Findings Of Fact At all times pertinent to the issues herein the Respondent, Linda H. Abraham, was licensed by the State of Florida as a real estate broker under license number 0323486. During the months of February and March 1983 Martha L. Tew owned a parcel of waterfront property located in Panama City Beach which was identified as being for sale by a sign on the property reflecting her husband's real estate company. Her husband was Ronald Eugene Tew and Mrs. Tew also held a salesman's license. Mr. Tew was contacted by Gregory A. Peaden, a contractor and developer in the Panama City Beach area on several occasions prior to March 1983 with offers to purchase the Tew property. The contacts with Mr. Peaden subsequently culminated in a contract dated March 8, 1983, between Greg Peaden, Inc., and the Tews in the amount of, initially, $180,000.00. During the negotiations for the property, Mr. Peaden had introduced the Respondent to the Tews as his broker. When, at the time of Use contract, Mr. Peaden advised the Tews he wanted Respondent to get a commission for the sale, Mr. Tew refused to pay any commission indicating that Respondent had performed no service for him; that he, Tew, was a broker himself; and that he had no intention of paying any commission to the Respondent or to anyone, for that matter. After some further negotiation, a second contract was prepared and agreed upon wherein the contract price was raised to $189,000.00 and the Respondent's commission was to be paid with the additional money from Mr. Peaden. The contract in question executed by the parties on March 8, 1983, reflected that the sum of $5,000.00 deposit was paid to Linda Abraham, Inc., by check. Mr. Tew contends that at this point he was led to believe that Respondent had the $5,000.00 check and, he contends, he would not have signed the contract if he had known that the check had not been delivered and placed in Respondent's escrow account. The actual signing of the contract took place in Respondent's office, a mobile home which she shared with Mr. Peaden's business. This trailer home was described as having Mr. Peaden's office on one end, and Respondent's on the other, with the living-kitchen area in the middle used as a reception area for both businesses. Mr. Peaden contends that once the contract was signed by the Tews, he gave a check drawn on one of his business accounts, that of Peaden and Guerino, a property management company he owned, to his secretary, Judy White, to deposit in Respondent's escrow account and thereafter promptly forgot about the matter until the date scheduled for closing, two months in the future. Ms. white, on the other hand, contends that Mr. Peaden at no time gave her a check for $5,000.00 to deposit to Respondent's escrow account. It is her contention that when she received the contract after it was signed, she, on her own, inserted the receipt portion on the bottom of the second page and signed as having received it merely to complete the contract. At the time, she contends, she did not know if the deposit was received from Peaden or not. She has never signed a contract like this before without a deposit and cannot give any other reason why she did it on this occasion. She is certain, however, that at no time did Mr. Peaden ever give her a $5,000.00 check or tell her to draw one for his signature on March 8, 1983, or, for that matter, at any time thereafter. What is more, neither Mr. Peaden nor the Respondent, at any time after the signing of the contract and prior to her departure under less than friendly circumstances approximately a week or so later, ever asked her whether she had made the escrow deposit or discussed it with her at all. Ms. white contends that she left Mr. Peaden's employ because he expected her to perform certain functions she was unwilling to do. When she left his employ, she did not feel there was any unfinished business that needed her immediate attention. To the best of her recollection, there were no sales contracts or deposits left in or on her desk - only bills. According to Respondent, the $5,000.00 deposit by Mr. Peaden was to stay in her escrow account. She understood Mr. Peaden was going to arrange with the bank to borrow the entire cash payment called for under the contract, including the deposit, and when that was done, it was her intention to give him back his $5,000.00 check. Under these circumstances, the amount in escrow would never be paid to the sellers but would be returned to Mr. Peaden and the Tews would receive the entire cash amount called for by the contract from the proceeds of the bank loan. Respondent also indicated that this procedure had been followed at least once, in a prior transaction. Under the circumstances, it is clear that no deposit was ever received from Mr. Peaden nor was it placed in Respondent's escrow account. Therefore, the contract, dated on March 8, 1983, was false in that it represented a $5,000.00 deposit had been received. The check for $5,000.00 dated March 8, 1983, payable to Linda Abraham, Inc. and drawn by Mr. Peaden on the Peaden and Guerino account with the stub admitted to show the date of issuance, does not establish that it was written on March 8, 1983, as contended. This check, number 1349, comes after two other checks, 1347 and 1348, which bear dates of April 4 and September 7, 1983 respectively. Mr. Peaden's explanation that the checks were drafted out of sequence is non-persuasive. Of greater probative value is the fact that neither Mr. Peaden nor Respondent bothered to review their bank statements on a regular basis. The check in question was drawn on an account not related to the construction and development business of Greg Peaden, Inc. Further, examination of Respondent's escrow account reflects that there were approximately eleven transactions over a three year period even though, according to her, she handled numerous other closings as well as this. Her explanation is that in most cases the attorney handling the closing served as escrow agent even though she was the sales broker. Her explanation is not credible. This appears to be a classic situation of movement of accounts to satisfy a particular end. The contract called for closing of the sale to be held on or before May 8, 1983, in the office of Panama Title Company. May 8, 1983, fell on a Sunday. As a result, the closing would not have been held that day, but it was not held the following day, Monday, May 9, 1983 either. Mr. Peaden admits that he had not checked with Panama Title prior to