The Issue Whether Respondent, Office of Financial Regulation, has made certain agency statements with regard to record-keeping requirements for licensed check cashers, which are agency rules as defined in section 120.52(16), Florida Statutes, but have not been adopted as rules in violation of section 120.54(1)(a), Florida Statutes; and if so, whether costs and attorney’s fees should be awarded.
Findings Of Fact Petitioner, Capital City Check Cashing (Capital City) is a licensed check casher, pursuant to chapter 560, Part III, Florida Statutes. Respondent, Office of Financial Regulation (the Office), is the state agency charged with administering and enforcing chapter 560, Florida Statutes, related to licensing of Money Services Business, at term that includes check-cashing businesses. License Disciplinary Case On or about October 23, 2012, the Office conducted an examination of Respondent’s business records for the period January 1, 2010, through October 23, 2012. The examination ultimately culminated in an Amended Administrative Complaint (Complaint) filed by the Office against Petitioner, a matter which is pending before the undersigned in Case No. 13-4484. The Complaint charges, among other alleged violations, that Petitioner failed to (1) keep a daily payment instrument log including all the information required by section 560.3110(2)(d) and Florida Administrative Code Rule 69V- 560.704(5)(a); (2) maintain copies of payment instruments cashed as required by section 560.310(1) and rule 69V-560.704(2)(a); and (3) maintain records of conductor’s thumbprints on payment instruments as required by section 560.310(2)(c) and rule 69V-560.704(4)(a). The Complaint against Petitioner prompted Petitioner to file the instant unadopted rule challenge.1/ Examination Process The Office examines licensees’ records to ensure compliance with the record-keeping requirements of section 560.310. The general process for an examination is a site visit from an examiner, a report from the examiner of his or her findings to the Chief of the Bureau of Enforcement, and a recommendation from the Bureau Chief to the Director of the Division of Enforcement whether to file a complaint against a licensee, and if so, recommended sanctions. Examination Module2/ William Morin is the examiner who conducted the examination of Petitioner’s records in the underlying license disciplinary case. Mr. Morin utilized an “examination module” to track compliance with various statutory and rule requirements during the examination. The examination module is a chart divided into four columns. The columns are labeled, from left to right, “Area of Review,” “Results of Review,” “Findings,” and “Report Reference.” The first column is pre-filled with the particular record-keeping statutory and rule requirements, along with directions to the examiner, such as “[t]he examiner should access the FinCEN registration list to determine if the licensee has registered with FinCEN as a money services business (MSB).” The second column allows the examiner to note the results of his or her review of the particular requirement found in the first column. For example, in his review of Petitioner’s records, Mr. Morin noted in column 2 “[n]o branch offices” in response to the requirement noted in column 1, that he “verify all branch locations have been properly and timely reported to the Office.” The examination module also allows the examiner to input detailed notes regarding the results of the review. In the case at hand, Mr. Morin made notes regarding the records reviewed for each of approximately 10 of Petitioner’s named customers. The notes reflect observations such as “[d]id not provide consumer with full amount of cash;” “[n]o customer file;” and “[n]o thumbprint from consumer.” The examination module is a work plan used by an examiner to document the findings of each examination. The examination module is used consistently by the Office’s examiners. The examination module is an internal agency document used to assist in conduct of examinations of licensee’s records. The examination module does not, in and of itself, create rights, require compliance, or otherwise have the direct and consistent effect of law. Sanction Computation Worksheet Andrew Grosmaire is the Office’s Chief of the Bureau of Enforcement. Mr. Grosmaire reviews examiners’ reports of examination. When Mr. Grosmaire receives an examination report, he utilizes a sanction computation worksheet to calculate a recommended sanction amount based on violations noted in the examination report. The sanction computation worksheet is a spreadsheet developed for him by Jay Newton, a financial administrator with the Office. Mr. Grosmaire uses the sanction computation worksheet with every examination report that is referred to him. Florida Administrative Code Rule 69V-560.1000 establishes the disciplinary guidelines applicable to each ground for disciplinary action that may be imposed against a licensee for violating chapter 560. The rule establishes both administrative fines associated with violations of particular statutory sections, as well as levels of suspension or revocation, if applicable to the corresponding violation. Administrative fines and levels of suspension are classified as A, B, and C. Generally, the guidelines increase the severity of the recommended administrative fine and level of suspension for repeat violations of the same requirements. The rule establishes a range of administrative fines, as well as a range of days of suspension, that corresponds with A, B, and C penalties. For example, an A-level administrative fine ranges between $1,000 and $3,500. An A-level suspension ranges between 3 to 10 days. The rule authorizes the Office to consider a list of enumerated circumstances when determining an appropriate penalty within the range of