The Issue Whether Respondent committed the violations alleged in Second Amended Administrative Complaint? If so, what disciplinary action should be taken against her?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Background Information Respondent is now, and has been at all times material to the instant case, licensed by the Department as a general lines insurance agent. Regional Insurance Agency, Inc. (hereinafter referred to as "Regional") is an incorporated insurance agency located at 3955 Southwest 137th Avenue, #3, Miami, Florida. Respondent is Regional's principal owner, president, secretary, and registered agent and serves on its board of directors. In addition, she works as an insurance agent for Regional. Since on or about April 10, 1990, Respondent has maintained signatory authority over Regional's bank account (account number 50002713) at Continental National Bank. Greater Miami Insurance Agency, Inc. (hereinafter referred to as "Greater Miami") was an incorporated insurance agency located at 1887 Southwest 1st Street, Miami, Florida, from on or about June 26, 1979, until it was administratively dissolved on or about October 11, 1991. Respondent acted as an insurance agent for Greater Miami. Following Greater Miami's administrative dissolution, Regional took over Greater Miami's accounts and serviced them from Greater Miami's Southwest 1st Street location. Count I Marta and Orlando Cuevas own a home located at 1907 Northwest 46th Avenue, Opa Locka, Florida, in which they have lived since approximately October of 1972. Since their purchase of the home, the Cuevases have not replaced the roof, nor have they painted the exterior of the home. Barnett Mortgage Company (hereinafter referred to as "Barnett") holds the mortgage on the Cuevas home. The Cuevases make monthly payments to Barnett. Barnett uses a portion of these payments to purchase homeowner's insurance for the Cuevases. On or about October 23, 1991, Barnett sent a check (check number 808446) in the amount of $186.00 to Greater Miami's Southwest 1st Street location. The check was made out to Greater Miami. It was to pay, in full, for the annual premium for homeowner's insurance for the Cuevases for the 1991-92 policy year. Barnett had obtained homeowner's insurance for the Cuevases through Greater Miami for the 1990-91 policy year. Respondent received the check and, on or about October 31, 1991, deposited it in Regional's bank account at Continental National Bank. Respondent attempted to secure homeowner's insurance for the Cuevases. She telephoned a prospective insurer and provided information regarding the Cuevas home. The prospective insurer declined to provide coverage because of the location and condition of the home. Respondent mailed Barnett a letter advising it of her inability to obtain homeowner's insurance for the Cuevases. Barnett, however, never received the letter. Neither Respondent, nor Barnett, took any further measures to attempt to obtain homeowner's insurance for the Cuevases for the 1991-92 policy year. Unbeknownst to the Cuevases, who relied on Barnett to take care of their homeowner's insurance needs, they were without homeowner's insurance for the 1991-92 policy year. Although she did not use the $186.00 that she had received from Barnett to obtain homeowner's insurance for the Cuevases, Respondent neglected to return, in the regular course of business, the $186.00 to either Barnett or the Cuevases. It was not until March of 1995, after the Department had charged her with wrongdoing in connection with her handling of the $186.00, that she refunded the money to Barnett. On or about August 24, 1992, Hurricane Andrew made landfall in south Florida. The Cuevas home was damaged as a result of the hurricane. There were damages to the roof and to the exterior of the home. As the Cuevases discovered after filing a claim with the insurance company that had provided them with homeowner's insurance for the 1990-91 policy year, they were not insured against such damages to their home. These damages have not been repaired inasmuch as the Cuevases have not been able to afford to pay for the repairs. As a result of these unrepaired damages, when it rains, rainwater leaks into the Cuevas home. On or about September 30, 1992, Barnett sent another check (check number 901842) in the amount of $186.00 to Greater Miami's Southwest 1st Street location. The check was made out to Greater Miami. It was to pay, in full, for the annual premium for homeowner's insurance for the Cuevases for the 1992-93 policy year. Respondent received the check and deposited it in Regional's bank account at Continental National Bank. Respondent was successful in obtaining homeowner's insurance for the Cuevases for the 1992-93 policy year. She obtained such insurance from Monticello Insurance Company (hereinafter referred to as "Monticello"). The annual premium was more than Respondent had received from Barnett to pay for homeowner's insurance for the Cuevases for the 1992-93 policy year. Respondent used her own funds to pay the difference. Effective December 17, 1992, Monticello cancelled the Cuevases' policy for "noncompliance with