May 9 to see if everything was prepared for the closing. Instead, he contacted the title company for the first time at approximately noon on May 9. Apparently he received disquieting information because he thereafter called his attorney, Mr. Hutto, and asked him to check with the title company to see if and when the closing would be held. Mr. Hutto's inquiry reflected that the title insurance binder was ready but the closing statement and the package were not because the title company required a copy of the contract. At this point Mr. Peaden immediately had a copy of the contract delivered to the title company but later that day was advised that the closing still could not be held because of the failure to provide a survey. Mr. Hutto indicates that the reason given was that the release clauses called for in the contract required the survey to be furnished though he did not necessarily agree with that. In any event, closing was not held on May 9. At this time both Mr. Peaden and Respondent allegedly became concerned about the $5,000.00 deposit. Admittedly, neither had concerned themselves with it from the time of the signing of the contract. At this point, Mr. Peaden indicates that he examined his bank records which failed to show the deposit being made and his subsequent search of Ms. White's desk finally revealed the check, undeposited, still there. On May 11, 1983, a $5,000.00 deposit was made to the account on which the deposit check was drawn and on the same day, May 11, 1983 check number 1349, in the amount of $5,000.00 was presented against the account. When on May 10, 1983, Mr. Peaden and Respondent went to Mr. Hutto's office the primary reason for the visit was because Mr. Peaden had heard that the Tews were planning to sell the property in question to someone else at a price much higher than that agreed upon for the sale to Peaden. At this point Mr. Hutto indicated that if Peaden so desired, Hutto could "fix up the contract to jam up the works" until he could do something about it. His examination of the contract revealed that it was not recorded or acknowledged and under the laws of Florida, acknowledgment is required in order for a contract to be recorded. Hutto asked the Respondent if she had seen the parties sign the contract and when she said that she had, he had his secretary prepare a jurat. Unfortunately, his secretary prepared an affidavit type notary jurat rather than an acknowledgment and Hutto quickly admits that he did not look at it when it was given back to him. He says that if he had, he would have had it changed but in any event, without looking at what was given him, he gave it to the Respondent with the implication, at least, that she should notarize it and have the contract recorded. According to Hutto, Peaden, and the Respondent, the sole purpose for notarization and recordation was to preserve the status quo to protect Mr. Peaden's interest in the property so that the matter could be adjudicated in a lawsuit which was soon to be filed. Respondent contends she never intended any misconduct throughout this transaction nor did she do any of the things alleged in the Administrative Complaint. She contends she never saw the check which Mr. Peaden allegedly gave to his secretary for deposit to her escrow account. She merely assumed that it was given and never checked to insure that it had been placed in her account. She does not know why Mr. Peaden did not give her the check. When she took the contract to the Tews, she was operating under the assumption that the check had been received but did not verify this to insure that it had. She contends that since she represented the buyer, her duties were limited to insuring that he performed and this made it simple. She did not check on him because she had had so much experience with him, him being by far her largest account, if he said something, she believed him and when the contract was executed, she merely instructed the secretary, Judy White, to make the file and did not check on it again. As to the recordation and the notarization after the fact, she acted upon the advice of counsel, she states, and did what was suggested to her by Mr. Hutto. It should be noted, however, that Mr. Hutto did not represent her but instead represented Mr. Peaden and while because of her long-standing relationship with him and Mr. Hutto, she may have felt safe in relying on his advice, the fact remains that Hutto was not her attorney.
Recommendation On the basis of the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Respondent's license as a registered real estate broker in Florida be suspended for six months and that she pay an administrative fine of $2,000.00. RECOMMENDED this 6th day of June, 1985, in Tallahassee, Florida. ARNOLD H. POLLOCK 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 6th day of June, 1985. COPIES FURNISHED: Arthur Shell, Esquire Department of Professional Regulation Division of Real Estate 400 W. Robinson Street Orlando, Florida 32801 John D. O'Brien, Esquire P. O. Box 1218 Panama City, Florida 32402 Harold Huff Executive Director Division of Real Estate P. O. Box 1900 Orlando, Florida Fred Roche Secretary Department of Professional Regulation 130 N. Monroe Street Tallahassee, Florida 32301 Salvatore A. Carpino General Counsel Department of Professional Regulation 130 N. Monroe Street Tallahassee, Florida 32301
The Issue The issue in this case is whether Respondent is guilty of dishonest dealing by trick, scheme or device in any business transaction in violation of Subsection 475.25(1)(b), Florida Statutes (2008),1 and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency responsible for issuing real estate sales associate licenses and monitoring compliance with all statutes, rules, and regulations governing such licenses. Respondent was at all times relevant to this proceeding a licensed real estate sales associate in the State of Florida and held License No. 3115665. In March 2006, Respondent was introduced to Willie Belle Lewis (Lewis) by a mutual acquaintance. Lewis was interested in selling her house, and Respondent agreed to work for Lewis in that regard. On March 13, 2006, Lewis and Respondent entered into an Exclusive Right of Sale Listing Agreement (the "Agreement"). Under the Agreement, Respondent was to act as Lewis' sales agent for sale of the house. Pursuant to paragraph 7 of the Agreement, Respondent was to receive a commission of six percent of the purchase price. Respondent initially requested a seven percent commission which was the