The Issue The issue in this case is whether Respondents have violated provisions of Section 627.837, Florida Statutes, through payment of alleged monetary inducements to insurance agents for the purpose of securing contracts which finance insurance premiums.
Findings Of Fact Petitioner is the Department of Insurance and Treasurer (Department). Respondents are Puritan Budget Plan, Inc., and Gibraltar Budget Plan, Inc., (Respondents). Findings contained in paragraphs 3- 23, were stipulated to by the parties. Stipulated Facts Common shares in Respondents' corporations were sold to insurance agent/shareholders for between $500.00 and $2,500.00 per share, depending on date purchased. Presently, and for the purposes of this litigation, marketing and/or administrative fees paid by Respondents to agent/shareholders range from $1.00 to $13.00 per contract produced, depending on the number of payments made, and the amount of the down payment. Each per contract marketing and/or administrative fee paid by Respondents to agent/shareholders is completely unrelated to the number of contracts produced by that agent/shareholder, and is based upon the characteristics of each contract, pursuant to the terms of the shareholder purchase agreement. Perry & Co., pursuant to a written agreement, manages the day to day activities of Respondents, including solicitation of new shareholder/agents. Alex Campos is currently President of Perry & Co. Perry & Co., Dick Perry or Alex Campos have no equity ownership, either direct or indirect, in Respondents corporations. No shareholder of Perry & Co. is also a shareholder in either Respondent, and no shareholder of the Respondents is a shareholder in Perry & Co. No officer or director of Perry & Co. is an officer or director of either Respondent, and no officer or director of either Respondent is an officer or director of Perry & Co. The individual management agreements between Perry & Co. and Respondents are terminable with proper notice by either party. Respondent Puritan Budget Plan, Inc., was originally licensed by the Department as a premium finance company in 1984, pursuant to the provisions of Chapter 627, Part XV, Florida Statutes. Puritans' principle office is located at 2635 Century Parkway, Suite 1000, Atlanta, Georgia 30345. Respondent Gibraltar Budget Plan, Inc., was originally licensed by the Department as a premium finance company in 1984, pursuant to the provisions of Chapter 627, Part XV, Florida Statutes. Gibraltar's principle office is located at 2635 Century Parkway, Suite 1000, Atlanta, Georgia 30345. Customers of Respondents are typically financing automobile insurance premiums. There is little if any variation among licensed premium finance companies in the State of Florida as to the interest rate charged to customers. In 1988, the Department inquired of Respondents' activities in relation to agent/shareholder compensation arrangements. After several meetings with representatives from Respondents, the Department closed the matter without taking any action. Also in 1988, the Department proposed the adoption of Rule 4-18.009, which in part would have explicitly made payment of processing fees or stock dividends a violation of Section 627.837, Florida Statutes, but later withdrew the proposed rule. Again in 1994, the Department proposed a rule which would have explicitly made payment of processing fees or stock dividends a violation of Section 627.837, Florida Statutes. After a hearing and adverse ruling by the hearing officer, the Department withdrew proposed Rule 4-196.030(8). Financial consideration paid to insurance agents in exchange for the production of premium finance contracts may result in the unnecessary financing of contracts, and the Department believes Section 627.837, Florida Statutes, was intended to make such conduct illegal. Financial consideration paid to insurance agents in exchange for the production of premium finance contracts may result in insurance agents adding or sliding unnecessary products to make the total cost of insurance more expensive and induce the financing of additional contracts, and the Department believes Section 627.837, Florida Statutes, was intended to make such conduct illegal. An "inducement" is presently defined as "an incentive which motivates an insurance purchaser to finance the premium payment or which motivates any person to lead or influence an insured into financing the insurance coverage being purchased; or any compensation or consideration presented to a person based upon specific business performance whether under written agreement or otherwise." Rule 4-196.030(4), Florida Administrative Code (July 27, 1995). This rule is currently effective but presently on appeal. There is no evidence that Respondents unnecessarily financed any premium finance contracts or engaged in any "sliding" of unnecessary products to induce the