Findings Of Fact During 1982 and 1983, Petitioner was licensed as a mortgage broker and real estate broker in the State of Florida. His mortgage broker's license expired in September, 1983. At all times material hereto, Petitioner utilized his mortgage broker's and real estate broker's license to engage in real estate development speculation. He worked closely with Jeffrey Graham, who was also licensed as a mortgage broker and who was a co-owner with Petitioner of Continental Development, Continental Mortgage Company and the Real Estate Spot. They were engaged in buying and selling existing residential properties and constructing new homes for sale. Financing for Petitioner's speculative real estate transactions was provided primarily by The Bank of Florida, located in St. Petersburg, Florida. The Bank provided financing on 80 to 85 percent of his transactions, but at some point in 1982 or 1983, Petitioner and Graham found themselves unable to obtain further construction financing from the Bank. In order to continue receiving financing from the Bank, Petitioner and Graham initiated the use of "stand-in" buyers. A "stand-in" buyer would not have to use any of his own money as a deposit or down payment, even though real estate contracts executed in connection with these transactions would show an earnest money deposit by such buyers. The buyer's role was simply to lend his credit to the transaction and to share in any profits on the eventual sale of the property. On or about March 25, 1983, Petitioner executed, as seller, a contract for sale of real estate and deposit receipt with Norman Tanner, buyer. The transaction involved the sale of real estate in Pinellas County, Florida, and reflects a total purchase price of $25,000, with an earnest money deposit of $5,000 which the contract specified was to be held by Petitioner, as seller, until closing. Petitioner also executed a Settlement Statement on March 29, 1983, in connection with a loan obtained by Tanner from The Bank of Florida which indicated that Tanner had paid an earnest money deposit of $5,000. Based upon the testimony of Norman Tanner at hearing, it is found that he did not provide the earnest money deposit indicated on the sales contract or Settlement Statement which Petitioner executed as seller. Petitioner testified that this transaction was carried out in his individual capacity as a personal investment, and not under the authority of his mortgage broker's license. In fact, Petitioner did not deal directly with Tanner in this transaction. Tanner's dealings were with Petitioner's partner, Jeffrey Graham. Nevertheless, the evidence and demeanor of the witnesses establishes that Petitioner was aware of the fact that Tanner had not paid the deposit reflected on the instruments he executed, and that such instruments were used to induce the Bank to make a mortgage loan to Tanner. Petitioner, as seller, received $19,665.56 cash at settlement from this transaction with Tanner. On or about February 24, 1982, Petitioner executed a contract for sale of real estate and deposit receipt with Joseph Armendinger, buyer. The transaction involved the sale of real estate in Pinellas County, Florida, and reflects a total purchase price of $48,000, with an earnest money deposit of $6,500 which the contract specified was to be held in escrow by The Real Estate Spot, Inc., until closing. Petitioner and Armendinger also executed an Affidavit of Purchaser and Vendor in connection with obtaining financing for this transaction, and said Affidavit also indicated the buyer's purported cash equity of $6,500 in the property. At the time, Petitioner was co-owner of The Real Estate Spot, and Armendinger was an electrician who was doing some work at The Real Estate Spot and became interested in the "stand-in" buyer transactions he observed while doing electrical work at Petitioner's office. On or about October 27, 1982, Petitioner and Armendinger executed another contract for sale and deposit receipt for a second piece of property, which reflects a total price of $85,000 and an earnest money deposit by Armendinger of $5,000. Thereafter, they executed an Affidavit of Purchaser and Vendor and Settlement Statement reflecting Armendinger's purported cash equity of $4,250.00. Petitioner used the proceeds from this transaction to pay off an existing mortgage and judgment on the property, and realized $1,607.46 in cash, which was shared with Jeffrey Graham, co-seller. Petitioner knew that the contracts for sale and Affidavits which he executed with Armendinger were to be presented to The Bank of Florida and used for the purpose of Armendinger obtaining financing for the purchase of these properties. Based upon the testimony of Joseph Armendinger at hearing, it is found he did not provide any earnest money deposit or downpayment in connection with these two transactions with Petitioner. Armendinger relied on Petitioner, a licensed mortgage broker and real estate broker, in these transactions, and was told by Petitioner that he would not have to put any money of his own into these transactions. Petitioner knew that Armendinger had not made any deposit or downpayments concerning these transactions at the time he executed the contracts for sale and deposit receipts, Affidavits and Settlement Statement. On December 16, 1982, Petitioner executed two mortgages in favor of Patricia G. Herren on property he had previously sold to Armendinger. These mortgages totalled $21,793.35, and were recorded in Pinellas County, Florida, on December 28, 1982. These mortgages were used by Petitioner, along with a $10,000 mortgage he executed in Herren's favor, to obtain a satisfaction from Herren of a mortgage she held on a piece of property she sold to Petitioner in October 1982 in St. Petersburg Beach. The $10,000 Herren mortgage was also recorded on December 28, 1982. Having obtained the satisfaction, Petitioner then sold the St. Petersburg Beach property to Juanita Murdaugh and Jeffrey Graham on December 17, 1982, prior to recording the $10,000 Herren mortgage. He did not disclose on the Affidavit of Purchaser and Vendor which he executed that he had an outstanding $10,000 mortgage in favor of Herren on this St. Petersburg Beach property, although this mortgage should have been disclosed as "secondary financing." In each of the Affidavits of Vendor and Purchaser executed by Petitioner in connection with sales of property as described herein, there is the following statement in Item VII: The certifications of this affidavit are for the purpose of inducing the Lender named above or its assignees to make or purchase the first mortgage described by this affidavit.... By signing the Affidavits of Vendor and Purchaser, Petitioner, as the "Property Vendor," made the following certification: The PROPERTY VENDOR hereby certifies that to the extent PROPERTY VENDOR is a party, the Financial Terms, including Total Purchase Price, and the Liens are as set forth in Items III and IV above, [and] hereby acknowledges the inducement purpose of this affidavit as set forth in Item VII above....