penalties prescribed for each violation, as well as when determining whether to impose a penalty outside of the established range. These circumstances are generally referred to as “mitigating and aggravating factors.” Mr. Grosmaire uses the sanction computation worksheet to calculate an overall recommended penalty against a licensee based on the particular violations noted in the examiner’s report, the range of sanctions for those particular violations as established in rule 69V-560.1000, and any mitigating or aggravating factors. For each finding noted in the examiner’s report, Mr. Grosmaire inputs the corresponding statute or rule, the level of sanction from the corresponding rule, a description of the violation, the minimum and maximum fine established by the rule, the minimum and maximum suspension established by the rule, and whether or not revocation is authorized by the rule for the specific violation. The chart also contains fields for Mr. Grosmaire to input the sample size utilized by the examiner, the number of violations of a particular requirement within the particular sample, and the percentage of the sample containing the same violation. Finally, Mr. Grosmaire inputs a recommended fine and recommended sanction in their respective columns. The spreadsheet automatically calculates the total recommended fine and recommended days of suspension for all the violations. This sum can be compared with the total of the minimum and maximum fine and days of suspension for each violation based on the range established by rule. Mr. Grosmaire exercises discretion in determining the recommended sanctions against a licensee based upon the range of penalties provided in the rule and any mitigating or aggravating circumstances. After completing the sanction computation worksheet, Mr. Grosmaire makes a written recommendation of appropriate penalties against the licensee to the Division Director and the Office’s legal counsel. Payment Instrument Log Section 560.310, Florida Statutes (2012), provides in pertinent part: A licensee engaged in check cashing must maintain for the period specified in s. 560.1105 a copy of each payment instrument cashed. If the payment instrument exceeds $1,000, the following additional information must be maintained: * * * d) The office shall, at a minimum, require licensees to submit the following information to the check cashing database or electronic log, before entering into each check cashing transaction for each payment instrument being cashed, in such format as required by rule: Transaction date. Payor name as displayed on the payment instrument. Payee name as displayed on the payment instrument. Conductor name, if different from the payee name. Amount of the payment instrument. Amount of currency provided. Type of payment instrument, which may include personal, payroll, government, corporate, third-party, or another type of instrument. Amount of the fee charged for cashing of the payment instrument. Branch or location where the payment instrument was accepted. The type of identification and identification number presented by the payee or conductor. Payee’s workers’ compensation insurance policy number or exemption certificate number, if the payee is a business. Such additional information as required by rule. For purposes of this subsection, multiple payment instruments accepted from any one person on any given day which total $1,000 or more must be aggregated and reported in the check cashing database or on the log. Florida Administrative Code Rule 69V-560.704 provides, in pertinent part: (5)(a) In addition to the records required in subsections (1) and (2) for payment instruments $1,000.00 or more, the check casher shall create and maintain an electronic log of payment instruments accepted which includes, at a minimum, the following information: Transaction date; Payor name; Payee name; Conductor name, if other than the payee; Amount of payment instrument; Amount of currency provided; Type of payment instrument; Personal check; Payroll check; Government check; Corporate check; Third party check; or Other payment instrument; Fee charged for the cashing of the payment instrument; Branch/Location where instrument was accepted; Identification type presented by conductor; and Identification number presented by conductor. Electronic logs shall be maintained in an electronic format that is readily retrievable and capable of being exported to most widely available software applications including Microsoft EXCEL. Petitioner alleges that the Office requires check cashers to keep the daily payment instrument log in a spreadsheet format, a statement Petitioner argues is an unadopted rule. In his exam notes, Mr. Morin wrote “Licensee maintains an electronic log; however, it lacks the information and data fields required by rule.” Petitioner was not charged with failing to maintain an electronic log in a spreadsheet format. Gregory Oaks is the Office’s Director of the Division of Consumer Finance, and oversees the Bureau of Enforcement, as well as the Bureau of Registration. Mr. Oaks testified that if a licensee kept an electronic log in some format other than a spreadsheet, the Office would look at whether the information was “readily retrievable and capable of being exported into some software application, including or similar to Excel” in determining compliance.3/ Andrew Grosmaire is the Office’s Chief of the Bureau of Enforcement. Mr. Grosmaire testified that software other than a spreadsheet program might comply with the statute and rule if it was searchable, allowed for sampling, and aggregation of multiple checks cashed for less than $1,000 by the same person on the same day. Mr. Grosmaire conceded that a .pdf copy of documents would likely not meet the requirement of rule 69V-560.704 that the information be “easily retrievable and