unnecessary financing of contracts. Section 627.837, Florida Statutes, does not prohibit the payment of corporate dividends based on stock ownership to shareholders who are also insurance agents. According to the Final Bill Analysis for H.B. 2471, in 1995 the Legislature amended Section 627.837, Florida Statutes, relating to rebates and inducements. This section was amended to clarify that this statute does not prohibit an insurance agent or agents from owning a premium finance company. The statute, as amended, is silent on the issue of how owner-agents may be compensated. Other Facts Approximately 80 percent of Respondents' insureds will turn to the shareholder/agent to handle premium mailing and collection. When a shareholder/agent provides these valuable services and labor to Respondents through the servicing of the premium finance contract with an insured, payment for those services and/or recoupment of the expenses involved with their provision is made, at least in part, in the form of the marketing and administrative fees paid by Respondents to the shareholder/agent. The marketing and administrative fee payment by Respondents to shareholder/agents is made from the net profit of the corporation and represents payment of ownership interest (dividends) to shareholder/agents in addition to payment for shareholder/agent services or expenses. Respondents generally finance "non-standard" private passenger automobile insurance. Such insurance generally covers younger drivers and drivers with infraction points against their license. The average non-standard premium is $500 per year. Thirty percent of non-standard insureds will cancel their insurance prior to the renewal date. Cancellation of policies and financing arrangements by non-standard insurers require the agent to return unearned commissions, about $30 generally. In contrast, payment of an insurance premium in cash guarantees an agent his/her entire commission, an average of $90 per non-standard policy. Consequently, the financial interest of most agents is best served by cash sale of auto insurance as opposed to financing the insurance. The average amount generated by 95 percent of all premium finance contracts executed in Florida would yield an agent/shareholder approximately six dollars per contract.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered dismissing the Administrative Complaints. DONE and ENTERED in Tallahassee, Florida, this 28th day of November, 1995. 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 28th day of November, 1995. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted on behalf of the parties. Petitioner's Proposed Findings 1.-11. Accepted to extent included within stipulated facts, otherwise rejected for lack of citation to the record. 12. First sentence is rejected as not substantially dispositive of the issues presented. Remainder rejected for lack of record citation if not included within stipulated facts. 13.-15. Rejected to extent not included within stipulation, no citation to record. Incorporated by reference. Rejected, no record citation, legal conclusion. 18.-19. Rejected, not materially dispositive. 20. Rejected, no record citation. 21.-23. Rejected, not materially dispositive. Rejected, record citation and relevancy. Rejected, weight of the evidence. Incorporated by reference. Respondent's Proposed Findings 1. Rejected, unnecessary to result. 2.-3. Accepted, not verbatim. 4. Rejected, unnecessary. 5.-7. Accepted, not verbatim. 8.-9. Rejected, unnecessary. 10. Accepted per stipulation. 11.-12. Rejected, unnecessary. 13. Accepted per stipulation. 14.-16. Accepted, not verbatim. Rejected, hearsay. Rejected, relevance. Rejected, unnecessary. 20.-22. Accepted per stipulation. 23. Rejected, unnecessary. 24.-57. Incorporated by reference. 58.-60. Rejected, unnecessary. 61.-62. Rejected, subordinate and not materially dispositive. 63.-67. Rejected as unnecessary to extent not included in stipulated facts. Accepted per stipulation. Rejected, unnecessary. Accepted per stipulation. 72.-76. Rejected, unnecessary. 77. Accepted per stipulation. 78.-79. Incorporated by reference. 80.-87. Accepted per stipulation. 88. Incorporated by reference. 89.-90. Accepted per stipulation. 91.-95. Rejected, subordinate. 96. Accepted. 97.-101. Rejected, unnecessary. 102. Incorporated by reference. COPIES FURNISHED: Alan Liefer, Esquire Division of Legal Services 612 Larson Building Tallahassee, FL 32399-0333 Steven M. Malono, Esquire Cobb, Cole & Bell 131 N. Gadsden St. Tallahassee, FL 32301 Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Dan Sumner Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, FL 32399-0300