Recommendation Based upon the foregoing, it is recommended that Petitioner's application for licensure as a mortgage broker be DENIED. DONE AND ENTERED this 19th of October, 1987, in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of October, 1987. APPENDIX (DOAH No. 87-0033) Rulings on Petitioner's Proposed Findings of Fact: 1. Adopted in Finding of Fact 1. 1.(a) Adopted in Findings of Fact 2, 4. 2.(a) Rejected as not based on competent substantial evidence. 2.(b) Rejected in Findings of Fact 5, 6. 2.(c) Rejected in Finding of Fact 10. 2.(d) Rejected in Findings of Fact 6-10. 2.(e), (f) Rejected in Finding of Fact 11. Rulings on Respondent's Proposed Findings of Fact: 1. Adopted in Finding of Fact 1. 2. Adopted in Findings of Fact 2, 3. 3. Adopted in Finding of Fact 2. 4. Adopted in Findings of Fact 3, 4. 5-6. Rejected as not based upon competent substantial evidence. 7. Adopted in Finding of Fact 5. 8. Adopted in Findings of Fact 5, 6. 9. Adopted in Findings of Fact 7, 10. 10-11. Adopted in Findings of Fact 7, 9, 10. Adopted in Findings of Fact 8, 10. Adopted in Findings of Fact 8, 9, 10. 14-19. Adopted in Finding of Fact 11. Adopted in Finding of Fact 12. Adopted in Finding of Fact 13. Rejected as not based on competent substantial evidence. Adopted in Finding of Fact 11. Rejected as unnecessary and cumulative. COPIES FURNISHED: John Swisher, Esquire Dillinger & Swisher 5511 Central Avenue St. Petersburg, FL 33710 Stephen M. Christian, Esquire Office of Comptroller 1313 Tampa Street Tampa, FL 33602-3394 Honorable Gerald Lewis Department of Banking and Finance Comptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 Charles L. Stutts General Counsel Plaza Level The Capitol Tallahassee, FL 32399-0350
The Issue Whether Mortgage Broker License No. 3534 should be suspended or revoked under Section 494.05, F.S. At the hearing, the Respondent filed an answer to the charges in the Petitioner's Administrative Complaint, incorporating therein affirmative defenses. Rule 28-5.25(2), Florida Administrative Code, provides that the party may file an Answer which may contain affirmative defenses within 20 days of service of the Petition. Respondent's basis for late filing was inadvertence and neglect of its counsel. The Answer contained a general denial of the allegations and set forth affirmative defenses asserting lack of jurisdiction of the Petitioner to pursue its claims for alleged actions which took place on or before October 19, 1974, which was prior to the issuance of the mortgage broker license to Respondent. Further defenses included the claim that the Administrative Charges and Complaint are vague and ambiguous, that Petitioner had taken written action against Respondent without a hearing and denied it due process of law prior to the filing of the Administrative Charges and Complaint, thereby constituting double jeopardy, that Petitioner has unilaterally and without hearing denied Respondent renewal of its license, therefore denying it due process of law and claiming that petitioner is estopped from proceeding on the ground that it violated Section 494.06(5), in not keeping confidential the examination and investigation of the Respondent by giving press releases designed to influence the outcome of the hearing. The Hearing Officer permitted the late filing of the Answer and Affirmative Defenses at the hearing, over the objection of the Petitioner who claimed lack of notice as to the affirmative defenses. Respondent made a motion at the hearing to quash or abate the charges on the grounds of lack of jurisdiction on the basis set forth in its aforesaid pleading and on the grounds that Section 494.05(1) permits the petitioner only to investigate actions of licensees and not to suspend or revoke such licenses. The motion was denied by the Hearing Officer under the authority granted to deny, suspend or revoke licenses pursuant to Section 494.05, F.S. From statements of counsel at the hearing, it appears that Respondent's application for yearly renewal of its license was denied by Petitioner on September 3, 1975. However premature such a denial might have been, the question is not in issue in the instant proceeding. Nor is any purported violation by Petitioner of Section 494.06(5), concerning confidentiality of its investigations of Respondent. Both parties made opening statements and closing arguments. The Petitioner presented its case through two witnesses and submitted documentary evidence. The Respondent did not call, any witnesses. Petitioner also called Frank H. Roark, Jr. President of Respondent Corporation as a witness. Mr. Roark, after being sworn, declined to testify on the grounds of possible self-incrimination. The Hearing Officer thereupon excused the witness. Upon a showing by the Petitioner that the books and records of Respondent Corporation had been requested by Subpoena Duces Tecum and its request that Mr. Roark be required to identify the corporate books and records in his capacity as an officer of the corporation, over objection of Respondent's counsel, the Hearing Officer permitted Mr. Roark to testify for this limited purpose.
Findings Of Fact The Department of Banking and Finance of the State of Florida issued Mortgage Broker License Number 3534 to Respondent on October 10, 1974 (Petition and Answer). The transactions of the Respondent which are the subject of the Administrative Charges and Complaint, concern the purchase by investors/lenders of corporate promissory notes issued by a land development company which are secured by mortgages on its land. The purpose of selling the note is for the land development company to raise funds for the development of real property. The sales of the notes were made by Respondent to individual investors. Usually these transactions were handled through what was termed a "Master Broker" who was a middle man between the land developer and the Respondent mortgage broker which actually made the individual sales of the notes. Typical of the manner in which Respondent conducted these transactions was to enter into an agreement with an investor termed an "Application To Purchase a Mortgage" for a certain face amount at a specified interest rate with interest payable monthly and with concurrent delivery by the investor to Respondent of the stated sum under the conditions that the note would be executed, the mortgage recorded, and the note and recorded mortgage delivered to the investor-purchaser. In due course, a promissory note issued by the land development corporation (the borrower), was delivered to the investor, along with a mortgage deed to specified real property to secure the note. Some notes were payable on an interest only basis and some on a principal and interest basis. Some involved the issuance of title insurance policies and others did not. In some cases, Respondent remitted funds involved in the transaction to the "Master Broker" and in some cases directly to the land developer, less an amount retained by Respondent, ostensibly for its fees, commissions, and/or other charges. The funds were placed into escrow bank accounts when they were received from the investors by Respondent and then sometimes on the same day or in most cases several days or weeks later, the funds less the amount retained by Respondent, were forwarded on to the "Master Broker" or directly to the developer (testimony of Mr. Hunt, Petitioner's Exhibits 1, 3 & 4). Acting upon a request of the State Comptroller to have all mortgage companies examined, in the latter part of July, 1975, Mr. Lawrence W. Hunt, a Financial Examiner Supervisor of Petitioner's Division of Finance along with three assistants went to the Respondent's office to examine its records and determine from the examination whether or not violations of the Mortgage Brokerage Act had been committed. Utilizing source documents from the company records, Mr. Hunt and his associates prepared a worksheet and listed thereon various items of information gleaned from these records (Petitioner's Exhibit 1). After preparation of the worksheet, overcharges as to the 402 transactions identified in the worksheet were computed by Mr. Joseph Ehrlich, Deputy Director of the Division of Finance, solely from the worksheet obtained by the examiners (Petitioner's Exhibit No. 2). Such overcharges were computed with respect to maximum fees or commissions which a broker could charge in accordance with the provisions of Rule 3-3.08, Florida Administrative Code, in consideration of the amount of funds retained by Respondent, Mr. Hunt is not a state auditor and his examination of records did not go into the depth of an audit such a compilation of financial statements. His work consists basically of an examination which involves obtaining information from corporate records and placing it on worksheets so it can be analyzed. During Mr. Hunt's visit to Respondent's place of business, he received full cooperation of its officers and employees and found the records to be in good order. He also had no reason to question any of the entries in any of the records that he observed. Neither he nor Mr. Ehrlich had received complaints from any individual or organization about Respondent's operations prior to his visit. He did not at any time contact any of the lenders or borrowers involved in Respondent's transactions (Testimony of Mr. Hunt, Mr. Ehrlich, Petitioner's Exhibits 1 and 2). On October 11, 1974, the Division of Finance issued a "Memorandum to all Mortgage Brokers" in which it was stated that it had been brought to the Division's attention that a number of mortgage brokers in transactions (such as those under consideration here), were remitting investors' funds to the land developer rather than placing the funds in an escrow account, and that such funds were being remitted in anticipation of receiving a recorded mortgage and note. The Memorandum warned that this practice could result in substantial losses to the broker in repaying investors should the land developer fail and was also in violation of the Mortgage Brokerage Act and could lead to the suspension or revocation of a license under Section 494.05, (1)(f), Florida Statutes. This section concerns placement of funds received in escrow accounts where they shall be kept until disbursement thereof is properly authorized (Respondent's Exhibit A). The Memorandum was sent to Respondent among others Mr. Hunt, during his examination of Respondent's records, found that Respondent ,had