ordinary and customary amount at that time, but agreed to six percent in deference to Lewis' request (and due to the fact that Lewis had recently lost her grandmother and Respondent empathized with her, having just lost her mother). In one version of the Agreement admitted into evidence, there is a notation that any cooperating real estate agent (presumably a buyer's agent) would receive a commission equal to three percent of the purchase price, i.e., one-half of Respondent's six percent commission. Another version of the Agreement admitted into evidence did not address sharing the commission with a cooperating agent. At some point in time (which was not clearly defined during testimony at final hearing) Lewis and Respondent re-negotiated the amount of Respondent's commission.2 Lewis maintains that the re-negotiated commission was three percent; Respondent says the re-negotiated commission was four percent. Respondent's testimony was more credible on this point. The amount of the new commission was not reduced to writing or indicated on either version of the Agreement. There is no indication, for example, what Respondent's commission would have been if a cooperating agent had been involved. It is highly unlikely that Respondent or any other agent would agree to a two percent commission, i.e., one-half of four percent (or 1.5 percent, one-half of three percent). Once the Agreement was signed, Respondent immediately began efforts to sell the Lewis house. Respondent invited Lewis to her (Respondent's) house and offered Lewis plants and flowers from Respondent's yard. Respondent and Lewis dug up various plants and transferred them to Lewis' yard to generate some "curb appeal," i.e., to dress it up for potential buyers. Within days, a potential buyer was found. A Contract for Sale and Purchase (the "Contract") was entered into between Lewis and Mrs. Bibi Khan. Respondent was listed as the seller's agent; no agent was indicated for the buyer. In fact, Respondent agreed to act as buyer's agent as well, performing services as both an agent and a broker. Again, there were two versions of the sales Contract admitted into evidence. On one version, Respondent's signature included only her first name; on the other it included her first and last name. On one version of the Contract, there appears to be "white-out" on Respondent's signature line. Contained and legible under the whited-out portion of the signature is the phrase "3%." Respondent admits she whited out the three percent figure, but that it was done after the closing occurred. The three percent figure appearing at that place in the Contract is confusing. It only makes sense if that was meant to represent Respondent's portion of a six percent commission split between a buyer's agent and a seller's agent. Respondent explained that she whited out the figure because it was not written in both places it was supposed to be. Rather than going through the process of re-doing the entire Contract and re-distributing it to all pertinent parties, she whited it out in one place. The explanation is plausible. However, it seems an unnecessary action inasmuch as the closing had already occurred. When the parties arrived at closing on April 17, 2006, the closing documents--including the HUD Settlement Statement-- indicated a six percent commission for Respondent (as originally stated on the Agreement). Lewis vehemently objected to the commission, saying that it should be three percent as verbally agreed to by her and Respondent.3 Respondent acquiesced at closing and, in front of witnesses, said the commission should be three percent. She asked that a letter be drafted by the closing agent reflecting a three percent commission. In effect, Respondent re-negotiated her commission at that time. She rues having done so and says she was confused, but she did so nonetheless. The closing was only the third closing Respondent had taken part in since becoming licensed. She was not very experienced with the process and seemed to be thinking she was getting a four percent commission, even when three percent was being discussed.4 It is clear, however, that Respondent did verbally agree to a three percent commission during the closing. The closing agent told Lewis to return on Monday and she would re-calculate the commission and provide Lewis with a final check in the appropriate amount. Meanwhile, Respondent attempted to contact Lewis over the weekend to discuss the discrepancy. Respondent wanted to remind Lewis they had agreed on four percent despite what she said at the closing. All attempts at communication with Lewis over the weekend were futile. When Lewis returned to the closing office on the following Monday, she found the check to still be in error as it reflected a four percent commission instead of a three percent commission. Apparently when Respondent advised the closing agent about her mistake regarding the amount of the commission, Respondent still maintained that the verbal agreement was for four percent. This was contrary to her statements during the closing and is not substantiated by any written documentation. Respondent directed the closing agent to issue a check reflecting a four percent commission, instead of the six percent commission reflected on the Agreement. Lewis ultimately, under protest, accepted her $74,264.92 check reflecting a four percent commission to Respondent. The check contained a shortage of $1,600, if a three percent commission had been applied. Lewis continued to seek repayment of the $1,600 she believed she was entitled to receive. Subsequently, Respondent discussed the entire dispute with her sales team and decided that the disputed amount ($1,600) was not worth fighting about. A check was then sent to Lewis in that amount.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Business and Professional Regulation, Division of Real Estate, imposing a fine of One Thousand Dollars ($1,000) against Respondent, Marian Lemon Coaxum. DONE AND ENTERED this 26th day of November, 2009, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN 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 26th day of November, 2009.
The Issue The issue in this case is whether the Respondent, Department of Revenue (Respondent or Department), may levy on the Petitioner’s bank account in order to satisfy a tax liability owed to the Respondent. The Respondent asserts the Petitioner, Business Depot-Accounting and Tax Center, Inc. (Petitioner), owes the Department for delinquent sales tax, interest, and penalties.