Recommendation Based on the foregoing Stipulated Facts, Supplemental Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Banking and Finance, enter a final order that the following disbursements from the Mortgage Broker Guaranty Fund be made Payee on the claims against Polk Investments, Inc.: Amount Amendolaro $ 2,661,22 Victorias 10,000.00 Fournier, Janice 10,000.00 Wilson 1,334.71 Ledfords 6,573.09 Fournier, Robert 10,000.00 Murphy 4,715.49 Murphy as Trustee 4,715.49 Total $50,000.00 RECOMMENDED this 13th day of November, 1986 in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSON, 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 13th day of November, 1986. COPIES FURNISHED: Paul C. Stadler, Jr., Esquire Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301 Dennis P. Johnson, Esquire SHELNUT AND JOHNSON, P.A. Suite One Belvedere Professional Center 1525 South Florida Avenue Lakeland, Florida 33806-2436 Cristy F. Harris, Esquire HARRIS, MIDYETTE & CLEMENTS, P.A. Post Office Box 2451 Lakeland, Florida 33806-2451 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32301 Charles Stutts General Counsel Plaza Level The Capitol Tallahassee, Florida 32301
Findings Of Fact Based upon the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made. At all times pertinent hereto, Respondent has been licensed in the State of Florida as a limited surety agent (bail bondsman), a life and health agent and a general lines agent. Respondent has been licensed as an insurance agent for more than eleven years. He has been a licensed limited surety agent for more than ten years. Pursuant to Section 648.442(3), Florida Statutes, all collateral received by Respondent or others acting under his supervision or control in transactions under his surety agent license constituted trust funds received in a fiduciary capacity. At all times pertinent to this proceeding, Respondent has been doing business as Protective Insurance Center, Jenkins Bail Bonds. Until early February of 1991, Respondent's general agent was Banker's Insurance Company. However, in early February, Respondent's relationship with that company was terminated. Respondent's current general agent is American Bankers Insurance Company of Florida. Russell Faibish, Respondent's general agent with American Bankers since February of 1991, has expressed via affidavit that Respondent is in good standing with that company and the company has been satisfied with his performance to date. On January 25, 1991, Respondent, while acting in his capacity as a limited surety agent for Banker's Insurance Company, posted a surety bond, No. 339658, (the "Bond") in the amount of $752.00 to obtain the release of Kim Reinhold Whitford from custody in Clay County, Florida. In connection with the posting of the Bond, Respondent received from Earnest R. Justice (the "Indemnitor") a $75.00 premium payment and a $350.00 cash collateral payment. At the time the Indemnitor arranged with Respondent for the issuance of the bond, the Indemnitor was advised that his collateral would be returned within twenty one days of the receipt of written notice of the discharge of the bond. Respondent was provided with a notice from the Clerk of Court that Ms. Whitford was scheduled for a court appearance on April 3, 1991 for a "plea." Respondent never made any inquiry as to the results of that April 3, 1991 hearing. On April 3, 1991, the Bond was discharged and the obligation of the surety, Banker's Insurance Company, was released in writing by the County Court of Clay County, Florida. Respondent contends that he never received notification of the discharge of the Bond. While the Court document indicates that a notice of the discharge of the Bond was sent to Respondent at the time the requirements for the discharge were satisfied on or about April 3, 1991, no conclusive evidence was presented to establish that the notice of discharge was actually sent to or received by Respondent. Respondent denies ever receiving that document. After Ms. Whitford was released from jail, the Indemnitor contacted Respondent's office several times in April and May of 1991 trying to arrange the return of his collateral. Respondent denies receiving any messages from the Indemnitor. The failure to receive the messages may have been due to office staff turnover. In any event, the evidence was sufficient to establish that the Indemnitor attempted to arrange for the return of his collateral on numerous occasions without success. On August 9, 1991, the Petitioner filed the Administrative Complaint which is the basis for this proceeding against Respondent alleging that he failed to return the Indemnitor's collateral. Upon receipt of the Administrative Complaint, Respondent contacted the Clerk of Court, in Clay County, Florida to determine the status of the bond. On August 30, 1991, the Clerk of Court, Clay County, Florida, sent Respondent a certified copy of the bond discharge. Respondent claims that he first became aware of the discharge of the Bond and the Indemnitor's right to the return of the collateral when he received the August 30 certification from