changed its escrow procedures approximately the date that the bulletin was issued and that there were no discrepancies after that date concerning escrow monies. By further correspondence in December, 1974, and May and June of 1975, Respondent's President posed various questions to Mr. Ehrlich to clarify certain aspects of escrow account requirements and received replies thereto (Respondent Composite B - Respondent's Exhibit C, D, F and G. (Note: There is no Exhibit E) In 402 separate transactions conducted by Respondent during the years 1973, 1974, and 1975, the mortgages which were purchased by the investors were delivered to the investor within varying periods from one day from the sale date until almost two months from the sale date. Forwarding of funds by the Respondent to the "Master Broker" or to the land development company was also accomplished in these transactions within varying periods of time from the sale date. These ranged from the same date as the sale to periods of a month or so thereafter, but usually on the date of delivery of the mortgage to the investor. The amounts forwarded by Respondent consisted of the face amount of the note and mortgage, less a certain amount which was retained by the Respondent (Petitioner's Exhibit 1). No effort was made by Petitioner's examiner to determine either the basis for the amount retained by Respondent or its composition. For example, he did not determine whether there were any "points" for service charges or discounts of any sort included in the retained sum. The examination was made solely on the basis of examining the business records of Respondent which did not reflect a breakdown of the retained amount. However, it could be deduced from various documents in individual investor files that certain amounts had been paid by someone unknown for title insurance premiums, recording fees and intangible taxes. The dates of mortgage delivery shown by Mr. Hunt in his worksheet were dates which he assumed were correct but he had not verified by any person the exact dates the mortgage was delivered to the investors. Neither could he ascertain from the records whether or not an investor had authorized Respondent to disburse funds at a particular time. The overcharges were determined in accordance with the formula set forth in Rule 3- 3.08, F.A.C., which is on a "gross proceeds" loan in which the borrower indicates that he wished to borrow a specified amount with all fees and charges to come out of the gross amount, thereby resulting in a reduced amount being provided to the borrower. The overcharges were computed without knowledge of whether the amount retained by the Respondent, as shown in Petitioner's Exhibit 1, included payment for state intangible tax, documentary stamps, and recording fees (Testimony of Mr. Hunt, Mr. Ehrlich, Petitioner's Exhibit 1 and 2). The overcharges set forth in Petitioner's Exhibit 2 were unrebutted by Respondent and are deemed correct. In a transaction between Respondent and Cary G. Anderson, who applied for purchase of a mortgage on May 7, 1974, in the face amount of $3,500.00, the file relating to the transaction did not reflect the amount of any costs to be paid by Respondent in the matter, nor did it reveal a specific figure for brokerage fee or commission charged by Respondent. The file did reflect a bill for title insurance premium in the amount of $45.00 and recording fees in the amount off $22.25, $5.25 documentary stamps, and $7.00 for intangible tax. The amount of overcharge was $175.46. In another $2,500 transaction with Mr. Anderson, the amount remitted to the land developer was $2,075.00. The amount retained by Respondent was $425.00. Petitioner's Exhibit number 2 establishes an overcharge from this transaction of $61.37. There was no copy of the mortgage in the file and therefore no information upon which to determine the payment of intangible taxes, documentary stamps and recording fees (Petitioner's Exhibit 3). In a $5,000 transaction between Walter L. and Thelma T. Beach and Respondent with application for purchase mortgage dated July 30, 1974, a check was written on Respondent's escrow account to Kingsland Development in the amount of $4,100. The maximum allowable brokerage fee or commission under the law would have been $590.90. The amount retained by Respondent was $900.00. The mortgage indicated that documentary stamps in the amount of $7.50 and intangible tax of $10.00 were paid. Assuming that Respondent paid the intangible taxes, and documentary stamps, the excess fee charged according to calculation under Rule 3-3.08, was $281.60 (Testimony of Mr. Hunt, Petitioner's Exhibits 1, 2 and 4). In respect to the above three transactions Petitioner's examiner did not find closing statements in the file, nor did he go to the Florida title ledger or Attorney's ledger of Respondent's records. However, he had, at the outset of his investigation, asked Respondent to make available all records concerning the transactions (Testimony of Mr. Hunt).
The Issue Whether the license of Respondent should be suspended for violation of the Mortgage Brokerage Act, Chapter 494, Florida Statutes.
Findings Of Fact Respondent Irving Zimmerman holds Mortgage Brokerage Registration No. 90-3337. An Order of Emergency Suspension of License was issued by the Department of Banking and Finance dated March 24, 1975 and served on Respondent Irving Zimmerman by certified mail. Said Emergency Order is now in effect: Through his attorney, Milton R. Wasman, Respondent Zimmerman requested this formal administrative hearing. The attorney for Respondent, Mr. Milton R. Wasman, called the undersigned Hearing Officer on the day immediately preceding this hearing, that is June 23, 1975, requesting that the hearing be postponed because of a physical disability of said attorney. Said request was denied because of the late hour of request and because of grievous inconvenience to the parties and to the witnesses that had been subpoenaed. Said request was denied orally by telephone to Respondent's attorney whereupon said attorney requested that the transcript of the proceeding be made available. Said attorney was assured that he could view the transcript upon his request when it was available. Upon request of William Corbett, Counsel for the agency, authorization was given to take the deposition of witness Joseph M. Magill, a witness who could not attend the hearing. Said deposition is filed with this record. The attorney for Respondent Zimmerman, Mr. Wasman appeared in behalf of the Respondent at the taking of said deposition in Miami, Florida on July 18, 1975. The following instruments were made part of the record: Summons dated March 24, 1975; Order of Emergency Suspension of License filed March 24, 1975; Petition for Hearing filed by Respondent's attorney; Deposition of witness for the agency, Mr. Joseph M. Magill; Transcript of record of this hearing and also transcript of record at the taking of deposition. On or about July 10, 1974, Mr. Leonard G. Pardue issued a check in the amount of $7,500 payable to "State Farm Mortgage Co., escrow account" for the purpose of making a mortgage loan to Hans G. and Ann M. Widenhauser. Subsequently, after the Widenhausers decided not to make this loan, the Respondent contacted Mr. Pardue and attempted to negotiate a substitute loan to Alan and Marcia Hollet. After that loan did not close, Mr. Pardue, by his attorney, Mr. Roger G. Welcher, wrote several letters to Respondent which demanded a return of the $7,500 to his client. Mr. Pardue filed a civil suit against Respondent to recover said funds; however, as of the date of the hearing, the Respondent has failed or refused to return the money. Mr. Bernard Supworth made a mortgage loan to Robert E. and Madeline Pope in June of 1972, through the Respondent as broker. The monthly payments were made to Respondent who in turn was supposed to remit the funds to Mr. Supworth. Subsequently, on or about January 25, 1974, Respondent advised Mr. Supworth that the mortgage was being paid off and Mr. Supworth executed and delivered a Satisfaction thereof to Respondent. Later, Mr. Supworth learned that the Pope mortgage had been paid off in July, 1973, and that a check had been issued by Dade Federal and Savings & Loan Association on July 9, 1973, payable to State Farm Mortgage in the amount of $3,544.98. Notwithstanding such payment in full on the Pope mortgage in July, 1973, Respondent continued to remit monthly payments on it to Mr. Supworth. Mr. Supworth had not agreed to receive any monthly payments after the mortgage had been satisfied and to date has not received all of his money on the Pope transaction. Respondent Zimmerman negotiated another mortgage loan to Mr. Supworth to James and Phyllis Lowe, as borrowers in the amount of $4,600 to be paid in the amount of $97.74 per month. These payments were to be paid by the Lowes to the Respondent, who was to remit said payment to Mr. Supworth. Thereafter, on or about November 21, 1973, Respondent advised Mr. Supworth, by memorandum, that this mortgage must be paid off. Thereupon, Mr. Supworth executed and delivered a Satisfaction of Mortgage to Respondent. He continued to receive monthly payments from Respondent on the Lowe mortgage up until January, 1975. Mr. Supworth later learned that the Lowe mortgage had been paid in full to Respondent in October, 1973. Mr. Supworth had not agreed to this transaction. On or about August 15, 1973, Mrs. Judith Valenza made a mortgage loan at the Commercial Bank of Kendall. Later Mrs. Valenza negotiated a mortgage loan through Respondent, as broker, to pay off the existing mortgage to the Commercial Bank of Kendall. Pursuant to that transaction, Mrs. Valenza closed said loan through Respondent, as broker. Thereafter, a check was issued on "Irving Zimmerman Trust Account" in the amount of $3,510.78, and payable to the Commercial Bank of Kendall. The check was returned because of "insufficient funds". As of the date of the hearing, the Commercial Bank of Kendall had not received payment of said check from Respondent. On or about January 28, 1975, Mr. and Mrs. Joseph M. Magill executed a note and mortgage in the amount of $3,500 in favor or Helen R. Stahl, as trustee, at the offices of Respondent. Respondent failed to account for or deliver money to the person entitled thereto, on demand failed to disburse funds in accordance with the agreement, and failed to keep funds in a trust account.