capable of being used in the format the same way that an application such as Microsoft Excel would do.”4/ Mr. Grosmaire testified consistently that the determinative factor is that the data on the electronic log be “retrievable and capable of being exported.”5/ Petitioner did not demonstrate by a preponderance of the evidence that the Office maintains a statement that check cashers must maintain the electronic log in a spreadsheet format. Copies of Checks Section 560.301(1) provides, “[a] licensee engaged in check cashing must maintain for the period specified in s. 560.1105 a copy of each payment instrument cashed.” Section 560.301(3) provides, “[a] licensee under this part may engage the services of a third party that is not a depository institution for the maintenance and storage of records required by this section if all the requirements of this section are met.” Florida Administrative Code Rule 69V-560.704(2) provides as follows: Every check casher shall maintain legible records of all payment instruments cashed. The records shall include the following information with respect to each payment instrument accepted by the registrant: A copy of all payment instruments accepted and endorsed by the licensee to include the face and reverse (front and back) of the payment instrument. Copies shall be made after each payment instrument has been endorsed with the legal name of the licensee. Endorsements on all payment instruments accepted by the check casher shall be made at the time of acceptance. Petitioner was cited by the Office as follows: “Respondent’s records from July 2012 failed to show copies of the back of all accepted payment instruments.”6/ In the examination module for examination of Petitioner’s records, Mr. Morin noted as follows: Licensee claims that the copies of the back of the checks are on their bank statements. The licensee cannot rely on their financial institution to keep these records for them. Reviewed bank statements and saw no copies of backs of customer checks. (emphasis added). Petitioner alleges the Office prohibits check cashers from designating a bank as a third-party record keeper of the documents required to be kept by section 560.301(1) and rule 69V-560.704(2), i.e., copies of the checks cashed. Petitioner claims that this policy constitutes a rule, pursuant to section 120.52(16), but has not been adopted as a rule in violation of section 120.54(1)(a). The Office maintains that it has no such policy. Rather, the statute prohibits check cashers from designating a bank as a third-party record keeper. Neither chapter 560 nor rule 69V-560.704 defines “depository institution.” Section 494.001 defines “depository institution” to have the same meaning as in section(3)(c) of the Federal Deposit Insurance Act, and to include any credit union. See § 494.001(9), Fla. Stat. Chapter 494 provides for regulation of loan originators, mortgage brokers, and lenders. Section(3)(c) of the Federal Deposit Insurance Act defines “depository institution” to include any bank or savings association. See 12 U.S.C. § 1813(c) (1989). Further, section 560.104 provides, in pertinent part, as follows: 560.104 Exemptions.—The following entities are exempt from the provisions of this chapter: Banks, credit card banks, credit unions, trust companies, associations, offices of an international banking corporation, Edge Act or agreement corporations, or other financial depository institutions organized under the laws of any state or the United States. § 560.104(1), Fla. Stat. Chapter 560, Part I, provides for general regulation of money services business, a term which specifically includes check cashing businesses. See § 560.104(22), Fla. Stat. The Office’s practice of prohibiting check cashers from designating banks as third-party record keepers of copies of the checks cashed, is a simple reiteration of the statutory prohibition. Thumbprints Section 560.310(2) provides, in pertinent part, as follows: If the payment instrument exceeds $1,000, the following additional information must be maintained or submitted: * * * A thumbprint of the customer taken by the licensee when the payment instrument is presented for negotiation or payment. Florida Administrative Code Rule 69V-560.704(4), provides, in pertinent part: In addition to the records required in subsections (1) and (2), for payment instruments exceeding $1,000.00, the check casher shall: Affix an original thumbprint of the conductor to the original of each payment instrument accepted which is taken at the time of acceptance[.] Petitioner was cited for violating section 560.310(2)(c) and rule 69V-560.704(4) by failing “to maintain records of conductors’ thumbprints from approximately twenty-two (22) accepted payment instruments exceeding $1,000.” Off. of Fin. Reg. v. Capital City Check Cashing, Case No. 13-4484, Amd. Admin. Comp. at 7 (Dec. 4, 2013). In the examination module for examination of Petitioner’s records, Mr. Morin noted as follows: “Thumbprint is not affixed to the payment instrument. It is affixed to the check cashing agreement.” It is Petitioner’s practice to obtain the customer’s thumbprint on a check-cashing agreement at the time a check is presented. Petitioner then staples a copy of the check-cashing agreement to a copy of the check cashed, which is kept for his records. Mr. Grosmaire testified it is his understanding that the rule requires the original thumbprint be placed on the original check. Strict Compliance Finally, Petitioner argues that the Office requires strict compliance with the regulations applicable to check cashers, a requirement which is in and of itself a rule.7/ The Office does not distinguish between “strict compliance” and “substantial compliance” in determining whether a licensee has complied with the applicable statutory and administrative record-keeping requirements.