Clay County. Because an Administrative Complaint had already been filed, Respondent did not immediately refund the collateral for fear that such action could be construed as an attempt to influence a witness in the case. In order to avoid the appearance of attempting to influence a witness, Respondent waited until the day of the hearing to arrange to make a refund of the collateral available to the Indemnitor. On January 14, 1992, Respondent sent a Western Union Money Transfer, control no. 7395574746, payable to the Indemnitor in the amount of $350.00 as return of the collateral. Although the Indemnitor did not receive the return of his collateral until approximately eight to nine months after it was due, the collateral was ultimately returned and there is no other evidence in this case of any other financial loss to any member of the public. On average, Respondent has between 100 to 150 active bond cases per month. Most of those bonds are written in Palm Beach County, where Respondent's business is located. In this case, Respondent arranged for a "teletype bond" whereby the arrangements for the bond were made in Palm Beach County and notification of the posting of the bond and authorization for the release of the prisoner were transmitted via teletype to Clay County. Respondent contends that he reviews his active cases on a quarterly basis to confirm the status of the bonds. Nevertheless, it took almost six months for Respondent to determine that the requirements of the Bond in this case had been fully satisfied. No justifiable excuse was given for this delay. However, in mitigation, it does appear that the long distance nature of the transaction, the change in Respondent's general agent and office staff turnover all contributed to the delay in refunding the Indemnitor's collateral. Respondent has had three Administrative Complaints filed against him since 1985. The first Administrative Complaint was filed on June 26, 1985 and alleged that Respondent failed to provide required documentation of his assets to the Department. Pursuant to a Consent Order entered on August 6, 1985, Respondent was fined $200 and placed on probation for one year as a result of this charge. The most serious and pertinent prior administrative proceeding against Respondent was commenced by an Administrative Complaint dated November 17, 1987. That complaint alleged, among other things, that Respondent failed to return collateral to at least two clients. In April of 1989, the parties entered into a settlement stipulation regarding these charges pursuant to which Respondent was suspended for one year and fined $1,000.00. He was also required to make resitution to several individuals who had not been identified in the Administrative Complaint in that case. No explanation has been provided regarding the "restitution" required to be made to those individuals. The third case involved an Emergency Suspension Order entered on March 16, 1988. That Order was dissolved on September 20, 1988 when the underlying criminal charges were nolle prosequi. Respondent has had several IRS liens filed against him and there is currently a foreclosure action pending against his house. However, no specific information was provided regarding the status of those cases. Respondent contends that he is vigorously contesting all of those matters and he believes they will be favorably resolved. The evidence in this case suggests that Respondent is currently involved in disputes with some other customers regarding the return of collateral. The evidence did not establish the exact number or the facts surrounding those disputes. Respondent contends that all of those disputes are related to problems with or caused by his prior General Agent. No conclusions as to the merits of those complaints can be drawn from the evidence presented in this case. Gerald Michael Sandy, a licensed bondsman in the State of Florida and the current president of the Florida Surety Agents Association, testified on behalf of the Respondent in this matter. He indicated that on approximately 40% of the bonds that are executed, the Courts do not provide written notice of the discharge. However, Mr. Sandy conceded that even if written notification from a court is not received, the bail bondsman is primarily responsible for determining whether a bond has been discharged and a bail bondsman must immediately respond to the inquiries of an indemnitor regarding the return of collateral.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered suspending Respondent's licenses for three months, placing him on probation for two years and assessing an administrative fine in the amount of $500. RECOMMENDED this 9th day of March, 1992, at Tallahassee, Florida. J. STEPHEN MENTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of March, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-6302 Both parties have submitted Proposed Recommended Orders. The following constitutes my rulings on the proposed findings of fact submitted by the parties. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. 1. Adopted in substance in Findings of Fact 1. 2. Adopted in substance in Findings of Fact 1. 3. Adopted in substance in Findings of Fact 2. 4. Adopted in substance in Findings of Fact 3. Findings of Fact 5. 7. Adopted in substance in Findings of Fact 5. 8. Adopted in substance in Findings of Fact 7. Rejected as unnecessary. Adopted in substance in Subordinate to Findings of Fact 13 and 14 and addressed in the Preliminary Statement. Subordinate to Findings of Fact 6 and 10. Adopted in substance in Findings of Fact 8. Subordinate to Findings of Fact 18. Subordinate to Findings of Fact 19. Subordinate to Findings of Fact 20. The Respondents's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. 1. Adopted in substance in Findings of Fact 5. 2. Adopted in substance in Findings of Fact 5. 3. Adopted in substance in Findings of Fact 7. 4. Adopted in substance in Findings of Fact 10. 5. Adopted in substance in Findings of Fact 11. 6. Adopted in substance in Findings of Fact 11. 7. Adopted in substance in Findings of Fact 12. 8. Adopted in substance in Findings of Fact 14. 9. Addressed in the Preliminary Statement. 10a. Adopted in substance in Findings of Fact 10. 10b. Adopted in substance in Findings of Fact 9. 10c. Adopted in substance in Findings of Fact 10. 10d. Adopted in substance in Findings of Fact 10. 10e. Adopted in substance in Findings of Fact 13. 10f. Adopted in substance in Findings of Fact 13. 10e.[sic] Adopted in substance in Findings of Fact 17. 10f.[sic] Adopted in substance in Findings of Fact 16. 10g. Rejected as unnecesdsary. 11a. Adopted in substance in Findings of Fact 21. 11b. Adopted in substance in Findings of Fact 21. 11c. Adopted in substance in Findings of Fact 21. 12. Adopted in substance in Findings of Fact 4. COPIES FURNISHED: David D. Hershel, Esquire Department of Insurance and Treasury Larson Building, Room 412 Tallahassee, Florida 32399-0300 Franklin Prince, Esquire Northbridge Centre, Suite 300-P 515 N. Flagler Drive West Palm Beach, Florida 33401 Tom Gallagher State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil Deputy General Counsel Department of Legal Affairs The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue Whether the Petitioner, Edward J. Miller, is entitled to be licensed as a resident life and variable annuity insurance agent.
Findings Of Fact The Petitioner, Edward J. Miller, is employed at Washington Mutual Bank. His supervisor is Tracy Tarach. It was Ms. Tarach's desire that Mr. Miller become licensed as a resident life and variable annuity insurance agent. To that end, she and Mr. Miller filed the necessary papers with Washington Mutual Bank to approve the application process as well as the course to become licensed. The process of having the bank issue the check to cover the licensing procedure was timely. Additionally, the Petitioner could only be scheduled for the licensure class and completion of the licensing process when the bank took favorable action on the request. Accordingly, for this Petitioner the licensing process was dragged out over the course of several months. In January 2003 the Petitioner completed the state application for licensure but did not transmit it to the state. He submitted the request to the bank for course approval and planned to submit the paperwork when it was successfully completed. At that time, the Petitioner did not have any criminal charges pending against him and the answers noted on the application were all correct and truthful. In February 2003 the Petitioner was stopped for DUI. The next workday the Petitioner went to his supervisor and fully disclosed the arrest as well as the charge. The Petitioner made no effort to hide the arrest from his employer and the employer considers the Petitioner a valuable employee, despite the incident. In March 2003 the Petitioner was formally charged with DUI, a misdemeanor. Meanwhile, the bank approved the Petitioner's request to take the course for licensure. The forty-hour course in another work location required the Petitioner to travel to the school site and reside in a hotel for a week while the course work was completed. Obviously the Petitioner's supervisor was willing to invest the costs of licensure school and accommodations for the Petitioner with full knowledge of the Petitioner's pending criminal matter. After successfully completing the licensure course in April 2003 the Petitioner submitted the license application to the state. He failed to double-check the forms. He failed to correct an answer that was now incorrect. That is, he failed to fully disclose the arrest. Subsequently, the criminal case went to hearing, and the Petitioner entered a plea and was placed on probation. The resolution