The Issue The issues in this matter are whether Respondent poses an immediate, serious danger to the public health, safety, or welfare, and, if so, whether Petitioner has cause to immediately suspend Respondent's loan originator license.
Findings Of Fact At all times relevant to this case, Respondent was licensed with the Office to conduct business as a loan originator in the State of Florida. Respondent holds certificate of licensure NMLS No. LO19773. As a loan originator in Florida, Respondent is governed by chapter 494. The Office is the state agency charged with licensing, regulating, and supervising loan originators in Florida pursuant to chapter 494. On March 24, 2015, Respondent was arrested for the following crimes by the Sarasota County Sheriff's Office: Occupied Burglary--pursuant to section 810.02(2)(a), Florida Statutes,3/ a first-degree felony; Battery on a person 65 years or older-- pursuant to section 784.08(2)(c), Florida Statutes,4/ a third-degree felony; and Simple Battery (two counts)--pursuant to section 784.03(1)(a)1.,5/ first-degree misdemeanors. On May 12, 2015, Respondent was charged with these crimes in Sarasota County, Florida, in Case No. 2015-CF-004817-NC. Respondent's criminal case is currently pending disposition in Sarasota County. At the final hearing, Respondent described her actions which led to her arrest on March 24, 2015.6/ The incident began with a dispute over money. According to Respondent, an individual allegedly stole $258.00 from Respondent's friend who was staying at her house. Respondent, together with the friend and three other individuals, drove to the suspected thief's house to demand the money's return. Upon arrival at the house, Respondent walked up to and knocked on the front door. Two individuals, the suspected thief and the suspected thief's mother, answered. The confrontation quickly became physical. Respondent claims that the suspected thief's mother started the fight by jumping on her from out of the front door. Rapidly, upwards of five individuals were involved in hitting, pushing, tackling, and wrestling. The scrum ranged from the front door to the house's garage. Respondent recounted that she was battered, punched, slammed to the ground, and beaten with a cane. (The cane-wielder was the suspected thief's grandfather, who is over 65 years old, which apparently led to Respondent's felony charge of battery on a person 65 years or older.) Respondent claimed she suffered injuries to her chin, neck, heart, and scalp. At the final hearing, Respondent testified that she did not enter the suspected thief's home. However, Respondent did admit that at some point during the encounter, she entered the open garage with the intent to access the house through the side door. (This action evidently led to Respondent's felony charge of burglary.) Eventually, the Sarasota County Sheriff's Office was called and responded. The fight broke up. No serious injuries were reported. No information was presented regarding the fate of the $258.00. Respondent testified that she did not start the fight. She claimed that because of her small frame, she was never a serious danger to anyone. Nevertheless, the Sarasota County Sheriff indisputably arrested Respondent for her alleged role in the altercation. As of the date of the final hearing, Respondent understood that she will have a court date in August 2015 for the pending criminal case. Based on Respondent's arrest, on April 8, 2015, the Office issued the Emergency Order. The Office issued the Emergency Order pursuant to sections 120.60(6) and 494.00255(8). The Emergency Order states that the Office found Respondent's activities posed an immediate and serious danger to the public welfare. The Emergency Order ordered Respondent to immediately cease and desist from engaging in the business of loans and any activities in violation of chapter 494 and Office rules. Through the Emergency Order, the Office suspended Respondent's loan originator's license, effective April 13, 2015. Respondent's loan originator license is suspended "until such time as [Respondent] complies with the terms of this order." As described in the Emergency Order, the Office determined that Respondent's actions that led to her arrest posed an immediate, serious danger to the public based on several factors. The Emergency Order declares that the Office found that an emergency suspension and a cease and desist order was necessary to protect Florida consumers from Respondent's "apparent unpredictable and irrational behavior." Furthermore, Respondent's "apparent volatility, unpredictability, and lack of impulse control" calls into question her "trustworthiness and character." The Emergency Order also states that "[c]ommitting felony battery over a financial matter demonstrates that Respondent lacks the character or general fitness necessary to command the confidence of the community." To emphasize the seriousness of the alleged crimes, the Office points to the fact that the felony burglary charge carries a possible maximum penalty of life in prison. The Office included provisions and terms in the Emergency Order to meet the fairness requirement of section 120.60(6). The Emergency Order contained detailed factual findings in order to adequately notify Respondent of the basis for the Office's intended action. The Emergency Order included a Notice of Rights which provided Respondent the point of entry to request an expedited administrative hearing pursuant to chapter 120 to contest the Emergency Order (which Respondent pursued in the present matter). The Emergency Order also informed Respondent of her opportunity to seek to stay the Office's action through an appellate proceeding under section 120.68. Further, the Emergency Order stated that Respondent's loan originator's license is subject to reinstatement, if the criminal charges are ultimately dismissed or not prosecuted. At the final hearing, Respondent conceded that she made the wrong decision to confront the suspected thief. She expressed that she was not thinking clearly at the time. Nevertheless, Respondent asserts that she is falsely accused and has done nothing wrong. She pleads to keep her license during the time it takes Sarasota County to process her criminal case. Respondent proclaims that she should be considered and treated as innocent of all charges up to and until such time as the allegations against her are proven. Respondent asserts that her loan origination business is her sole source of financial support. Based on the facts produced at the final hearing and further discussed below, the undersigned finds that the Office has not met its burden of demonstrating by clear and convincing evidence that immediately suspending Respondent's license to conduct business as a loan originator is an action "necessary to protect the public interest," as required by section 120.60(6)(b).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner, Office of Financial Regulation, enter a final order rescinding the Emergency Order to Cease and Desist and Suspending License issued to Respondent, Frankie Damiano, on April 8, 2015. DONE AND ENTERED this 21st day of July, 2015, in Tallahassee, Leon County, Florida. S J. BRUCE CULPEPPER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of July, 2015.