Findings Of Fact The Respondent is the state agency charged with the responsibility of collecting sales and use tax owed to the State of Florida. See § 213.05, Fla. Stat. (2006). At all times material to the allegations of this case, the Petitioner was responsible for collecting and remitting to the Department sales and use tax. The return forms itemizing information for these payments require the taxpayer, Petitioner, to represent gross sales, exempt sales, as well as other data that the Department uses to compute the amount that must be remitted to the state. In this case, after extensive communications with the Petitioner, the Department determined that $10,524.20 was owed for taxes, penalties, and interest. This amount was calculated based on estimates of the delinquency. A Notice of Final Assessment dated August 28, 2006, was issued by the Department to the Petitioner that outlined the amounts claimed to be owed. On or about September 27, 2006, the Petitioner responded to the notice and, under oath, represented that the tax returns were filed. The Department took the Petitioner’s representations into consideration and re-calculated the tax liability owed by the Petitioner. Currently, the Department asserts that the Petitioner’s delinquent amount is $278.46. Accordingly, when that amount remained unpaid, the Department sought a tax warrant, gave notice of its intent to levy on the assets of the Petitioner, and provided notice that it intended to collect monies against the Petitioner’s bank account at Regent Bank. The Department issued a Notice of Freeze to the Regent Bank that instructed it not to transfer, dispose of, or return assets belonging to the Petitioner. The Department also gave notice to the Petitioner of its intent to levy on the bank account with a formal Notice of Intent to Levy. The Petitioner challenged the notice by seeking an administrative hearing. The Petitioner did not appear at the hearing and did not offer any evidence in support of its challenge. The Petitioner’s letter dated September 28, 2006, was not submitted within twenty days of the issuance of the Notice of Final Assessment.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a Final Order sustaining the Notice of Intent to Levy against the Petitioner’s assets in the amount of $278.46 to satisfy the liability owed by the Petitioner to the Department. DONE AND ENTERED this 2nd day of May, 2007, in Tallahassee, Leon County, Florida. S J. D. Parrish 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 2nd day of May, 2007. COPIES FURNISHED: S. G. Ross Business Depot-Accounting & Tax Center, Inc. 4611 South University Drive, Suite 455 Davie, Florida 33328 John Mika, Esquire Assistant Attorney General Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Bruce Hoffmann, General Counsel Department of Revenue 501 South Calhoun Street The Carlton Building, Room 204 Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 501 South Calhoun Street The Carlton Building, Room 104 Tallahassee, Florida 32399-0100
Findings Of Fact Respondent is the state agency authorized to administer and enforce provisions of Chapter 520, Florida Statutes, regulating the granting or denial of applications for Home Improvement Contractor Licenses. On November 30, 1988, Petitioner submitted an application on behalf of a corporation known as "The Durocoat Company" (Durocoat) to Respondent for licensure as a home improvement contractor. On that application, Petitioner disclosed the identity of the two principals of the corporation and the position held by those two individuals. Petitioner listed himself as the president of the corporation and another individual, Russell W. Black, as the corporation's vice-president. Each principal owns 50 percent of the corporation. Following the section of the application providing for the disclosure of the identities and addresses of business principals, a number of questions are listed and the person executing the form is required to provide an "X" in a block to indicate a "yes" or "no" answer to each of those questions. Question number four reads as follows: Are there unpaid judgments against the applicant or any of the persons listed above? If "yes" attach a copy of the complaint and judgment(s). Petitioner placed an "X" in the space allotted for a "yes" answer to the inquiry regarding unpaid judgments against the persons listed as business principals, namely himself and Mr. Black. Petitioner then attached a copy of a document entitled "Notice of Levy" issued by the Internal Revenue Service (IRS) of the United States Department of the Treasury. In sum, the notice certifies the existence of a tax lien against Mr. Black, Durocoat's vice-president, in the amount of $27,546.25. It is undisputed by the parties that creditors held unpaid judgments against Petitioner at the time he submitted the application on November 30, 1988, and that he failed to attach copies of those judgments to the application. Further, Petitioner acknowledged at the final hearing that he was aware at the time of submittal of the application of the existence of one of these judgments. That judgement, entered in favor of The American Express Company (American Express) for $7,602, has existed since September of 1987. In mitigation of his failure to disclose the American Express judgement, Petitioner testified at hearing that he didn't have a copy of the judgement at the time he filed the application and was unaware of the requirement that he should attach a copy. In view of his action in attaching a copy of the existing tax lien against Mr. Black to the application, Petitioner's testimony that he was unaware that he should attach copies of unpaid judgments is not credited. A copy of Petitioner's credit report, introduced at final hearing by Petitioner, discloses that a business known as "Speeler Marine" obtained a judgement against him in the amount of $250 in March of 1986. Petitioner testified at hearing that he was unaware of the existence of this judgement. No settlement discussions have been initiated by him with the creditor. Petitioner's credit report further discloses that an outstanding loan to Petitioner in 1985 in the amount of $36,000 by a financial institution identified as "Sun Bank" is classified as a "bad debt, placed for collection." Petitioner testified that this debt represents loan funds obtained in a previous business venture and is the subject of settlement negotiations and that he has repaid $4,000 of the amount at the present time. Petitioner's testimony also establishes that the credit report's disclosure of a 1987 foreclosure certificate of title to real estate represented real property located in Gainesville, Florida, which Petitioner had taken in trade for money owed to him. In view of the distance to that city, Petitioner testified that he simply chose not to pay off the existing mortgage on the property or oppose foreclosure action by the mortgage holder. A representative of Nationwide Chemical Coating Company (Nationwide) testified at the final hearing regarding that company's business relationship with Petitioner's corporation. Since February of 1988, Nationwide has sold supplies valued at $250,000 to Durocoat. The company has always paid charges within the 30 day required time limit and is considered to be a "class A" customer. In regard to the federal tax lien which Petitioner attached to the application, Russell W. Black testified that the lien resulted from the disallowance by IRS of a tax shelter investment of $34,000 made by Black in 1977 or 1978. Black was notified by IRS in 1981 that the tax shelter was not considered to be a valid deduction for tax purposes. The amount owed by Black to IRS in 1981 was $20,630.64. The amount is now $27,546.25 and, according to Black, is still unpaid because he doesn't have the money. On advice of counsel, he has not contacted IRS to schedule payments on the debt. Respondent denied Petitioner's application by letter dated January 13, 1989, stating that Petitioner's failure to attach copies of the unpaid judgments against himself constituted a material misstatement of fact sufficient to authorize the denial. The letter further stated that the unpaid judgments, along with the federal tax lien against Mr. Black, demonstrated a lack of financial responsibility by both individuals and constituted an additional ground for denial of the application.