underwriting information." The unearned premium was refunded to Respondent. Respondent thereupon mailed to Barnett a check in an amount ($97.00) 2/ that represented what she believed was due Barnett (and ultimately the Cuevases) as a result of the cancellation of the Cuevases' policy. Count II Luisa Lopez and her husband, Orlando Ruiz, own a home located at 245 Northeast 26th Terrace, Miami, Florida. For approximately the past 15 years, Lopez and Ruiz have used Respondent's services to purchase insurance for the home. During this time, they have dealt directly with Respondent. On or about August 5, 1991, Lopez and Ruiz received a notice advising them that they needed to remit a check in the amount of $336.00 to renew their homeowner's insurance policy with Utah Home Fire Insurance Company (hereinafter referred to as Utah"). On or about September 26, 1991, Ruiz sent a check (check number 541) in the amount of $336.00 to Greater Miami's Southwest 1st Street location. The check was made out to Regional. It was to pay for the renewal of Lopez's and Ruiz's homeowner's insurance for the 1991-92 policy year. Lopez and Ruiz reasonably anticipated that, upon receiving the check, Respondent would take whatever steps were necessary to have their homeowner's policy renewed. Respondent received the check and, on or about October 1, 1991, deposited it in Regional's bank account at Continental National Bank. Respondent neither forwarded the $336.00 to Utah or any other insurer, nor refunded the money to Lopez and Ruiz, in the regular course of business. Her failure to take such action was the product of neglect. Effective November 2, 1991, Utah cancelled Lopez's and Ruiz's homeowner's policy for "non-payment of premium." A Notice of Cancellation was mailed to Lopez and Ruiz, but never received by them. Respondent was not sent a copy of the Notice of Cancellation. Unaware of the cancellation, Respondent made no effort to obtain replacement coverage for Lopez and Ruiz. When Hurricane Andrew made landfall in south Florida in August of 1992, Lopez's and Ruiz's home was not insured. The home suffered extensive damage as a result of the hurricane. After discovering, following the hurricane, that their home was not insured, Lopez and Ruiz retained counsel and filed suit against Respondent. The dispute was amicably resolved in early 1995 when Lopez and Ruiz entered into a settlement agreement with Respondent. Count III Martha L. and Martha Y. Penate own a home located at 13265 Southwest 53rd Street, Miami, Florida. They have lived in the home for approximately the past six years. Throughout this period of time, Respondent has been their insurance agent. Citicorp holds the mortgage on the Penate home. The Penates make monthly payments to Citicorp. Citicorp uses a portion of these payments to purchase homeowner's insurance for the Penates. On or about August 11, 1989, Respondent received payment from Citicorp to cover the cost of homeowner's insurance for the Penates. On that same date, a policy insuring the Penate home was issued by Guardian Property and Casualty Insurance Company (hereinafter referred to as "Guardian"). The policy was effective from August 11, 1989, until August 11, 1990. The policy was renewed for the period commencing August 8, 1990, and ending August 11, 1991. On or about August 8, 1991, Citicorp sent a check (check number 50921327) in the amount of $334.00 to Greater Miami's Southwest 1st Street location. The check was made out to Greater Miami. It was to pay, in full, for the annual premium for homeowner's insurance for the Penates for the 1991-92 policy year. Respondent received the check and, on or about August 21, 1991, deposited it in Regional's bank account at Continental National Bank. As a result neglect, Respondent neither forwarded the $334.00 to Guardian or any other insurer, nor refunded the money to Citicorp or the Penates, in the regular course of business. It was not until on or about April 5, 1995, after the Department had charged her with wrongdoing in connection with her handling of the $334.00, that she refunded the money to Citicorp. Effective August 23, 1991, Guardian cancelled the Penates' homeowner's policy for "non-payment of renewal premium." A written notice advising of the cancellation was prepared and sent to Respondent. Respondent, however, never saw the notice. Respondent apprised neither Citicorp nor the Penates of the cancellation of the Penates' homeowner's policy inasmuch as she herself was unaware that the policy had been cancelled. On or about August 11, 1992, Citicorp sent a check (check number 51110066) in the amount of $334.00 to Greater Miami's Southwest 1st Street location. The check was made out to Greater Miami. It was to pay, in full, for the annual premium for homeowner's insurance for the Penates for the 1992-93 policy year. Respondent received the check and, on or about August 14, 1992, deposited it in Regional's bank account at Continental National Bank. Respondent's review of her records revealed that the Penates' homeowner's policy had not been renewed for the 1991-92 policy year. Therefore, on or about August 17, 1992, Respondent wrote a