Findings Of Fact The Petitioner is an agency of the State of Florida charged, under Chapter 475, Florida Statutes, with enforcing the licensure standards embodied in Chapter 475, and regulating the manner of practice of licensed real estate brokers pursuant to the standards enumerated in Chapter 475, Florida Statutes and the rules promulgated pursuant thereto. The Respondent, Stewart J. Love, at all times pertinent hereto, has been a licensed real estate broker in the State of Florida, holding license number 0145076. That license is issued to Stewart J. Love, t/a Love Realty, 2120 Westfield Road, Pensacola, Florida 32505. A previous Administrative Complaint was filed against the Respondent by Petitioner on June 23, 1988. That Complaint, in essence, also charged two violations of Section 475.25(1)(b), Florida Statutes involving alleged fraud and misrepresentation, concealment, dishonest dealing, culpable negligence and the like It involved two separate real estate transactions which the Respondent engaged in. The first transaction concerned a piece of property Respondent purchased with an existing mortgage and shortly thereafter resold. The Respondent was charged with failing to assume the existing mortgage and, in essence, with not keeping the mortgage payments current, with receiving funds from his purchasers without properly accounting for them in proper escrow accounts and with failing to formally consummate the sale, as well as with issuing a check to the mortgagee bank holding the delinquent mortgage upon insufficient funds. With regard to the other transaction, the Respondent, in essence, was charged with purchasing a piece of property, recording his warranty deed from the sellers, but never properly paying the sellers monies that were due them for the property nor carrying through with the promise to assume the mortgage on that piece of property. That complaint culminated in DOAH Case No. 88-4570, in which the Respondent was charged in pertinent part with violations of Section 475.25(1)(b), Florida Statutes. During the course of that proceeding the Petitioner and Respondent entered into negotiations such that a stipulated adjudication of that proceeding by the agency was effected. The Respondent neither admitted nor denied the charges, but rather agreed to a fine of $500.00, as well as to making restitution of all monies owed to the alleged injured parties and to having his license being placed on probationary status for a period of one year for "culpable negligence" in violation of 475.25(1)(b), Florida Statutes. A final order is in evidence as part of Petitioner's Exhibit 1 in this proceeding. Donald and Teresa Winingar, husband and wife, in 1986 found themselves in rather straitened financial circumstances. Their home mortgage was in arrears and was threatened by foreclosure by the mortgagee. The ultimate result of their financial problems caused them to search for a new place to reside. They located six acres of land owned by Donna Day Bowers. The acreage had a small frame house approximately 20 years of age on it. They began negotiating with Ms. Bowers concerning purchasing the property from her The Winingars discussed the price with Ms. Bowers and ultimately a purchase price of approximately $12,000.00 was agreed upon. The Winingars realized that they could not pay cash for the property but would have to secure financing arrangements in order to purchase it. The Winingars had approximately $4,500.00 in cash and at first attempted to have the balance financed by the owner and seller, Ms. Bowers. That arrangement did not come to fruition and so the Winingars searched for another source of funds in order to finance the purchase of the Bowers property in this search they somehow came in contact with the Respondent Stewart Love, a real estate broker. After negotiations with Mr. Love he agreed to finance the purchase of the Bowers property for the Winingars. This resulted in a verbal agreement entered into between the Winingars and the Respondent whereby the Winingars would pay Love $4,500.00 in cash and he would finance the balance of $8,500.00 of the purchase price by a mortgage. Love, or the corporation of which he was president and part owner, Courthouse Investments, Inc., would collect interest on the $8,500.00 mortgage and note from the Winingars. Love also assessed the Winingars a $2,000.00 fee for handling the transaction, the purpose of the fee being unclear. It was apparently some sort of "broker's fee," although Love did not represent the Winingars as a realtor. On October 16, 1986 Respondent entered into an agreement called a "Warranty Deed to Trustee Under Land Trust Agreement pursuant to Section 689.071, Florida Statues," with the seller of the property, Donna Day. That instrument conveyed title to the property to the Respondent as Trustee in fee simple. The "warranty deed to trustee" document granted the trustee, Love, full power and authority to sell, lease, encumber and otherwise manage and dispose of the property in accordance with the terms of that instrument and with a trust agreement. The trust agreement itself, providing for powers and duties of the trustee and beneficiary of the trust is not evidence and the terms of it are unknown. In any event, having purchased the property from Donna Day (also known as Donna Day Bowers) the Respondent the following day, October 17, 1986, agreed to sell the property to Donald and Teresa Winingar. The Winingars on that day gave the Respondent $4,500.00 in cash as a down payment for the Bowers property. Thereafter, on or about October 31, 1986, the Winingars executed a mortgage note for the amount of $8,500.00 remaining on the purchase price, payable in favor of Courthouse Investments, Inc., a corporation partially owned by and represented by the Respondent Love and of which the Respondent was President. That mortgage note provides that the note was to be for a principal balance of $8,500.00 with payments of $130.00 per month for 265 months at an interest rate of 18% per annum. The note provided for no prepayment penalties and for $6.00 for late fees for each late payment. Additionally, the Winingars executed a promissory note payable to Stewart J. Love for the above-mentioned fee, in the amount of $2,000.00. That note provided that one balloon payment was to be due six years from October 30, 1986 at the rate of 12% per annum, payable in one payment. The Winingars began making monthly payments on the mortgage note of $130.00 per month and made those payments to Stewart J. Love. They were frequently behind in their payments but made payments sporadically until approximately May of 1988. When the Winingars and Mr. Love first engaged in negotiating the financing arrangement, Love informed the Winingars that he would have his attorney draft an agreement whereby the property would be held in trust by Love on behalf of the Winingars allegedly so that it could not be attached by any creditors of the Winingars. This was apparently because the Winingars were involved in a foreclosure action concerning their previous residential property and feared a deficiency judgment from that foreclosure proceeding which might endanger their rights to the land in question. Whether or not their credit was in such peril, Love assured them that he would obtain title to the property from the seller in the form of a trust arrangement, with the beneficial interest to be conveyed to the Winingars, in order to allegedly protect their interest in the six acres from the claims of creditors. Love then at some point showed a photocopy of a document entitled "Warranty Deed to Trustee Under Land Trust Agreement pursuant to Section 689.071, Florida Statutes," to the Winingars and advised them that form of agreement would be drafted to represent their mutual arrangement regarding the sale and ownership of the property, pending final payment by the Winingars. After the initial down payment of $4,500.00 was made by the Winingars, however, they had to make repeated demands of the Respondent for the execution of an agreement or contract to to formalize their arrangement regarding the purchasing of the Bowers property. The purchase arrangements from October 1986 to May 1987 were merely verbal aside from the execution of the mortgage note in question. Finally, on May 1, 1987, a document entitled "Agreement to Convey Beneficial Interest" was signed and executed by the Respondent as President of Courthouse Investments, Inc., "beneficiary," and the Winingars. That agreement provided, in pertinent part, that the total purchase price should be $8,500.00, which acknowledged, in effect, that the remaining $4,500.00 of the originally agreed upon purchase price had already been paid. The agreement also provided that when the principal sum of the purchase price had been paid in full that the beneficiary would instruct the trustee (Stewart Love) to deliver to the grantees (the Winingars) a warranty deed showing good and marketable title to the property. The beneficiary held the beneficial equitable interest in the property with the legal title being held by the Respondent as trustee. The beneficiary was Courthouse Investments, Inc., of which the trustee, the Respondent, was the President. He signed the agreement to convey beneficial interest as the President of that corporation. The agreement also provided that the grantees would be, permitted to go into possession of the property immediately on the date of its execution (May 1, 1987) and would assume all liability for insurance, taxes and maintenance after that date. ,It was also expressly agreed that all oil, gas and mineral rights were to be conveyed to the grantee. Presumably, that meant that all gas and mineral rights were to be conveyed upon the conveying of the warranty deed to the grantees when the purchase price was paid in full. In any event, the agreement clearly provided that when the principal sum of the purchase price was paid in full that a warranty deed conveying good and marketable title would be immediately conveyed to the grantees and, in that connection, the mortgage note already executed at that time by the grantees and the respondent provided that there would be no penalty for early payment of the purchase price or principal amount of the mortgage note referenced in the