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered denying Petitioner's application for licensure. DONE AND ENTERED this 24th day of August, 1989, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of August, 1989. APPENDIX The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings. Petitioner's proposed findings consisted of 10 unnumbered paragraphs which have been numbered 1-10 and are treated as follows: 1-8. Addressed in part, remainder rejected as unnecessary. Rejected, unsupported by direct admissible evidence. Rejected, unnecessary to result reached. Respondent's Proposed Findings. 1-2. Addressed. 3-4. Rejected, unnecessary. 5-11. Addressed in substance. COPIES FURNISHED: John L. Riley, Esq. 2325 Fifth Avenue North St. Petersburg, FL 33713 William W. Byrd, Esq. Assistant General Counsel Office Of The Comptroller 1313 Tampa Street, Suite 615 Tampa, FL 33602-3394 Hon. Gerald Lewis Comptroller, State of Florida Department of Banking and Finance The Capitol Tallahassee, FL 32399-0350 Charles Stutts, Esq. General Counsel Department of Banking and Finance The Capitol Plaza Level, Room 1302 Tallahassee, FL 32399-0350
The Issue The issue is whether Petitioners, Judith C. Cleary and Charles B. Houck (Petitioners or Ms. Cleary and Mr. Houck), are entitled to an award of attorney's fees against Respondent, Department of Financial Services (Respondent or the Department), pursuant to section 57.111, Florida Statutes (2009).1/
Findings Of Fact The underlying proceedings were initiated by Respondent on February 22, 2010, by the issuance of substantively identical Administrative Complaints against Petitioners. Petitioners timely requested administrative hearings to contest the charges against them, and the cases were forwarded to the Division of Administrative Hearings where they were consolidated for hearing. Count 1 of each Administrative Complaint charged Petitioners with willfully misrepresenting and or omitting material information in order to induce Mr. and Mrs. Nagle to cash in another annuity they held in order to purchase an annuity sold by Petitioners. Included in the alleged misrepresentations or material omissions were: misrepresenting that there would be no surrender charges to withdraw the entire amount of the new annuity after one year, when in fact there would be a 15 percent surrender charge; falsely representing that the annuity would earn the Nagles ten to 20 percent returns; and (3) misrepresenting the suitability of the Nagles to purchase the annuity by misrepresenting the Nagles' net worth and by misrepresenting the Nagles' investment objective as long-term, in a form Petitioners submitted to the insurance company issuing the annuity. Count 2 of each Administrative Complaint charged Petitioners with similar conduct in order to induce the Nagles' son, Robert, to purchase an annuity. Included in the alleged misrepresentations or material omissions were: misrepresenting that there would be no surrender charges to withdraw the entire amount of the new annuity after one year, when, in fact, there would be a 15 percent surrender charge; and falsely representing that the annuity would earn Robert Nagle ten to 20 percent annual returns. Petitioners do not dispute that if the allegations charged in the Administrative Complaint had been proven by clear and convincing evidence, then Respondent would have established the statutory violations alleged as the predicate for taking disciplinary action against Petitioners' insurance agent licenses. Petitioners also acknowledge that Respondent initiated the disciplinary actions against them on the basis of two complaint letters received by Mrs. Phyllis Nagle, the attestation of Mrs. Nagle to the material allegations in an affidavit, and a corroborating complaint letter by Mrs. Nagle's son, Robert Nagle. After a full evidentiary hearing, a Recommended Order issued in the underlying disciplinary actions determined that the more credible evidence failed to establish the allegations in the Administrative Complaints. In particular, the undersigned weighed the credibility of testimony by Robert Nagle and by Petitioners at the final hearing, as well as deposition testimony by both Mr. and Mrs. Nagle. The question posed in this case, however, is not whether credibility judgments caused the Department to ultimately not prevail in its charges against Petitioners. Instead, the question here is whether Respondent had a reasonable basis, in law and in fact, at the time it initiated the underlying disciplinary actions. In this regard, Petitioners contend that the Department's investigation file contained documents from the insurance company issuing the annuities that contradict the allegations in the Administrative Complaints. Petitioners point to three documents in particular. The first document was a customer survey response submitted by Mrs. Nagle to the insurance company after she purchased the annuity from Petitioners. Her completion of the survey form indicated that she knew that "[s]urrender charges are imposed on premature full withdrawal"; that she considered the "annuity to be a long-term investment"; that she did "not intend to use these funds to meet current expenses"; and that Petitioners reviewed her "financial status . . . and other pertinent information to determine whether this annuity purchase" was suitable to her. The other document claimed to contradict the allegations in the Administrative Complaints was the Nagles' annual statement showing a yield of 5.66 percent, which was different than the 2.6 percent yield claimed by Mrs. Nagle in her complaint letters or affidavit. Finally, Petitioners point to statements of understanding signed by the Nagles, showing the surrender charges that would be imposed for early withdrawals. None of these documents conclusively refute the charges in the Administrative Complaint. For example, with respect to surrender charges, the Nagles' complaints assert that Petitioners represented that there would be no surrender charges for a withdrawal after one year. Mrs. Nagle's survey form only acknowledged that there would be surrender charges for "premature" withdrawal. It certainly would have been possible to reconcile these two concepts in that Mrs. Nagle may have been thinking that "premature" withdrawal, as used in the survey form, was a withdrawal in less than one year. The response in the survey form to the "surrender charge" question does not conclusively contradict Mrs. Nagle's complaint and affidavit, nor does it conclusively contradict the allegations in the Administrative Complaint. Similarly, the responses in the survey form about suitability do not conclusively contradict the allegations in the Administrative Complaint. The annual statement likewise does not conclusively contradict the allegations in the Administrative Complaint, even though the yield shown is somewhat different from the