letter asking Citicorp if it wanted her to "rewrite the account" or return the $334.00. Before she received a response from Citicorp, Hurricane Andrew made landfall in south Florida. The Penate home suffered extensive damage as a result of the hurricane. The Penates were not insured against such damage. After discovering, following the hurricane, that they did not have insurance to cover their losses, the Penates approached Respondent and asked her to bear the cost of repairing the damage to their home. The amount that the Penates sought from Respondent was beyond Respondent's financial capacity to pay. The matter is currently in litigation. Respondent ultimately (but not in the regular course of business) obtained homeowner's insurance for the Penates from Scottsdale Insurance Company (hereinafter referred to as "Scottsdale"). The annual premium was more than Respondent had received from Citicorp to pay for homeowner's insurance for the Penates for the 1992-93 policy year. Respondent used her own funds to pay the difference, which was $221.00. Scottsdale subsequently cancelled the Penates' policy.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order: (1) finding Respondent guilty of the violations noted in Conclusion of Law 82 of this Recommended Order; (2) penalizing Respondent for having committed these violations by revoking her license; and (3) dismissing the remaining allegations of misconduct advanced in the Second Amended Administrative Complaint. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 9th day of August, 1995. STUART M. LERNER 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 August, 1995.
Findings Of Fact At all times pertinent to this proceeding Respondent, HOWARD P. HAUSER, was eligible for licensure and licensed in this state by the Florida Department of Insurance as a Life and Health Insurance Agent; General Lines Insurance Agent - Property, Casualty, Surety, and Miscellaneous Lines; and Legal Expense Insurance Agent. At all times pertinent hereto, Respondent was the registered agent and an officer or director of Hauser and Associates Insurance Agency, Incorporated of 7770 Davie Road Extension, Hollywood, Florida. Beginning on or about January 1, 1986, and continuing through August 31, 1987, Respondent represented to one of his clients that he had obtained insurance coverage for that client's three restaurants. This representation of coverage was false. Respondent received from the client insurance premium payments of $56,550.00, more or less, for the insurance of the client's three restaurants. These funds were obtained by Respondent under false pretenses. Respondent provided the mortgagee of one of the restaurants owned by his client with a document purporting to be a certificate of insurance on that restaurant from Scotsdale Insurance Company insuring the restaurant for the period December 11, 1985, to December 11, 1986. Respondent further provided the mortgagee with a declaration sheet stating that Protective Insurance Company would insure the restaurant from January 1, 1987, to January 1, 1990. Respondent falsified these declaration sheets. Respondent's client suffered no loss, other than the loss of his premium dollars, because of Respondent's misrepresentations as to coverage. Respondent was charged with one count of Grand Theft of the Second Degree, a second degree felony, based on the dealings with his client. Respondent entered a plea of nolo contendere to the charge of Grand Theft of the Second Degree. The Circuit Court, in and for Broward County, Florida, placed Respondent on probation for a period of three years and withheld adjudication of guilt. As a condition of the Order of Probation, the court required that Respondent make restitution to his client in the amount of $56,550.00 and further required that $15,000.00 be paid toward restitution on October 24, 1988, the date Respondent entered his plea of nolo contendere and the date the court entered the Order of Probation. Respondent made a restitution payment of $15,000.00 on October 24, 1988. Respondent has been licensed by Petitioner since April 1972. Although Petitioner has received other complaints about Respondent, no formal action has been previously taken against him. Respondent has been a good citizen, except for this misconduct, and a good family man. Respondent regrets his misconduct. Respondent timely requested a formal hearing after the Administrative Complaint was served upon him.