Agreement to Convey Beneficial Interest. This Agreement to Convey Beneficial Interest reveals additionally that Courthouse Investments, Inc. was the beneficiary of the trust set up by the above-mentioned warranty deed instrument from the original owner to the Respondent, as well as the fact that the Respondent is the President of the beneficiary corporation. Thus, there is no doubt, based upon the terms of the Agreement to Convey Beneficial Interest and the manner in which it was executed by the Respondent as President of the beneficiary corporation, that the Respondent knew that the parties thereto had agreed that all oil, gas and mineral rights were to be conveyed to the grantee upon the payment of the principal sum of the mortgage involved and that the trustee (the Respondent) would be obligated to transfer fee simple title to the grantees by warranty deed upon full payment, at any time, by the grantees. The "Warranty Deed to Trustee . . . " referenced above, however, clearly reveals that the seller, Donna Day (a/k/a Donna Day Bowers) had retained one-half the mineral rights and thus neither the Respondent/Trustee nor the beneficiary corporation had any ability to convey all gas and mineral rights to the grantees simply because the Respondent as trustee with legal title and the beneficiary corporation, the holder of equitable title, only owned one-half of the oil, gas and mineral rights. Since the Respondent/trustee arranged and conducted the purchase transaction with Ms. Bowers whereby he took fee simple title as trustee to the property in question under an instrument which revealed on its face that Ms. Bowers retained half the mineral rights, and since that same Respondent executed the agreement to convey beneficial interest (analogous to a contract for deed) to the Winingars as president of the beneficiary corporation which was the Grantor under that instrument purporting to convey all oil, gas and mineral rights (upon payment of the full purchase price), the Respondent is chargeable with knowledge that the representation concerning oil, gas and mineral rights contained in the Agreement to Convey Beneficial Interest did not accurately represent the ownership situation with regard to those oil, gas and mineral rights. After the Winingars made the initial down payment of $4,500.00 cash in October 1986 and during the time when they were making repeated demands for the execution of a contract to formalize their agreement regarding purchasing of the Bowers property, Mr. Love brought a representative of a financial institution known as "C&S Family Credit" (C&S) to the Winingars' home, sometime in January 1987. This representative and the Respondent informed Teresa Winingar that C&S Family Credit was considering the purchase of their mortgage from the Respondent. The Respondent and the C&S representative, however, advised Ms. Winingar to continue making her monthly payments of $130.00 to the Respondent and not to C&S. The Following year, in May, 1988, Teresa Winingar went to the Respondent's office to pay off the balance of the $8,500.00 mortgage note. Mr. Love informed her at that time that he could not accept the payoff because he did not have a clear title to the property to transfer to the Winingars at that time. The Agreement to Convey Beneficial Interest required the Respondent to transfer marketable title by general warranty deed upon tender of the payoff of the principal balance on the mortgage note. This he did not do. Thereafter, in June of 1988, a representative from C&S again visited the Winingars at their home. This time he informed Mrs. Winingar that his company was about to foreclose on the property at issue because a mortgage on the Winingar's property was in arrears. This was a mortgage executed by the Respondent in favor of C&S as mortgagee and which encumbered the property the Winingars were purchasing. At some point after that June 1988 visit by the C&S representative, C&S filed a foreclosure action against Stewart J. Love and the Winingars. Prior to the May 1988 offer by Mrs. Winingar to pay off the mortgage note, the Respondent's because he could not convey clear title, and the visit by the C&S representative informing Ms. Winingar of the delinquency of the Respondent's mortgage, the Winingars had no knowledge that the Respondent had executed a mortgage on their property in favor of another party. The mortgage executed in favor of C&S encompassed several pieces of property owned by the Respondent, including the piece of property being purchased by the Winingars. The evidence does not reflect that the Respondent made any arrangements with C&S to obtain a partial release of that mortgage as to the Winingar's property at such point as they should tender full payment of the balance of their purchase money mortgage note. While the Respondent, as trustee and holder of fee simple title to the Winingars' property might have had legal authority to mortgage the property to C&S, he was equally obligated under the agreement to convey beneficial interest to insure that their equitable interest in the property was protected, such that he would be able to convey good and marketable title by warranty deed upon the payment by the Winingars of the principal sum of the purchase price. This he was unable to do because he had failed to make arrangements with C&S for a partial release of mortgage or other means of insuring that the Winingars' property was unencumbered at the point of their tendering payment of the remaining purchase price. This negligent failure to insure that the Winingars' equitable interest in the property was protected resulted in the foreclosure action filed by C&S against the Respondent and the Winingars' interest in the property because the Respondent had not made payments on the C&S mortgage in a timely manner. The conveyance of fee simple title to the Respondent by the "Florida Land Trust Agreement" containing the reservation in the original owner of one- half of the oil, gas and mineral rights was recorded, so that any prospective purchaser or his representative searching the title of the subject property could have determined that the Respondent only owned one-half of the mineral rights to the property. Nevertheless, the Winingars were under the impression that they were to receive all mineral rights to the property. This impression may have arisen from the fact that the clause in the agreement to convey beneficial interest provides that . . . "All oil, gas and mineral rights are to be conveyed to the grantee." This agreement appears to be a form or "fill-in- the-blank" agreement prepared by the Respondent himself and not an attorney. Thus, it appears that the mineral rights clause referenced above is a "standard one" which was probably inadvertently left in that form in the agreement when it was executed due to the Respondent's negligence. It has not been established that he intentionally misrepresented the state of his ownership of mineral rights which he would be able to convey to the grantees. In fact, some eighteen months after the original purchase transaction between the Winingars, the Respondent and Courthouse Investments, Inc. was entered into, the Respondent executed the renewal of a preexisting oil lease with regard to the subject property. He, or his corporation, collected the sum of $238.00 lease payment as a result of that renewal. At the time of that lease renewal the Respondent still had legal title to the property and one-half of the mineral rights. This would not have been the case, however, had he timely transferred title to the Winingars in May of 1988 when they tendered payment in full of the remaining balance of the purchase price and at which point he was unable to convey marketable title for the reasons delineated above. In any event, the Winingars were shown to have been entitled to the Respondent's mineral rights at the point of their tender of full payment of the remaining purchase price in May of 1988, at which point title should have been transferred, together with the mineral rights held by the Respondent, which did not occur. As a result of the Respondent's failure to convey title upon the fulfillment of the condition in the above-referenced agreement regarding payment and the dispute which arose between the parties concerning the mineral rights and the proceeds from the lease, the Winingars apparently obtained counsel and instituted legal proceedings against the Respondent of an undisclosed nature. Criminal proceedings were instituted by the State's attorney against the Respondent. These proceedings resulted in a plea of "Nolo Contendere" by the Respondent in order to avoid the expense and anguish of trial and was a negotiated settlement of the criminal charges. Through the plea negotiation arrangement which was accepted by the Court, on February 14, 1990, an order withholding adjudication of guilt and placing the defendant (Respondent) on probation was entered in the case of the State of Florida v. Stewart J. Love, Case NO. 88-5765 CFA. See Petitioner's exhibit (3) in evidence. That order was entered pursuant to the plea of Nolo Contendere entered by the Respondent to the offense of petit theft. The subject matter of the theft charge was the $238.00 lease payment which the Respondent had maintained he or his corporation was entitled to and which the Winingars believed they were entitled to. In any event, the Respondent was placed on probation for a period of six months and was ordered to pay restitution in the amount of the $238.00 to the Winingars. He was also ordered to pay certain costs and was ordered to set a firm closing date by which the Winingars could obtain clear title to the property upon their payment of the balance due, as well as applicable closing costs, including one- half title insurance. The Respondent was ordered by the Court to attend and assist in the closing of the transaction. The Court also ordered that the Respondent would not be liable to clear any encumbrances to the title to the property which had been caused by the Winingars. Ultimately, the Winingars failed to tender the remaining purchase price and therefore the closing never occurred.
The Issue The issue in this case is whether the Petitioner’s application for licensure as a mortgage broker should be approved.