The Issue Whether Respondents violated the statutes and rules alleged in the Second Amended Administrative Complaint; and, if so, what is the appropriate penalty to be imposed against Respondents.
Findings Of Fact OFR is the state agency charged with administering and enforcing chapter 560, Florida Statutes, including part II related to money services businesses. At all times material hereto, Payservices has been a foreign corporation and part II licensee pursuant to chapter 560, specifically a "money services business," as defined in section 560.102(22), and "money transmitter," as defined in section 560.102(23).4/ At all times material hereto, Mr. Danenberg has been the chief executive officer, compliance officer, and an owner of Payservices. As such, Mr. Danenberg is an "affiliated party" and a "responsible person" as defined in sections 560.103(1) and 560.103(33). Count I Licensees, such as Payservices, are required to annually file a financial audit report within 120 days after the end of the licensee's fiscal year. The financial audit report is prepared by a certified public accountant and is used to demonstrate to OFR that the licensee has the financial health to conduct its business and transmit funds within the State of Florida. Payservices' fiscal year ends December 31st. Respondents were required to provide Payservices' 2016 financial audit report to OFR by no later than May 1, 2017. On December 20, 2017, William C. Morin, Jr., OFR's Chief of the Bureau of Registration, contacted Payservices by email with regard to Payservices' failure to timely file a financial audit report within 120 days after the 2016 fiscal year ended. Mr. Danenberg responded by email that same day, telling Mr. Morin that Payservices' accountant had prepared a financial audit report "many months ago," and that it was his "impression" that it had been uploaded to the REAL system "at some point when we filed the quarterly reports." Mr. Danenberg attached to his December 20, 2017, email what OFR accepted as the financial audit report that same day. Notably, the document indicated it was prepared by a certified public accountant on June 15, 2017, after the May 1, 2017, deadline. In any event, Mr. Morin reviewed the REAL system regarding Payservices and determined there were no problems with the REAL system's ability to accept uploaded documents. Mr. Morin testified that he could see on the REAL system that Payservices successfully uploaded a quarterly report and Security Device Calculation Form on January 26, 2017, which created a transaction number. Mr. Morin also observed that Payservices started to upload its financial audit report, which would create a transaction number, but no financial audit report was actually attached and uploaded to the REAL system on January 26, 2017, under that transaction number. According to Mr. Morin, Payservices may have attempted to start to file a financial audit report on January 26, 2017, but it did not complete the transaction because no financial audit report was attached. At hearing, Mr. Morin acknowledged that: "When I looked at the Financial Audit Report transaction, nothing was attached. And I also know that the functionality of the REAL system will kind of allow for the transaction to be completed and nothing attached." Tr. p. 100. Mr. Morin testified that Mr. Danenberg was cooperative when he was contacted on Decemeber 20, 2017, and submitted the financial audit report. The persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not submit their financial audit report to OFR until December 20, 2017, almost eight months after the May 1, 2017, deadline. Count II Licensees, such as Payservices, are required to annually file Form OFR-560-07, Security Device Calculation Form, by January 31st of each calendar year for the preceding calendar year. The Security Device Calculation Form requires licensees to report to OFR the dollar amount of transactions with Florida consumers. The dollar amount of transactions identified in the form is then utilized by OFR to determine if additional collateral is necessary to protect Florida consumers in the event a claim is made against the collateral for monies that were not properly transmitted by the licensee. Andrew Grosmaire, OFR's Chief of Enforcement in the Division of Consumer Finance, acknowledged at hearing that a licensee has 60 days to amend the face value of its surety bond, should an increase be required, and that at all times material hereto, the value of Payservices' surety bond has been correct for the minimum amount required. Nevertheless, Mr. Morin testified that Respondents did not file Form OFR-560-07, Security Device Calculation Form, until February 10, 2018, ten days late. The persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not file Form OFR-560-07, Security Device Calculation Form, until February 10, 2018, ten days late. Count III Licensees, such as Payservices, are required to update information contained in an initial application form, or any amendment to such application, within 30 days after the change is effective. In Payservices' initial application dated September 25, 2015, Respondents identified Corporate Access, Inc., as its registered agent with an address for service of process at 236 East 6th Avenue, Tallahassee, Florida 32303. According