of the DUI charges was completed after the application was submitted. Section 3 of the license application asks several screening questions of applicants for licensure. Applicants are required to answer "yes" or "no", depending on the information sought. In this case, it is undisputed that the Petitioner failed to correct his answers to the questions posed in Section 3. More specifically, the Petitioner failed to truthfully disclose that he had been arrested for DUI. This failure was an oversight on the Petitioner's part, and not intended to deceive the Department. The answers should have been corrected when the Petitioner amended the application form to include the information regarding his completion of the Gold Coast School of Insurance class on April 11, 2003. He did not do so. When the Department reviewed the Petitioner's application and discovered the false answer, it took action to deny the licensure request. That denial was entered on January 22, 2004. A notice of the denial was provided to the Petitioner and he timely challenged the proposed action. On October 31, 2003, the Petitioner completed all of the terms of his court-ordered probation and the entire DUI incident was put to rest.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a Final Order granting the Petitioner's application for licensure. DONE AND ENTERED this 30th day of July, 2004, 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 30th day of July, 2004. COPIES FURNISHED: Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Dana M. Wiehle, Esquire Department of Financial Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399 Edward J. Miller 6205 Northwest West Deville Circle Port St. Lucie, Florida 34986
The Issue The issue in this matter is whether Respondents committed the violations alleged in the Administrative Complaints, and, if so, what penalties should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Respondent, Tim Vincent Milianta ("Milianta"), at all times material to this matter, was a licensed title insurance agent subject to the regulatory jurisdiction of Petitioner. Petitioner issued Milianta license number E083154. Milianta is the owner and President of Surf Title ("Surf"), a closing and escrow company. Petitioner issued Surf license number E109661. Surf handles closings all over the State of Florida. Surf has been in business for eight years. Prior to Surf opening, Milianta was a title agent for three years. In October 2008, Charlie Mae Wilder ("Wilder") received a promotional advertisement regarding refinancing her property. Wilder responded to the advertisement and subsequently met Letterman, Manager of Southeast Equity and Lending ("Southeast"), to conduct the refinance. Wilder applied for refinancing of her residence and also requested that the loan be used to pay off some creditors. Letterman helped Wilder with her application. He initiated contact with SEAL Credit1 and had Wilder contract with SEAL Credit to reduce her debt. Wilder provided Letterman a list of creditors she wanted paid off through the refinance. On or about January 9, 2009, Milianta attended Wilder's closing as the settlement agent. The loan number 525210 was processed through First Continental Mortgage. Assurity Financial Services underwrote the loan and provided the closing instructions. Wilder's closing instructions provided that "a condition to the funding of this loan that the following payoffs be made through this closing. Indicate payoffs on the HUD-1 Settlement Statement or provide other satisfactory evidence of payoff." The HUD listed each of Wilder's creditors under the section "additional settlement charges." Each creditor's payoff was also listed as going to SEAL Credit. Wilder signed an acknowledgement at closing that a third party was going to handle her lender required payoffs.2 In addition to the HUD-1 Settlement Statement, Wilder and Milianta also signed a General Acknowledgment document which provided: The undersigned Borrower understands that the Lender has required the payment of specific credit accounts at the time of funding as listed on the HUD. The borrower has contracted with an outside agency for the payment of said accounts and agrees to Hold Harmless Surf Title for disbursal of funds to that agency. Borrower further understands that Surf Title has no affiliation with said contracted agency. The lender approved the HUD with SEAL Credit as the payee. Surf handled the refinancing transaction for loan number 525210 and properly disbursed the actual loan proceeds to the list on the HUD. On January 14, 2009, Surf Title transferred $29,928.00 to SEAL Credit per the HUD. Later, Wilder began to get late fees from creditors who were not paid off. In mid-April or May 2009, Letterman contacted Fragemeno because when he was processing Wilder's second re-finance Letterman discovered that Wilder's credit report still listed two