101 East Kennedy Boulevard Tampa, Florida 33602-5133 (eServed) Natasha Wiederholt, CPA, GE Pension Plan Supervisor General Employees Retirement Fund City of Tampa 7th Floor East 306 East Jackson Street Tampa, Florida 33602-5208 Dwight Rivera 3324 West Kathleen Street Tampa, Florida 33607-1840