to the Department of State, Division of Corporation's records, on January 10, 2017, Mr. Danenberg was appointed as Payservices' registered agent with a new address for service of process at 300 West Palmetto Park Road, A210, Boca Raton, Florida 33432. Respondents filed an amended license application with OFR on August 28, 2017, which still listed Corporate Access, Inc., as the registered agent for service of process. On February 26, 2018, Respondents amended their registered agent information with the Department of State listing a new address for Mr. Danenberg at 14061 Pacific Pointe Place, No. 204, Delray Beach, Florida 33484. Mr. Morin testified that at no time have Respondents updated their initial application with OFR to reflect Mr. Danenberg as the registered agent for Payservices and his address as the registered agent.5/ Mr. Morin and Mr. Grosmaire testified that the reason a licensee needs to update a change in the registered agent's name and address is so that OFR may effectuate service of process against the licensee. Yet, Mr. Grosmaire acknowledged that OFR has access to the Division of Corporation's records. Nevertheless, the persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not update their initial application with OFR to reflect Mr. Danenberg as the registered agent for Payservices and his address as the registered agent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that OFR impose an administrative fine against Respondents in the amount of $6,000. DONE AND ENTERED this 16th day of December, 2019, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of December, 2019.
The Issue The issue is whether Respondent committed the offenses alleged by the Administrative Complaint, and, if she did, the penalty that should be imposed.
Findings Of Fact Petitioner is a regulatory agency of the State of Florida charged with the responsibility of investigating and prosecuting complaints against real estate professionals, including licensed real estate salesmen. At all times pertinent to this case, Respondent, America Canizales, was licensed by Petitioner as a real estate salesman. At the time of the hearing, however, Respondent's license was on inactive status. Respondent was the real estate salesman who represented Elvira Martinez when Ms. Martinez bought her apartment in the middle of 1987. As a result of her professional dealings with Ms. Martinez, Respondent learned that Ms. Martinez was interested in investing in real estate. On December 4, 1987, Respondent persuaded Ms. Martinez to enter into a real estate transaction with her. Respondent intended to purchase a house for the sum of $34,000, but she did not have the funds necessary to close the transaction. Respondent needed an additional $5,000 to apply toward the purchase price and to pay the costs of closing. The house was to be purchased by Respondent in her individual capacity in a transaction that was independent of her status as a real estate salesman. The agreement executed by Respondent and Ms. Martinez on December 4, 1987, provided for Ms. Martinez to give to Respondent the sum of $5,000. In exchange for this money, Respondent agreed that she would convey to Ms. Martinez one-half interest in the $34,000 house after she had acquired title to the property. In the event the transaction did net close and Respondent did not obtain title to the house, Respondent was to return to Ms. Martinez the sum of $5,000 without the payment of interest. Between December 4, 1987, and December 8, 1987, Ms. Martinez gave to Respondent a check made payable to America Canizales in the amount of $5,000. This check, dated December 9, 1987, was to be held in trust by Respondent until the closing on the purchase of the $34,000 house. At no time did Respondent deposit the check in a bank account. There was no evidence that Respondent took any action to safeguard Ms. Martinez's check or the funds represented by the check. Although the check was dated December 9, 1987, the check was cashed on December 8, 1987, at the bank used by Ms. Martinez. The person who cashed the check endorsed it in the name of America Canizales. On or about December 10, 1987, Respondent told Ms. Martinez that Respondent's husband had stolen all of Respondent's money and that he had also stolen Ms. Martinez's check. Respondent also told Ms. Martinez that because of the theft, she would be unable to close their contemplated transaction and promised to repay the $5,000. Respondent offered no further explanation or accounting for the funds. Respondent made repeated promises to repay Ms. Martinez the sum of $5,000 on the occasions Ms. Martinez was able to contact her. Thereafter, Respondent moved from the State of Florida without letting Ms. Martinez know where she could be reached. When Ms. Martinez located Respondent in Chicago, Illinois, Respondent again promised to repay Ms. Martinez. As of the time of the formal hearing, Respondent had returned to Dade County, Florida, but she had made no effort to repay Ms. Martinez the sum of $5,000. Respondent repeatedly misled Ms. Martinez as to her intentions to repay her. The factual allegations of the Administrative Complaint filed by Petitioner to "initiate this case were denied by Respondent. The request for a formal hearing was timely filed by Respondent.