Findings Of Fact The parties set forth an extensive set of stipulated facts in the Prehearing Stipulation filed prior to the commencement of the hearing. The stipulated facts describe the activities of Richard Eric Watts (Petitioner) on behalf of Frederick M. Larry in relation to a $50,000 investment of Mr. Larry's funds with D. F. Owen, Inc., in May 1985. At approximately the same time as the Larry investment was made, the Petitioner contracted with D.F. Owen to act as an investment adviser for a fee of $33,500. The stipulated facts describe the activities of the Petitioner on behalf of Cynthia Halabrin Trust. The Petitioner was the trustee for the trust, which was a residence. During a period of time that the residence was under renovation, the Petitioner allowed Mr. Larry to reside without payment to the trust. The stipulated facts describe the activities of the Petitioner regarding the unregistered operation of "Watts Investment Management, Inc." during 1985 and the subsequent registration of the entity in 1986. The stipulated facts describe the activities of the Petitioner regarding his employment as a broker for Paine Webber from 1982-1985, and the failure to obtain approval for outside employment activities while working for the investment firm. The stipulated facts describe the legal action taken by Cynthia Halabrin Raybuck against the Petitioner and Paine Webber related to the activities of the Petitioner as trustee of the Halabrin trust. The parties settled the case through arbitration. The stipulated facts address the creation of "Danbury Mortgage Company," and describe the preliminary activities of the unlicensed entity. The facts also identify the Petitioner's association with the Paradigm Mortgage Company, based in Jacksonville, Florida. For purposes of this Recommended Order, all stipulated facts set forth in the prehearing stipulation filed by the parties are adopted and incorporated herein. On or about August 29, 1996, the Petitioner filed an application with the Department of Banking and Finance, Division of Finance (Department) seeking licensure as a mortgage broker. The Petitioner’s application disclosed that in 1989 he was denied admission to the Florida Bar. In January 1989, the Petitioner was notified by the Florida Board of Bar Examiners (“Board”) of their intent to deny his application for admission to the Florida Bar. A hearing was conducted in June 1989 regarding the denial. The Petitioner was represented by legal counsel and testified under oath at the hearing. On August 31, 1989, the Board of Bar Examiners denied Petitioner’s application for admission. Based on the facts set forth in the Board's order, the Board concluded that the Petitioner “engaged in acts to serve his own interest to the detriment of others, violated registration laws, neglected payment of student loan obligations and issued numerous worthless checks.” The Board also determined that the Petitioner provided misleading testimony at his Bar hearing and failed to disclose material information on his application. Although at the formal administrative hearing the Petitioner attempted to explain the circumstances under which the Board's determination occurred, the testimony at hearing and the stipulated facts support the findings made by the Board. Upon the filing of the Petitioner's application for licensure as a mortgage broker, the Department undertook a review of the application. Based on the review, the Department determined that the Petitioner had held himself out for business as a mortgage broker without an appropriate license. In December 1995, the Petitioner registered the name "Danbury Mortgage Corporation" with the Florida Department of State, Division of Corporations. In January 1996, the Petitioner established a business location for Danbury Mortgage Corporation. The Petitioner listed the business under the "mortgage brokers" section of the Sarasota Yellow Pages. At no time was the Danbury Mortgage Company licensed by the Department of Banking and Finance. At the hearing, the Petitioner suggested that no mortgage business had been conducted by Danbury Mortgage Company. The Petitioner asserted that he had affiliated with another company (Paradigm) and that the other company was handling the registration of his office as a Paradigm branch. The evidence establishes that the Petitioner was involved in completion of at least one mortgage loan application on behalf of Paradigm Mortgage Company without appropriate licensure. The Paradigm "branch" office was located in the same building as Danbury Mortgage Company, and shared the Danbury telephone number. Based on a cryptic telephone message received by the Petitioner from a Paradigm supervisor, the Petitioner assumed that he was licensed. The Petitioner did not return the telephone call and made no credible attempt at determining whether he was licensed prior to acting on behalf of Paradigm Mortgage Company.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department enter a Final Order denying the application of Richard Eric Watts for licensure as a mortgage broker. DONE AND ORDERED this 30th day of December, 1997, in Tallahassee, Leon County, Florida. _ _ WILLIAM F. QUATTLEBAUM 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 Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 1997. COPIES FURNISHED: Honorable Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 Harry Hooper, General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350 Richard E. Watts, pro se 1345 Main Street, Suite C-4 Sarasota, Florida 34236 Pamela R. Jacobs, Esquire Regional Counsel Department of Banking and Finance 1300 Riverplace Blvd, Suite 640 Jacksonville, Florida 32207
The Issue The issue in Case No. 94-2065 is whether National Mortgage Bankers, Inc. violated certain disciplinary proceedings governing mortgage brokers and, if so, what penalty should be imposed. The issue in Case No. 94-2066 is whether National Mortgage Bankers, Inc. is entitled to licensure as a correspondent mortgage lender.
Findings Of Fact As of September 3, 1992, the Department of Banking and Finance, Division of Finance (Department), issued a mortgage lender's license to National Mortgage Bankers, Inc. (NMB). At all material times, NMB acted as a mortgage broker, not a mortgage lender. NMB originated mortgaged loans, which were funded by third parties. NMB's principal place of business was in Pt. Charlotte. At all material times, Sheldon Voron was employed as the chief executive officer of NMB. Business was slow for NMB during the first few months after it acquired its mortgage lending license. NMB was operated by Mr. Voron, who supervised loan officers and the processing of loan applications, and Mark Asciutto, who handled bookkeeping, payroll, and the checking accounts, including the escrow account. Mr. Asciutto left the company in September 1993. By the end of 1992, the net worth of NMB was $89,115.23, according to an audited financial statement issued on February 12, 1993. The net worth deteriorated during 1993, dropping to $63,533 by December 31, 1993, according to an audited financial statement issued on March 7, 1994. At no time did NMB ever advise the Department that its net worth was below $250,000. In early 1993, business picked up from late 1992, and NMB hired a second loan processor. Refinancing activity in early 1993 required that NMB continually add new help. At this time, the approval of uncomplicated conventional loan applications took 30-45 days, and the operation ran smoothly. But business continued to increase. From March to June, NMB opened up offices in Naples and Sarasota. A branch in office in Englewood was opened and quickly closed due to its proximity to other offices. By April, the volume of business at NMB was increasing rapidly, aided in part by the addition of government loans. An average of 75 cases monthly during the first three months increased to 125 cases in April. Employing four to five loan processors, NMB continued to hire additional employees, but soon had problems finding qualified persons, as competition in the lending business was increasing due to considerable refinancing activity. Mr. Asciutto handled the escrow account during these busy months, until another employee assumed these duties in late July or August 1994. Mr. Asciutto routinely transferred money from the escrow account to the general operating account when Mr. Asciutto determined that NMB was entitled to retain the money, such as when customers had not been responsive to inquiries from NMB employees. The only such transfer for which a specific amount was identified at the hearing was $860, which was swept from escrow to general operations by check dated April 16, 1993. As is obvious from the trend in net worth, profitability did not increase in direct proportion to increases in business volume. In fact, total income increased from $82,716.01 in 1992 to $556,907 in 1993, but net income increased only from $30,714.88 to $43,528. NMB simply could not keep up with the business, as is evidenced by the experiences of its customers. In July 1993, William Zinser read an NMB advertisement in the newspaper offering an adjustable mortgage rate and a low fixed-rate mortgage. He called the number and set up an appointment to visit the office. He met with an employee of NMB, who discussed interest rates and closing fees. She assured Mr. Zinser that it would take only about 30 days to close the loan. Mr. Zinser submitted a loan application, and the employee said NMB would be back in touch with him. Mr. Zinser waited three or four weeks and heard nothing. He called and was told that there were no problems. On two or three occasions, an NMB employee requested from Mr. Zinser a profit and loss statement or a verification of his wife's income. However, NMB had the wife's income information since the start of the loan application process and twice had received the profit and loss statements. On January 4, 1994, Mr. Zinser applied for a loan with another lender. Shortly thereafter, an NMB employee called him and said that his loan was approved. When he said that he had gone elsewhere, she reminded him that he had obligated himself to pay a $1250 fee in connection with the loan. He refused to pay. On or about July 15, 1993, Janice Hamann first contacted NMB about refinancing her home. She applied for a mortgage, and an NMB employee asked for more information. She supplied it the following day, and the employee said everything was fine. The employee said that it would probably take 4-6 weeks to close. On August 13, 1993, Ms. Hamann called NMB to check on the status of the loan application. An NMB employee said that they would probably close when she returned from a week's vacation. On August 23, Ms. Hamann called and was told to provide some additional information on her payment history. She provided the requested information by September 20. For a second time, she had to provide verification of her husband's