Recommendation Based on the foregoing findings of fact and conclusions of law it is RECOMMENDED that the Department of Insurance enter a final order which revokes all licenses issued by the Department of Insurance to Respondent, Howard Paul Hauser. DONE and ENTERED this 21st of July, 1989, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 21st day of July, 1989. APPENDIX The proposed findings addressed as follows: of fact submitted on behalf of Petitioner are 1. Addressed in paragraph 1. 2. Addressed in paragraph 2. 3. Addressed in paragraph 6. 4. Addressed in paragraph 3. 5. Addressed in paragraph 4. 6. Addressed in paragraphs 3-4. The proposed findings of fact submitted on behalf of Respondent are addressed as follows: Addressed in paragraph 9. Addressed in paragraph 6. Addressed in paragraph 6. Rejected as being unnecessary to the conclusions reached. Addressed in paragraph 7. Addressed in paragraph 5. Addressed in part in paragraph 7. Rejected in part as being speculative. Rejected as being a conclusion of law and not a finding of fact. COPIES FURNISHED: Robert G. Gough, Esquire, (at the hearing) and Charles Christopher Anderson, Esquire, (on the proposed recommended order) Office of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Gary D. Weiner, Esquire, Glendale Federal Building Suite 209 901 Southeast 17th Street Fort Lauderdale, Florida 33316 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Don Dowdell, General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300
The Issue Whether Respondent committed the acts alleged in Petitioner’s ten-count Second Amended Administrative Complaint, and, if so, what penalty, if any, should be imposed upon Robert Gordon DeWald’s (Respondent) insurance agent licenses.
Findings Of Fact Respondent is currently licensed in Florida as a resident Life Including Variable Annuity (2-14), Life Including Variable Annuity & Health (2-15), Life (2016), and Life & Health (2-18) insurance agent. At all times pertinent to the dates and occurrences referred to herein, Respondent was licensed in this state as an insurance agent and has been a licensed insurance agent in Florida for over 21 years. Prior to being licensed in Florida, Respondent was a licensed insurance agent in the state of New York. Petitioner has jurisdiction over Respondent’s insurance agent licenses and appointments, pursuant to Chapter 626, Florida Statutes (2008).1 National Foundation of America The National Foundation of America (NFOA) is a registered Tennessee corporation that was formed on January 27, 2006, and headquartered in Franklin, Tennessee. NFOA Corporate Resolution, dated April 19, 2006, provides for the corporate authority to “liquidate stocks, bonds, and annuities . . . in connection with charitable contributions or transactions. ” This same resolution also provides for the corporate ability to “enter into and execute planned giving or charitable contribution transactions with donors, including executing any and all documentation related to the acceptance or acquisition of a donation, . . . given in exchange for a charitable gift annuity. ” On September 18, 2006, the State of Washington Office of Insurance Commissioner issued an Order to Cease and Desist: In the Matter of: National Foundation of America, Richard K. Olive, and Susan L. Olive, Order No. D06-245. The Order, among other things, was based on NFOA doing business in the state and not having been granted a certificate of authority as an insurer in the state of Washington and not having been granted tax exempt status under Section 501(c)(3) of the IRC. On April 13, 2007, the Florida Office of Insurance Regulation (OIR) issued an Immediate Final Order (IFO) In the Matter of: National Foundation of America, Richard K. Olive, Susan L. Olive, Breanna McIntyre, and Robert G. DeWald, Case No. 89911-07, finding that the activities of NFOA, et al., constituted an immediate danger to the public health, safety or welfare of Florida consumers. OIR further found that, in concert, NFOA, et al., were “soliciting, misleading, coercing and enticing elderly Florida consumers to transfer and convey legitimate income tax deferred annuities for the benefit of themselves and their heirs to NFOA in exchange for charitable term-certain annuities”; and that NFOA, et al., had violated provisions of the Florida Insurance Code, including Sections 624.401 and 626.901, Florida Statutes. NFOA has never held a license or Certificate of Authority to transact insurance or annuity contracts in Florida, nor has NFOA ever been registered, pursuant to Section 627.481, Florida Statutes, for purposes of donor annuity agreements. NFOA was never a registered corporation with the Florida Department of State, Division of Corporations. On May 11, 2007, NFOA appealed OIR’s IFO to the First District Court of Appeal of Florida (1st DCA). The 1st DCA dismissed NFOA’s appeal on July 24, 2007. Therefore, NFOA operated an as unauthorized insurer in Florida. On May 17, 2007, the IRS sent a letter to the Texas Department of Insurance stating that NFOA was not classified as an organization exempt from Federal Income Tax as an organization described in Section 501(c)(3) of the IRC. On May 23, 2007, the DCI filed a Verified Petition for Appointment of Receiver for Purposes of Liquidation of National Foundation of America; Immediate and Permanent Injunctive Relief; Request for Expedited Hearing, in the matter of Newman v. National Foundation of America, Richard K. Olive, Susan L. Olive, Breanna McIntyre, Kenny M. Marks, and Hunter Daniel, Chancery Court of the State of Tennessee (Chancery Court), Twentieth Judicial District, Davidson County, Case No. 07-1163-IV. The Verified Petition states, at paragraph 30: NFOA’s contracts reflect an express written term that is recognized by the IRS as a charitable non-profit organization under Section 501(c)(3) of the Internal