Recommendation Based on the foregoing Findings of `Fact and Conclusions of Law, it is: RECOMMENDED that the Department of Professional Regulation, Florida Real Estate Commission, enter a final order which finds that Respondent violated Section 475.25(1)(b), Florida Statutes, as alleged in Count I of the Administrative Complaint. It is further recommended that the final order revoke the real estate salesman's license issued to Respondent, America Canizales. DONE and ORDERED this 30th day of January, 1990, in Tallahassee, Florida. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of January, 1990. COPIES FURNISHED: John R. Alexander, Esquire Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 America Canizales 158 West 10th Street Hialeah, Florida 33010 Kenneth E. Easley, General Counsel Department of Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-0792 Darlene Keller, Division Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
The Issue Whether petitioner should impose fines and other administrative sanctions against respondents, and order them "to cease and desist from further violating Florida laws and take appropriate corrective action," for the reasons alleged in the administrative complaint?
Findings Of Fact Credicorp, Incorporated (Credicorp) is a Texas corporation whose principal place of business is located in Dallas, Texas. Credicorp is not licensed pursuant to Chapter 520, Florida Statutes, and never has been. Originally incorporated in 1990 under the name FAFCO, Credicorp began mailing solicitations to Florida in November of 1990. John Rheinfrank was president of Credicorp from November of 1990 until October of 1992. T. at 15. Since then, Stevan Brown, who has been corporate secretary at all pertinent times, has served as president. Credicorp has no employees or agents in Florida, and owns no property in Florida. Credicorp has not registered to do business in Florida and does not collect Florida sales or use taxes. Credicorp mails solicitations, also called invitations, to Florida residents and others. Before the corporate name change, invitations sent to prospects read as follows: TELEGRAM APPROVAL NO: [account number specified] APPROVAL EXPIRATION DATE: [date specified] [Name and address of targeted individual] YOU HAVE BEEN PRE-APPROVED FOR A GOLD CARD WITH A $10,000.00 LINE OF CREDIT. *MAIL YOUR $29.95 ANNUAL FEE BY CHECK OR MONEY ORDER BY (specified date) ALONG WITH THIS SIGNED NOTICE TO ACTIVATE YOUR CREDIT IMMEDIATELY. FAILURE TO DO SO WILL RESULT IN OUR REEVALUATION OF YOUR ELIGIBILITY. PLEASE RETURN THIS TELEGRAM WITH PAYMENT BY (date specified). MAKE CHECK OR MONEY ORDER PAYABLE TO FAFCO GOLD CARD. SINCERELY, ROBERT J. ARMSTRONG, NEW ACCOUNTS MANAGER RESPOND TODAY! Petitioner's Exhibit No. 19. Robert J. Armstrong, the putative accounts manager, does not exist. T. at 121. Recently invitations have included a 60- day money-back guarantee and a disclaimer in small type disclosing Credicorp's lack of affiliation with a financial institution. Petitioner's Exhibit No. 19. The solicitation arrives in an envelope stamped "DATED MATERIAL: YOUR IMMEDIATE REPLY REQUESTED," and the return address is shown as "CREDIT APPROVAL DEPT." Petitioner's Exhibits Nos. 8 and 21; Admission No. 13. Ordinarily the solicitation contains all the information an individual receives before paying money to Credicorp to secure its services. Respondents offer potential customers residing in Florida a "Gold Card" with "a $10,000 line of credit" at a 12 percent annual interest rate, in exchange for a $29.95 fee. Petitioner's Exhibits Nos. 19 and 20; Admission 46. The services Credicorp in fact provides to members are offers to sell merchandise, loans for purchasing the merchandise that Credicorp sells, assorted coupons, and hotel and rental car discounts. Petitioner's Exhibits Nos. 15 and 29, line 23. Not one of these services is clearly identified on the initial solicitation sent to potential members. Petitioner's Exhibit No. 19; T. at 120- 121. After the customer submits