yield Mrs. Nagle referred to in her complaint. Whether the yield was actually 2.6 percent or 5.66 percent, the material allegations in the Administrative Complaint were that Petitioners misrepresented that the yield would be 10 to 20 percent per year. These allegations and the complaints on which they were based, were not so plainly lacking in credibility that no reasonable agency would have proceeded with charges. Finally, the signed statements of understanding showing that surrender charges would be imposed for early withdrawals do not contradict the Nagles' complaints or the allegations in the Administrative Complaint. Although the undersigned ultimately found against the credibility of the Nagles' complaints, those complaints were that Petitioners made oral representations assuring the Nagles that there would be no surrender charges after one year, even though the policy forms themselves said otherwise. The ultimate lack of credibility of the complaining witnesses' testimony was not so clear that no reasonable agency would have prosecuted the claims. In short, Respondent had a reasonable basis in law and in fact, following a reasonable investigation, to make the allegations and to charge the statutory violations it did in the Administrative Complaints. The documentation gathered in the investigation did not conclusively contradict the factual allegations, and the credibility of the complainants was not so obviously lacking that no reasonable agency would have made the allegations in the Administrative Complaints. And it is beyond dispute that if those factual allegations had been proven, the charged statutory violations would have been established. Thus, it cannot be said that Respondent's action in initiating the disciplinary proceedings against Petitioners was unreasonable governmental action.
The Issue Whether or not Petitioner Robert R. Hambley is entitled to an award of attorney's fees pursuant to Section 57.111, Florida Statutes.
Findings Of Fact This case arises in the wake of Robert R. Hambley v. Department of Professional Regulation, DOAH Case No. 88-4788, for formal administrative proceeding stemming from a complaint filed against Petitioner on September 28, 1987. On July 5, 1989, the undersigned Hearing Officer entered a Recommended Order imposing an administrative fine against the Petitioner in the amount of $1,000.00 and placing the Petitioner's license on probation for a period of one (1) year. Petitioner did not file exceptions to the subject recommended order. On August 22, 1989, the Respondent, Department of Professional Regulation, Division of Real Estate, rejected the proposed order and revoked the Respondent's license. Thereafter, Petitioner retained the services of the law firm of LARSON, CONKLIN, STANLEY, PROBST & BOBENHAUSEN, P.A. to represent him, which attorney's filed an appeal in the Second District Court of Appeal contesting the Division of Real Estate's Final Order, specifically the aggravation of the penalty, to wit, revocation of Petitioner's license. In connection with Petitioner's legal representation, he incurred reasonable costs and fees in the amount of $504.49 and $3,393.00, respectively. On October 5, 1990, the Second District Court of Appeal entered its order affirming the findings as found by Recommended Order, but reversed and remanded for implementation of the recommended penalty of $1000.00 and rejecting the recommended penalty of probation, since that was not an authorized penalty at the time of the hearing. The basis of the Court's decision is that Respondent failed to adequately comply with Section 120.57(1)(b)(10), Florida Statutes, in order to properly increase the severity of the recommended penalty. See Bernal v. Department of Professional Regulation, 517 So.2d 113, (Fla. 3d DCA 1987), affirmed 531 So.2d 967 (Fla. 1988). Thereafter, on October 10, 1990, the Respondent filed a motion for rehearing which motion was denied on November 1, 1990. On November 11, 1990, a Mandate issued from the Second District Court of Appeal and Petitioner's license was reinstated on November 21, 1990, with Respondent issuing a Final Order rescinding its prior order of August 15, 1989, and by issuing a supplemental Final Order on December 4, 1990. That December 4, 1990, order implemented the recommended penalty with the exception of probation which was not statutorily authorized. The Administrative Complaint which was filed jointly against Petitioner was a six count administrative complaint and the entity through which he dealt, Real Pro Associates, Inc. Petitioner was found guilty of participating in five transactions which conduct amounted to proscribed conduct within the purview of Subsection 475.25(1)(a), Florida Statutes, by paying real estate commissions totaling over $28,500.00 to Paul George, an unlicensed person. Petitioner was also found guilty of culpable negligence and breach of trust in a business transaction in violation of Subsection 475.25(1)(b), Florida Statutes, for having failed to inform or otherwise disclose to Stewart Fidelity Title Company, the company which handled the closing for the transactions, that the stated escrow deposits were never placed in an escrow account as represented in the contracts for sale and purchase which would alert the lender that the purported purchaser had a "no equity" position in the purchases. Petitioner was, via Recommended Order, required to pay an administrative fine of $1,000.00 within thirty (30) days of the entry of the Final Order. Petitioner was found guilty of all violations for which he was cited in the Administrative Complaint filed by Respondent and a monetary penalty was imposed. Respondent was substantially justified in asserting that the Petitioner was in violation of the real estate licensing law when it issued the subject complaint. That proceeding was premised on a reasonable basis in law and fact when it was initiated. See Miller v. Department of Professional Regulation, Division of Real Estate, DOAH Case No. 89-5042F, 12 FALR 2312, 2314 filed 5/16/90. The Florida Real Estate Commission enhanced the penalty to recommendations which were within the parameters set forth in the disciplinary guidelines of the Florida Real Estate Commission as provided for by Rule Sections 21V-24.001(2) and (3), Florida Administrative Code. The rule sections provided that the Petitioner Hambley could have been fined, for such violations, up to $1,000.00 per count and may have had all his licenses, registrations, certifications and permits penalized as follows: (h) 475.25(1)(b) - Up to 5 years suspension or revocation. [Emphasis supplied] (n) 475.25(1)(h) - Up to 2 years suspension. Petitioner has not demonstrated that it was a prevailing small business party under Section 57.111, Florida Statutes. Moreover, the actions of the Florida Division of Real Estate were substantially justified as defined by Subsection 57.111(3)(e), Florida Statutes. This is borne out by the findings as found by the undersigned Hearing Officer, which provides both a reasonable basis in law and fact as well as substantial justification of the administrative action when it was initiated. Particularly, the complaint against Petitioner was reviewed by a probable cause panel on September 15, 1987. That material which was reviewed by the panel included an investigative report and documentary evidence, all of which was presented to the panel and ultimately to the undersigned Hearing Officer. Appended to the investigative report was some 30 pages of exhibits which provided an adequate basis to support the charges of culpable negligence and breach of trust in a business transaction.