Revenue Code (Prosser, attachment 4), and the NFOA represents in multiple statements and materials that the contract will entitle the customers to potential generous tax deductions related to that status. The IRS states that it has granted NFOA no such designation. The deceptive underpinning related to NFOA’s supposed tax favored treatment of its contracts permeates its entire business model and sales pitch. This misrepresentation has materially and irreparably harmed and has the potential to harm financially all its customers and the intended beneficiaries of the contracts. These harms are as varied in nature and degree as the circumstances of all those individual’s tax conditions, the assets turned into NFOA, and the extent to which they have entrusted their money and keyed their tax status and consequences to reliance on such an organization. On August 2, 2007, the Commissioner for the Tennessee DCI, having determined that NFOA was insolvent with a financial deficiency of at least $4,300,000, filed a Verified Petition to Convert Rehabilitation by Entry of Final Order of Liquidation, Finding of Insolvency, and Injunction, in the matter of Newman v. National Foundation of America, et al. On September 11, 2007, pursuant to a Final Order of Liquidation and Injunction entered in the matter of Newman v. National Foundation of America et al., the Chancery Court placed NFOA into receivership after finding that the continued rehabilitation of NFOA would be hazardous, financially and otherwise, and would present increased risk of loss to the company’s creditors, policy holders, and the general public. On February 6, 2008, the IRS sent a letter to the court appointed Tennessee DCI Receiver (Receiver) for NFOA stating that NFOA does not qualify for exemption from Federal income tax as an organization described in Section 501(c)(3) of the IRC. The IRS, in determining that NFOA did not qualify for tax exempt status, stated that the sale of NFOA annuity plans has a “distinctive commercial hue”, and concluded that NFOA was primarily involved in the sale of annuity plans that “constitute a trade or business without a charitable program commensurate in scope with the business of selling these plans.” The IRS letter also provides that consumers may not take deductions on their income tax returns for contributions made to NFOA. Insurance Agent’s Duties An insurance agent has a fiduciary duty to his clients to ensure that an insurer is authorized or otherwise approved as an insurer in Florida by OIR prior to the insurance agent selling the insurer’s product to his clients. There are several methods by which an insurance agent could verify whether or not an insurer was authorized or otherwise approved (hereinafter: “authorized”) as an insurer in Florida by OIR. It is insufficient for an insurance agent to depend on the assurances of his insurance business peers as to whether an insurer needs to be authorized in Florida. Due to the importance of income tax considerations in a consumer’s decision making process as to whether or not to purchase an insurance product, an insurance agent has a fiduciary duty to his clients to verify the validity of any representations that an insurer’s product has an IRS 501(c)(3) tax exempt status, prior to the insurance agent selling the product to his clients. There are several methods by which an insurance agent could verify whether or not an insurer has an IRS 501(c)(3) tax exempt status. Respondent admitted, in his testimony, that he had depended on the assurances of others and assumed that NFOA did not need to be authorized as an insurer in Florida. Respondent testified it was his understanding that only insurance companies sell annuities; that NFOA was not an insurer; and therefore, NFOA did not need to be licensed as a Florida insurer. Respondent did not inquire of the Florida OIR whether or not NFOA was authorized to do business in the State of Florida. However, Respondent admitted that the NOFA product he sold “mirrored” an annuity product. Respondent testified that he had verified (by phone, in writing, and the Internet) with the IRS that NFOA had applied for 501(c)(3) tax exempt status. However, Respondent was aware that the tax exempt status had not been granted to NFOA. Respondent knew income tax considerations were materially important to his clients. However, none of the NFOA materials or any Florida consumer contracts signed by Respondent and his clients contain any disclaimer language informing consumers that the 501(c)(3) tax exempt status had been applied for but had yet to be granted by the IRS. Respondent testified that he made use of the Internet to obtain information. However, Respondent failed to use the Internet to find out that the State of Washington Office of Insurance Commissioner entered an Order of Cease and Desist on September 18, 2006, against NFOA based on NFOA not having a certificate of authority as an insurer and because NFOA did not have a 501(c)(3) tax exemption. As is noted below, the filing date of the Washington Order to Cease and Desist, preceded in time all but two of Respondent’s NFOA sales to Florida consumers. Respondent received