a pre-approved application and pays the membership fee, Credicorp mails a "fulfillment package." Petitioner's Exhibit No. 15, p.77, line 22. The customer must pay a $29.95 fee before Credicorp performs any service on the customer's behalf. Petitioner's Exhibit No. 20; Admission No. 47. The fulfillment package contains a letter that states, in part: WELCOME TO CREDICORP, YOUR LINE OF CREDIT IS $10,000 HERE IS YOUR CREDICORP MEMBERSHIP CARD! ACCOUNT # START USING YOUR CREDICORP MEMBERSHIP AND BONUS COUPONS IMMEDIATELY TO PURCHASE NAME BRAND PRODUCTS FROM OUR HOME VALUES AND GIFT CATALOG. ENCLOSED IS OUR GIFT TO YOU, YOUR PREFERRED MEMBER SAVINGS COUPON BOOKLET WORTH UP TO $1,000.00 IN COUPONS REDEEMABLE IN YOUR AREA. ALSO SEE INFORMATION ENCLOSED ABOUT 50 percent DISCOUNTS AT THOUSANDS OF LOCATIONS THROUGH OUT THE U.S. Petitioner's Exhibit No. 6. This letter is the first notice Credicorp gives the "new member" that he or she has joined a catalogue shopping club. The fulfillment package also contains a second letter addressed "Dear New Credicorp Member," a copy of the Credicorp Rules and Regulations, a collection of Home Values and Gifts Bonus Coupons, a booklet of Super Saver coupons, and the Home Values and Gifts catalogue. For the past six months or so, Petitioner's Exhibit No. 16, p.44, the package has contained an application for a "Privilege Card." Petitioner's Exhibits Nos. 1, 2 6, and 15, p. 78 1. 22. A member can purchase merchandise listed in the Home Values and Gifts catalogue by completing order forms contained in the catalogue and mailing them, along with payment, to Credicorp. T. at 108. Credicorp extends members a line of credit of up to $10,000 to purchase this merchandise. T. at 108, 111. The member's "Gold Card" number must be included when ordering products from the catalogue. Petitioner's Exhibit No. 15, p. 83, line 9. A member cannot use the "Gold Card" to purchase goods or services from retail sellers other than Credicorp. T. at 111-114. Members cannot use their "Gold Cards" or their membership to obtain cash from anybody. The Better Business Bureau of Texas received over 34,000 inquiries in 1992 regarding Credicorp's activities. T. at 122-123. Credicorp receives a mark-up on the merchandise it sells members. Petitioner's Exhibit No. 16, p.60, line 5. Members who purchase merchandise on credit must initially submit a specified down payment with the order. Petitioner's Exhibits Nos. 1, 2 and 14. Two prices are available to a Credicorp member, a cash price and a "credit price," which reflects a 12 percent financing fee. Petitioner's Exhibits Nos. 1, 2, 14. Merchandise purchased on credit arrives with an installment coupon book for each item ordered. Petitioner's Exhibit No. 6, Credicorp Rules and Regulations p. 2. The Credicorp Rules and Regulations, the order forms contained in the catalogue, and all other materials Credicorp provides members make no mention of any contingency once the member completes, signs and sends in a form order for merchandise with the amount of money required. Petitioner's Exhibits Nos. 1, 2, 6, 12, 14, 17. Many Florida residents complete and sign these order forms in Florida. Petitioner's Exhibit No. 17. Credicorp has received at least 378 form orders for merchandise from Florida residents. Id. Approximately 1,600,000 individuals have submitted to Credicorp membership applications, each accompanied by $29.95. New members' names and addresses are entered into a computer data base and "batch edit sheets," each listing 100 names of new members, are printed. Petitioner's Exhibits Nos. 4 and 5; Petitioner's Exhibit No. 15, page 73, line 1; T. at 47. Sample batch edit sheets obtained from Credicorp by the Department listed the names of 640 Florida residents who had sent a membership application form and $29.95 to Credicorp to obtain membership. Petitioner's Exhibit Nos. 4, 5, 18. On a single day, June 24, 1992, money and membership application forms from 243 residents of Florida reached Credicorp. Petitioner's Exhibit No. 18.