The Issue The question presented in this case is whether Petitioner is entitled to an award of costs and attorneys’ fees pursuant to Section 112.317(8), Florida Statutes, and Florida Administrative Code Rule 34-5.0291.
Findings Of Fact Robert Burgess (Burgess) was the Santa Rosa County Property Appraiser from 1984 until December 31, 2000. He continues to reside in Santa Rosa County. Leon Cooper (Cooper) is a former employee of Robert Burgess, and qualified as a candidate for the Property Appraiser of Santa Rosa County on April 12, 2004, to run against the incumbent, Greg Brown (Brown), the Petitioner in this case. Brown was elected and took office on January 1, 2001, and in 2004 was running for re-election for the first time. Burgess supported Cooper's candidacy and opposed Brown's re-election bid in 2004. On April 12, 2004, the day Cooper qualified to run, Burgess signed an ethics complaint to the Florida Commission on Ethics alleging that Brown had reinstated a religious tax exemption for the Spiritual Life and Healing Waters church on November 14, 2003, and deleted taxes assessed against said church for the tax years 2000 through 2003. Burgess alleged that Brown did this corruptly in return for the political support of the owner of the church, Ms. Lovie Grimes in the 2004 election. He further alleged that Brown also did this to garner the support of Grimes to have Cooper terminated as an employee of the Florida Department of Revenue. Burgess filed his complaint in concert with that of Hilton Kelly, who is the subject of a companion case considered at the same time as this case, but the subject of a separate order, involving alleged favors regarding another property owner. Both complaints were motivated by the desire to impugn Brown's character and the performance of his elected duties, i.e., to injure Browns reputation. The Burgess complaint was fully investigated by the Commission. The investigation revealed that, prior to Burgess' leaving office, a determination to eliminate the tax exemption for the Spiritual Life and Healing Waters Church was made. The investigation revealed that notice that the exemption was eliminated was not provided to the property owner, Grimes. The lack of proper notice occurred during Burgess' tenure in office. Taxes were assessed as a result of this action by Burgess and Brown, and after Brown came into office, Grimes was notified of the pending tax sale of tax liens against her property. Grimes protested, stating that she had not received notice of the assessment of taxes. Brown caused this matter to be investigated by a member of his staff, Chief Deputy Property Appraiser Lorenzo Law Drinkard (Drinkard). Drinkard looked into the matter and determined that notice had not been given, and visited the church where he found pews, religious materials, and a piano. Although services were not being conducted at the time he was there, Drinkard concluded that it was obviously being used as a church. Drinkard determined on November 14, 2003, that the exemption should be re-instated because it was being used as a church and the taxes assessed be eliminated because notice had not been provided. Burgess, as the former Property Appraiser, was uniquely aware of the legal necessities and requirements in granting and removing exemptions. His office failed to provide the required notice to the owner of the elimination of the exemption for property used for religious purposes. During his tenure as Property Appraiser, Burgess had no direct contact with the Spiritual Life and Healing Waters Church regarding the factual basis for removal of the religious tax exemption. Burgess did not examine the public records of his former office to determine the basis for re-instating the exemption. The record reflects that Brown did not write the Department of Revenue about Cooper improperly engaging in campaign activities on state time until February 13, 2004. Burgess knew that determination to re-instate the exemption in question was made on November 14, 2003, and he knew that Brown's letter of complaint to the Department of Revenue regarding Cooper's alleged improper campaigning was on February 13, 2004. Therefore, Brown's alleged motivation in granting the exemption as it might have related to any support for Grimes' support with the Cooper complaint is sequentially impossible. Burgess did make this complaint in concert with the complaint by Kelly for which he provided copies of the records of the Property Appraiser's office. It is clear from the timing that Burgess' motivation was to impugn Brown's reputation. Burgess lacked a factual predicate to assert that Brown's re-instating the religious exemption was done corruptly, was done to improperly influence Grimes and in return for her political support, or to garner her support for Brown's complaint against Cooper. Affidavits were presented in support of attorney fees and costs, and their reasonableness. The Proposed Recommended Order restated those amounts as 94.4 hours at a rate of $175 per hour. The total provided in the Proposed Order was $17,079.50; however, 94.4 times $175 equals $16,250. If one considers that the difference is attributable to law clerks, if one subtracts $16,250 from $17,079, the balance of $559.46, which divided by 8.1 hours for clerks, equals $69.06 per hour for law clerks, which is a reasonable rate. The costs incurred by the attorneys in defending the action and presenting this case were $5,366.56, which are reasonable.