items from the January 9, 2009, closing that were unpaid. Fragameno assured Letterman that the items would show up on Wilder's credit report at any time paid. In 2008, Ama and Rudolph Sauceda ("Saucedas") received a Southeast flyer about refinancing. They responded to the flyer and met with Letterman regarding refinancing their home. After the meeting, the Saucedas decided to refinance their mortgage on their residence and take cash out to consolidate and pay off debts. Mrs. Sauceda met with Letterman several times during the application process. Letterman contacted debt holders on behalf of the Saudedas to negotiate items that had been required by the lender for pay off. Letterman even initiated a contract with SEAL Credit prior to closing to negotiate debts for a lesser amount and help get the Saucedas a higher amount of money in their pocket. On or about September 17, 2008, before closing, Letterman, as a credit counselor, signed a confirmation of settlement on SEAL Credit and Consolidating Services, Inc., stationary for the outstanding balance on Mr. Sauceda's Autobank account in the amount of $2,000, for full payment and to close the account on behalf of the Saucedas.3 SEAL Credit also negotiated and lowered amounts for some of the Saucedas' creditor pay offs. While preparing for the closing, Milianta as the Saucedas' settlement agent relayed any changes from SEAL Credit reductions to the lender by teleconference meetings. During the calls, the lender instructed Milianta to send the changes over with the closing statement, which was ultimately approved. On or about September 18, 2008, Southeast closed on the mortgage for the Saucedas. At the closing, the Saucedas signed the buyer and seller statement listing the creditors that the Saucedas wanted paid off.4 Surf Title served as the title company to disburse the actual loan proceeds for the refinance of the Saucedas' mortgage loan and the pay offs for creditors. Milianta sent out all the payments according to the HUD, which the lender approved. Surf Title cut a check for every creditor that was listed on the HUD. Some of the creditors were obscure and Milianta obtained the mailing addresses for the creditors from the Saucedas' credit report to send the payoffs. Some checks Surf sent to creditors were returned as undeliverable. Milianta placed the returned checks into the file until he could figure out what to do with them. None of the checks returned as undeliverable were items on the title commitment. Milianta double-checked to make sure that there would not be a lien or judgment against the property and that there was clear title after the checks were returned. Milianta contacted both the lender and Mrs. Sauceda5 to inquire what to do about the returned checks. The lender informed Milianta that the returned checks were the borrower's monies since the closing had already taken place. When Milianta asked Mrs. Sauceda what to do with the returned checks, she contacted Letterman about the returned checks and worked out a second contract with SEAL Credit to negotiate the debt for a lesser amount. Ultimately, she directed Milianta to send the money from the returned checks to SEAL Credit. On October 15, 2008, the Saucedas provided Milianta a letter to transfer the returned funds to SEAL Credit for payoff that stated: Thank you for calling me yesterday. Per our conversation, I realize that some creditors were not found or that some of the checks were returned from our refinance closing in September, but instead of returning the money directly to me, please forward the money to SEAL Credit and Consolidation Services. I have contracted SEAL Credit to negotiate the debt listed on my credit report and settle those accounts for minimal amounts.[6] On or about October 16, 2008, Surf followed the Saucedas' instructions and transferred the total returned check amount of $14,621.00 by wire to SEAL Credit to pay the outstanding creditors. On or about November 18, 2008, SEAL Credit confirmed with the Saucedas that the company had successfully negotiated the 15 outstanding creditors down to a payoff settlement that totaled $13,313.00. SEAL Credit then disbursed $1,275.00 to the Saucedas to which they signed a receipt for the monies.7 Months later, Mrs. Sauceda was checking her credit scores and discovered that approximately $14,000.00 had not been paid to her creditors as promised and indicated by SEAL Credit. Mrs. Sauceda contacted Letterman to inquire about the unpaid debt to creditors. Letterman followed up with Fragameno, who assured him that each debt would show up paid on the credit report anytime. Neither the Saucedas' nor Wilder's creditor payoffs were satisfied as promised and agreed to by SEAL Credit. At some point prior to hearing, SEAL Credit closed and discontinued doing business. Both Wilder and the Saucedas suffered financial losses due to the nonpayment of their