Recommendation It is, accordingly, RECOMMENDED: That petitioner order respondents Credicorp, John Rheinfrank and Stevan Brown to cease and desist violating Chapter 687, Florida Statutes. That petitioner levy an administrative fine against Credicorp in the amount of three million five hundred seventy-eight thousand dollars ($3,578,000) to be paid within thirty (30) days of entry of the final order. That petitioner levy an administrative fine against respondent John Rheinfrank in the amount of two hundred fifty thousand dollars ($250,000) to be paid within thirty (30) days of entry of the final order. That petitioner levy an administrative fine against respondent Stevan Brown in the amount of two hundred fifty thousand dollars ($250,000) to be paid within thirty (30 days of entry of the final order. DONE AND ENTERED this 4th day of October, 1993, in Tallahassee, Florida. ROBERT T. BENTON, II 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 4th day of October, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-911 Petitioner's proposed findings of fact Nos. 1-22, 24-38, 40, 41, 42, and 43 have been adopted, in substance, insofar as material. With respect to petitioner's proposed findings of fact Nos. 23 and 39, extrapolation is problematic. Respondent's proposed findings of fact Nos. 1, 2, 3, 5, 7, 8, 9, 11, 16, 24, 25, 26, and 27 have been adopted, in substance, insofar as material. Respondent's proposed findings of fact Nos. 4 and 21 pertain to matters that are not material to petitioner's allegations. Respondent's proposed findings of fact Nos. 6, 22 and 23 pertain to subordinate matters. With respect to respondent's proposed finding of fact No. 10, it is clear from all the circumstances that it was Credicorp's intent to mislead recipients into believing that there was no such restriction. With respect to respondent's proposed finding of fact No. 12, Credicorp lends money to finance merchandise it sells on credit. With respect to respondent's proposed findings of fact Nos. 13 and 14, it is clear from all the circumstances that Credicorp used the term "Gold Card" to mislead recipients of its solicitations into believing they were being offered a credit card. With respect to respondent's proposed finding of fact No. 15, the evidence did not show that the "Credicorp Gold Card is useful to members as a reminder of their membership." With respect to respondent's proposed finding of fact No. 17, the word card does appear. With respect to respondent's proposed findings of fact Nos. 18 and 19, Credicorp so held itself out. With respect to respondent's proposed finding of fact No. 20, the sales contract comes into existence when the member mails the order and payment. COPIES FURNISHED: Honorable Gerald Lewis Comptroller, State of Florida Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350 William G. Reeves, General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0350 Bridget L. Ryan, Esquire Department of Banking & Finance Suite 1302, The Capitol Tallahassee, Florida 32399 William E. Williams, Esquire Rex Ware, Esquire 106 East College Avenue Post Office Box 1794 Tallahassee, Florida 32301
Conclusions This cause has come on for final agency action after the filing of a Notice of Voluntary Dismissal With Prejudice (Notice) by Suntree Pharmacy, inc. (Suntree) at the Division Of Administrative Hearings in Case No. 13-4637 on December 27, 2013 and that Division's entry of an Order Closing File And Relinquishing Jurisdiction (Order) on January 9, 2014. Having considered the Notice and the Order and the Order of Conditional Release From Stop Work Order (Release) and the Payment Agreement Schedule For Periodic Payment of Penalty (Payment Agreement) and associated documents (Attachment A hereto), IT IS HEREBY ORDERED that the Notice Of Assignment And Order issued herein on January 30, 2014 is hereby withdrawn as improvidently issued. IT IS HEREBY FURTHER ORDERED that the Order of Conditional Release From Stop Work Order and the Payment Agreement Schedule For Periodic Payment of Penalty are affirmed and remain in full force and effect until all terms and conditions thereof are satisfied. Should any term or condition therein be defaulted on by Suntree, the Release shall be immediately lifted and a bar against further work immediately re- ss igsyerneeminyeevnerttaneimm mee imposed and the Payment Agreement shall be accelerated and the full amount due thereunder shall become immediately due and payable. March THE DONE AND ORDERED this _@rel_day of February, 2014. Robert C. Kneip, Chief of Sta