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is recommended that the Commission enter its final order awarding the Petitioner the amount of $17,079.50 in attorneys' fees and $5,366.56 in costs. DONE AND ENTERED this 31st day of January, 2006, in Tallahassee, Leon County, Florida. S STEPHEN F. DEAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of January, 2006. COPIES FURNISHED: Albert T. Gimbel, Esquire Mark Herron, Esquire Messer, Caparello & Self, P.A. 215 South Monroe Street, Suite 701 Tallahassee, Florida 32301 Joseph Hammons, Esquire Hammons, Longoria & Whittaker, P.A. 17 West Cervantes Street Pensacola, Florida 32501 Kaye Starling, Agency Clerk Commission of Ethics 3600 Macclay Boulevard, South, Suite 201 Post Office Drawer 15709 Tallahassee, Florida 32317-5709 Philip C. Claypool, General Counsel Commission of Ethics 3600 Macclay Boulevard, South, Suite 201 Post Office Drawer 15709 Tallahassee, Florida 32317-5709
The Issue The issues are whether Respondents K. D. Trinh Investments, Inc., Strong Financial Services, Inc., and Loren Reynolds sold unregistered securities in Florida, in violation of Sections 517.07 and 517.12, Florida Statutes, and engaged in fraudulent transactions with concealment and falsification of facts, in violation of Section 517.301(1)(a), Florida Statutes. If so, an additional issue is what penalty should be imposed.
Findings Of Fact Respondent K. D. Trinh Investments, Inc. (Trinh) has never been registered with the Division of Securities and Investor Protection (Division) as a dealer or investment advisor and its securities have never been registered with the Division pursuant to Chapter 517, Florida Statutes. Neither Respondent Strong Financial Services, Inc. (Strong) nor Respondent Loren Reynolds (Reynolds) has ever been registered with the Division as a dealer or investment advisor. Respondent Alexander Legault (Legault) was the president and general manager of Trinh at all material times. On March 14, 1986, a grand jury in the Eastern District of Louisiana, United States District Court, returned an indictment against Legault for wire fraud, mail fraud, and conspiracy to commit wire and mail fraud. The indictment alleges that Legault attempted to defraud several institutions in connection with a food brokerage scheme. The investments in the present case also involve food brokerage operations, according to the information supplied potential investors. In March 1994, Charles Mortimer of Lake Mary, Florida, attended a seminar in Leesburg, Florida, devoted to three investment opportunities. Mr. Mortimer learned of the seminar through mail flyers or newspaper announcements. Mr. Mortimer expressed interest at the seminar in a cremation society and the Trinh notes. Reynolds appeared at the seminar and presented these investment opportunities. The next month, Mr. Mortimer met Reynolds in Lady Lake, Florida, and Reynolds sold Mr. Mortimer one of the Trinh notes. Mr. Mortimer thereafter purchased through Reynolds several more notes for a total investment of $55,000. At no time prior to making these investments did Reynolds disclose to Mr. Mortimer that Legault was under indictment in New Orleans for criminal fraud and was avoiding prosecution in Canada. Mr. Mortimer would not have invested in the Trinh notes had he known this material fact. However, the record does not indicate whether Reynolds knew that Legault was under indictment or had escaped to Canada. Nor does the record reveal sufficient background information to support the finding that Reynolds reasonably should have known this fact. Mr. Mortimer received a total of $600 on this investment. He has lost the remaining $54,400. Earl Wilson learned of Trinh through Reynolds, who was Mr. Wilson’s tax advisor in 1994 and had been since 1986. Reynolds recommended that Mr. Wilson and his wife should invest a recent inheritance in Trinh notes. Between his initial investment in 1994 and his final investment on April 25, 1995, Mr. Wilson and his wife invested a little over $200,000 in Trinh notes. They lost the entire investment. William Dinges first learned of Trinh at a seminar that he attended in 1993. He purchased a $140,000 note in 1995. He lost his entire investment.
Recommendation It is RECOMMENDED that the Department of Banking and Finance enter a final order ordering Respondents K. D. Trinh Investments, Inc. and Loren Reynolds to cease and desist from any further violations of Chapter 517 and dismissing the amended administrative complaint against Respondent Strong Financial Services, Inc. ENTERED in Tallahassee, Florida, on June 4, 1997. ROBERT E. MEALE 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 on June 4, 1997. COPIES FURNISHED: Susan Steinberg Sandler Assistant General Counsel Office of Comptroller West Central Florida Regional Office 1313 Tampa Street, Suite 615 Tampa, Florida 33602-3394 K. D. Trinh Investments, Inc. 1194 Hanna Street East Windsor, Ontario Canada N8X2P4 Loren Reynolds Strong Financial Services, Inc. 241 B Ridgewood Avenue Holly Hill, Florida 32117 Harry Hooper General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0500