creditors by SEAL Credit. Letterman tried to help and assist them repeatedly. He ultimately instructed them to file a complaint with the state. After an investigation, Petitioner charged Respondents with numerous violations by separate Administrative Complaints dated March 31, 2011. The Charges: In Count I of the Administrative Complaint filed against Milianta, Petitioner charges Respondents with violations of sections 626.8437(4),(6), and (9); 626.844(2) and (5); 626.9521(1); 626.9541(1)(e)1, Florida Statutes, and rule 69O- 186.008 for the refinancing transaction on behalf of Wilder. In Count II, Petitioner charges Respondents with violations of sections 626.8437(4),(6), and (9); 626.844(2) and (5); 626.9521(1); 626.9541(1)(e)1, Florida Statutes, and rule 69O-186.008 for the refinancing transaction on behalf of the Saucedas.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order dismissing the Administrative Complaints against Respondents. DONE AND ENTERED this 31st day of October, 2011, in Tallahassee, Leon County, Florida. S JUNE C. MCKINNEY 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 31st day of October, 2011.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends that the Florida Real Estate Commission suspend the license of Gracia Wittmack, t/a Leeside Realty, for a period of one (1) year. DONE and ORDERED this 27th day of July, 1977, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 APPENDIX The Respondent, Gracia Wittmack, t/a Leeside Realty, filed a Proposed Recommended Order in this case. This Proposed Recommended Order has been considered and the following findings are made regarding its contents: The findings of paragraphs 1, 3(1)(2) and 4 of the Proposed Recommended Order are included in the Hearing Officer's statement of the case in the Recommended Order. The findings of paragraph 2 of the Proposed Recommended Order is paragraph 1 of the Findings of Fact in the Recommended Order. The findings of paragraphs 5, 6, 7, 8, 9, 10 and 11 in the Proposed Recommended Order are contained in paragraph 2 of the Recommended Order. That portion of paragraph 21 of the Proposed Recommended Order which states that no evidence was introduced refuting Wittmack's and Markowski's testimony regarding deposit of the funds is irrelevant in light of the affirmative finding of paragraph 2 of the Recommended Order that the $500 was deposited to Wittmack's escrow account. The findings of paragraphs 12, 13 and 14 of the Proposed Recommended Order are contained in paragraph 3 of the Recommended Order. The findings of paragraphs 15, 16 and 18 of the Proposed Recommended Order are contained in paragraph 4 of the Recommended Order. The findings of paragraphs 17, 19 and 20 of the Proposed Recommended Order are contrary to the testimony of the Bertzels who knew that the contract contained a no zoning contingency clause. Although Markowski stated he didn't realize the clause had been deleted, he recognized the contract date September 13 1976 as a binding contract. Further, no misunderstanding of the parties would be a basis for releasing Wittmack from her fiduciary duties after demand was made for the funds. The findings of paragraph 22 of the Proposed Recommended Order are irrelevant in light of the findings of paragraphs 2, 3 and 6 regarding the deposit of the $500 to and its removal from Wittmack's escrow account. The findings of paragraph 23 of the Proposed Recommended Order are contained in paragraph 3 of the Recommended Order. The findings of paragraph 24 of the Proposed Recommended Order are rejected in light of the findings contained in paragraph 3 and 6 of the Recommended Order. The findings of paragraph 25 of the Proposed Recommended Order are rejected as being relevant in light of the Hearing Officer's findings that regardless of what escrow account the funds were deposited, they were removed and were not delivered to the Bertzels. The findings of paragraph 26 of the Proposed Recommended Order are contained in paragraphs 3 and 6, and paragraph 7 above, which find that the funds were held in escrow. The name of the account and its location is irrelevant. The record, Exhibit 8, reflects at least a $500 balance at all times in that account until the account was closed. The records of the opening of the Dadeland account were not introduced. But for the Respondent's admission that she removed the money and credited Tri-Sailing's account and the collaborative testimony of Markowski that this occurred, there would be no evidence of the alleged violation of removing the escrowed funds. The findings of paragraph 27 of the Proposed Recommended Order are contained in paragraph 7 of the Recommended Order. COPIES FURNISHED: Bruce I. Kamelhair, Esquire Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Alan J. Kluger, Esquire Myers, Kaplan, Levinson & Kenin Brickell Executive Tower 1428 Brickell Avenue Miami, Florida 33131