commissions totaling $171,328.18 for selling NFOA annuities to Florida consumers. Respondent failed to disgorge any of these commissions to the Receiver for NFOA in the state of Tennessee. Re: Count I: Consumer – Yvette Potvin On November 30, 2006, Respondent solicited and induced Yvette Potvin of Casselberry, Florida, then age 81, to transfer or otherwise surrender ownership of her existing annuity contract with Allianz Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Potvin that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew that NFOA had not been approved for tax exempt status by the IRS. Based upon Respondent’s transaction of insurance, Ms. Potvin transferred to NFOA and is anticipated to lose approximately $10,410.42. This amount includes a surrender penalty incurred for transferring her original Allianz annuity to NFOA, and after receiving partial refunds by the Receiver. Based upon Respondent’s transaction of insurance with Ms. Potvin, Respondent was paid a commission of $3,682.89 by NFOA. Re: Count II: Consumer – Edna Bishop On January 18, 2007, Respondent solicited and induced Edna Bishop of Orlando, Florida, then aged 89, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Ultimately, this transaction did not close. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Bishop that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance with Ms. Bishop, Respondent was paid a commission of $8,185.35 by NFOA, even though the transaction was not completed. Re: Count III: Consumer – Genevieve McCann On December 14, 2006, Respondent solicited and induced Genevieve McCann of Fern Park, Florida, then aged 85, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. McCann that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance, Ms. McCann is anticipated to lose approximately $6,100.23. The loss consists of $20,933.04, the amount transferred to NFOA, less $1,742.85 (installment payments made by NFOA to Ms. McCann); $12,473.62 (the first payment sent by Receiver); and $2,686.63 (the second payment sent by Receiver). Ms. McCann lost $2,070.29 through surrender charges incurred for transferring her original American Equity annuity to NFOA. If the surrender penalty is excluded from the calculation, Ms. McCann’s loss is $4,029.94. Based upon Respondent’s transaction of insurance with Ms. McCann, Respondent was paid a commission of $1,879.52 by NFOA. Re: Count IV: Consumer – Lenora Bricker On or about November 30, 2006, Respondent solicited and induced Lenora Bricker of Winter Haven, Florida, then aged 87, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Ultimately, this transaction did not close. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Bricker that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance with Ms. Bricker, Respondent was paid a commission of $1,085.17 by NFOA, even though the transaction was not completed. Re: Count V: Consumer – Louise Blevins On or about November 30, 2006, Respondent solicited and induced Louise Blevins of Longwood, Florida, then aged 81, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Ultimately, this transaction did not close. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Blevins that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance with Ms. Bricker, Respondent was paid a commission of $5,469.09 by NFOA, even though the transaction did not close. Re: Count VI: Consumer – Audrey Piel On December 14, 2006, Respondent solicited and induced Audrey Piel of Maitland, Florida, then aged 81, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Piel that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance, Ms. Piel is anticipated to lose approximately $5,594.24. The loss consists of $21,089.17, the amount transferred to NFOA; less $996.35 (installment payments made by NFOA to Ms. Piel); $13.645.33 (the first payment sent by Receiver); and $2,938.99, (the second payment sent by Receiver). Ms. Piel lost $2,085.74 through surrender charges incurred for transferring her original American Equity annuity to NFOA. If the surrender penalty is excluded from the calculation, Ms. Piel’s loss is $3,508.50. Based upon Respondent’s transaction of insurance with Ms. Piel, Respondent was paid a commission of $1,839.54 by NFOA. Re: Count VII: Consumer – John Bartlett On February 13, 2007, Respondent solicited and induced John Bartlett of Orlando, Florida, then age 75, to transfer or otherwise surrender ownership of his existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Ultimately, this transaction did not close. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Mr. Bartlett that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance with Mr. Bartlett, Respondent was paid a commission of approximately $16,385.56 by NFOA, even though the transaction was not completed. Re: Count VIII: Consumer – Lilla Dama On January 18, Respondent solicited and induced Lilla Dama of Orlando, Florida, then aged 86, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Ultimately, this transaction did not close. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Dama that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance with Ms. Dama, Respondent was paid a commission of approximately $2,757.52 by NFOA, even though the transaction was not completed. Re: Count IX: Consumer – Agnes Burns On February 28, 2007, and April 2, 2007, Respondent solicited and induced Agnes Burns of Orlando, Florida, then aged 87, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company and New York Life Insurance and Annuity Company, respectively, in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Burns that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance, Ms. Burns is anticipated to lose approximately $77,509.17. The loss consists of $335,070.29, the amount transferred to NFOA; less $18,363.66 (installment payments sent by NFOA to Ms. Burns); $205,859.31 (the first payment sent by Receiver); and $44,338.93 (the second payment sent by Receiver). A surrender penalty of $11,000.78 was incurred by Ms Burns for transferring her original annuities to NFOA. If the surrender penalty is excluded from the calculation, Ms. Burns’ loss is $66,508.39. Based upon Respondent’s transaction of insurance with Ms. Burns, Respondent was paid a commission of $30,080.00 by NFOA. Re: Count X: Consumers – Ms. Buchanan; Ms. Golus, and Mr. Owens Respondent solicited and induced Elizabeth Buchanan, aged 42, of Bradenton, Florida; Nancy Golus, aged 59, of Palmetto, Florida; and Herbert Owens, aged 86, of St. Petersburg, Florida, to transfer or otherwise surrender ownership of their existing annuity contracts in return for an NFOA annuities. As to the the NFOA agreement that Mr. Owens entered into, and which was signed by Respondent, the date of the agreement is subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. The NFOA agreements that Ms. Buchanan and Ms. Golus entered into were dated prior to the State of Washington’s Order to Cease and Desist. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Based upon Respondent’s transactions of insurance, Ms. Buchanan is anticipated to lose approximately $89,031.12. The loss consists of $162,445.60, the amount transferred to NFOA; less $20,000.00 (installment payments sent by NFOA to Ms. Buchanan); $92,589.64 (the first payment sent by Receiver); and $19,942.38 (the second payment sent by Receiver). Ms. Buchanan suffered $59,117.54 in losses from surrender charges incurred. Even after partial refunds by the DCI Receiver and the surrender penalty are excluded from the calculation, Ms. Buchanan’s loss is still $29,913.58. Ms. Golus is anticipated to lose approximately $146,027.18, the amount transferred to NFOA. Ms. Golus received $94,917.67 (the first payment by Receiver) and $20,443.81 (the second payment by Receiver). However, Ms. Golus suffered $53,152.47 in surrender charges incurred. Even after partial refunds by the Receiver and the surrender penalty are excluded from the calculation, Ms. Golus’ loss is $30,665.67. Mr. Owens is anticipated to lose approximately $10,976.33. The loss consists of $54,743.52, the amount transferred to NFOA; less $5,108.40 (installment payments sent by NFOA to Mr. Owens); $32,262.83 (the first payment by Receiver); and, $6,948.92 (the second payment sent by Receiver). Mr. Owens incurred $552.96 in surrender charges. Even after partial refunds by the Receiver and the surrender penalty are excluded from the calculation, Mr. Owens’ loss is still $10,423.37. In each and every count, Petitioner proved by clear and convincing evidence that: Respondent directly or indirectly represented or aided an unauthorized insurer to do business in Florida. Respondent knew or reasonably should have known that the annuity contracts he contracted with clients were with an unauthorized insurer. Respondent knowingly placed before the public a statement, assertion, or representation with respect to the business of insurance that was untrue, deceptive or misleading. Respondent knowingly caused to be made, published, disseminated, circulated, delivered, or placed before the public a false material statement. Respondent demonstrated a lack of fitness and trustworthiness to engage in the business of insurance. Respondent engaged in unfair and deceptive practices or showed himself to be a source of injury or loss to the public.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Chief Financial Officer enter a final order finding that: Respondent violated Subsections 626.901(1), 626.901(2), 626.9541(1)(b)4., 626.9541(1)(e)1.e., 626.611(7), 626.621(2), and 626.621(6), Florida Statutes, as charged in Counts I-X of the Second Amended Administrative Complaint; Revoking each and every one of Respondent’s licenses and appointments issued or granted under or pursuant to the Florida Insurance Code; and Providing that if Respondent, subsequent to revocation, makes application to Petitioner for any licensure, a new license will not be granted if Respondent fails to prove that he has otherwise satisfied the financial losses of his NFOA clients, or if Respondent otherwise fails to establish that he is eligible for licensure. DONE AND ENTERED this 10th day of December, 2009, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE 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 10th day of December, 2009.