employment. On September 18, Ms. Hamann received notification from her homeowner's insurer that they had changed her insurance, evidently to show a new loss payee. No one from NMB had told her that the loan was ready to close. A couple of months later, surveyors showed up and surveyed the property that was to have been the subject of the loan and additional property. Ms. Hamann called NMB and informed them of the mistaken inclusion of additional property. On November 22, Ms. Hamann called NMB and said that she wanted her paperwork and was withdrawing her application. Ten days later, someone from NMB called her and said they were ready to close. Ms. Hamann restated her demand for her paperwork and refused to close. A few days later, she received a letter demanding $1500 in addition to the $300 that she had paid for the credit check, survey, and appraisal. She still receives bills from the surveyor. On September 9, 1993, Richard Chadbourne contacted NMB about refinancing a mortgage. At the first office visit, he completed an application and delivered a check to NMB in the amount of $300. An NMB employee said they would contact him for more information and said it would take 30-45 days to close his loan. At the first meeting, Mr. Chadbourne stated that he wanted the 3.259 percent variable rate mortgage with a six point cap, which NMB was offering. An NMB employee said that they could get him a 3.375 percent rate. On the one or two occasions that NMB contacted Mr. Chadbourne for more information, he provided it to them immediately. Repeated calls to NMB by Mr. Chadbourne or his agent were never returned. No one from NMB ever called Mr. Chadbourne to tell him whether his loan was approved or denied, and he never withdrew his application. On September 10, 1993, Katherine Healey and her husband visited the NMB office to apply for a refinancing loan. Responding to a newspaper advertisement for a 3.375 percent interest rate, the Healeys learned that they would have to pay $1250 in fees to obtain such a low rate. They agreed to pay the sum. They were asked only for salary information and certain documentation concerning their liabilities. An NMB employee said they could lock in the quoted rate when they returned from vacation in a couple of weeks. After returning from vacation, the Healeys called NMB repeatedly, but often could not find anyone to speak to or to return their calls. When they finally talked to someone about their loan, they were told they had to pay another $100 or $150 to lock in at 3.375 percent. They continued calling NMB without much success for two months after returning from vacation. They could not get a closing date, and nothing was happening. In response to their repeated requests to lock in an interest rate, they were told only that they could not lock in until two weeks before closing. By the end of November, the Healeys applied elsewhere for a refinancing loan. Shortly after the Healeys applied elsewhere for a loan, which closed about three weeks later, they received a call from an employee of NMB, who told them that they had a closing date. They said that they had decided to obtain a loan elsewhere. The employee demanded the $1250 fee, which the Healeys had not yet paid, and threatened to sue them if they did not pay. The Healeys refused to pay the fee and were able to use the appraisal, for which they had already paid, with their new application. However, they had to pay for a second credit report. In November 1993, Wendy Harrison contacted NMB for two mortgages--one on a home in Massachusetts and one on a home in Punta Gorda. She filed mortgage applications on or about December 15, 1993, but, by mutual agreement, she withdrew her application on the Florida home. Ms. Harrison subsequently left several telephone messages that were not returned. In January, she was assigned a new loan processor, who still did not return calls. Around this time, Ms. Harrison's husband received a notice from the mortgagee on the Florida property concerning a payoff amount. The Harrisons contacted NMB and told them that this was the wrong property. Mortgage rates began to increase in January. Ms. Harrison called repeatedly on the status of her mortgage refinancing from mid-January to mid- March. A new person assumed loan processing duties on her file. She called Ms. Harrison on or about March 9 and said that the credit report raised some problems. This was the first time either Mr. or Ms. Harrison had been told that there were problems with the credit report, which NMB had received in late December. Ms. Harrison mailed the requested explanatory documents on the following day. Two weeks later, after hearing nothing, Ms. Harrison called NMB and learned that the interest rate would be 8 percent annually, which was higher than the rate in effect when she initiated the loan approval process. The NMB employee explained that the higher rate was due to the fact that the Massachusetts property was a rental property, but NMB employees had known that from the start. However, the NMB employee assured Ms. Harrison that the file was complete and being forwarded to Miami for final approval. The following day, Ms. Harrison sent a certified letter withdrawing the application and asking for the appraisal and any other services for which she had already paid. NMB received the letter on March 26. On April 5, Ms. Harrison found in her mailbox an unstamped, uncancelled envelope that had evidently been hand- delivered by an NMB employee or agent. Inside was a rejection letter backdated to March 23, so as to look like the Harrison application had been rejected before it was withdrawn. Based on customer complaints, the Department financial examiner conducted an unannounced inspection of NMB from November 15-17, 1993. In addition to discovering a violation of the minimum net worth requirement imposed upon mortgage lenders, the examiner found several violations of requirements imposed upon mortgage brokers. At no time did NMB disclose in writing that it could not guarantee acceptance into a particular loan program and could not promise any specific loan conditions or terms. When taking applications, NMB failed to disclose the nature of the mortgage brokerage fee charged by NMB. The fee varied according to the terms of the loan, and NMB only disclosed a broad range of fees at the time of the application. NMB received monies from customers, but did not record check numbers for checks used to pay vendors on behalf of specific customers. NMB thereby failed to maintain an updated record of escrow account activity on an appropriate form. In fact, NMB had the Department-promulgated form, but, as discussed below, used it improperly to try to record mortgage brokerage transactions. NMB did not maintain supporting documentation for monies paid from its escrow account on behalf of customers. NMB often used courier prepayments to pay unrelated expenses. NMB did not record the dates and amounts paid out of escrow. NMB maintained a mortgage brokerage transaction journal, but it lacked the date the customer applied for the mortgage loan, the date of disposition of the application, the total amount of brokerage fees, and the name of the lender. NMB used the Department-promulgated form for escrow account activity and tried to adapt it for mortgage brokerage transactions, but failed to include the above-cited crucial items of information. Concerning NMB's application for a correspondent mortgage broker's license, there is evidence, in at least one case, of fraud or deceit. Ms. Harrison, who was very credible, described an act of fraud or dishonest dealing in the postdating and delivery of her rejection letter. The atmosphere of incompetence and neglect that prevailed at NMB might well have left a typed letter unmailed for days or even weeks. However, an employee or other agent committed a wilful act of deceit in driving the letter out to Ms. Harrison's home and leaving it in the mailbox, rather than simply dropping it in the mail.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Banking and Finance enter a final order revoking the mortgage lender's license of National Mortgage Bankers, Inc. and denying its application for licensure as a correspondent mortgage lender. ENTERED on November 3, 1994, in Tallahassee, Florida. ROBERT E. MEALE 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 on November 3, 1994. COPIES FURNISHED: Hon. Gerald Lewis Comptroller The Capitol, Plaza Level Tallahassee, FL 32399-0350 William G. Reeves General Counsel Department of Banking and Finance The Capitol Plaza Level, Room 1302 Tallahassee, FL 32399-0350 Susan E. Steinberg Assistant General Counsel Office of the Comptroller 1313 Tampa St., Suite 615 Tampa, FL 33602-3394 Sheldon Voron 775 Tamiami Tr. Port Charlotte, FL 33953
The Issue Whether Respondent's application of the inflation protection clause of the agreement to purchase real estate, thereby increasing the purchase price, discriminated against Petitioner in violation of the Florida Fair Housing Act (FFHA) and Sections 760.20 through 760.37, Florida Statutes (2004).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing Petitioner's Petition for Relief. DONE AND ENTERED this 24th day of January, 2006, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE 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 24th day of January, 2006. COPIES FURNISHED: Denise Crawford, Agency Clerk Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Tyrone Harrison 8412 Peterson Road Odessa, Florida 33556 Cristina A. Equi, Esquire Gray & Robinson, P.A. 301 East Pine Street, Suite 1400 Post Office Box 3068 Orlando, Florida 32802-3068 Cecil Howard, General Counsel Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
Findings Of Fact At all times pertinent to the allegations contained herein, Respondent was a licensed Mortgage Broker and the principal broker for Mortgage Associates of Countryside, located at 2623 Enterprise Rd., Clearwater, Florida. The Department was and is the state agency charged with regulating the activities of mortgage brokers in this state. In September, 1987, Andrew Grosmaire and Kevin Gonzalez, compliance officer and financial examiner, respectively, for the Department, pursuant to a complaint from Mark Snyder, conducted an examination of Respondent's affairs as they pertained to his operation as a mortgage broker. During the survey, which covered the period from August, 1986 through August, 1987, Mr. Grosmaire and Mr. Gonzalez examined between 50 and 60 loan files which had culminated in loan closings. In addition, they examined loan files which did not result in closings, bank account records, and other of Respondent's miscellaneous records. In order for an appropriate audit of a closed loan file to be conducted, it is imperative that the loan closing statement be included. Without it, the examiner cannot accurately determine what, if any, closing costs the borrower actually paid and if closing costs paid were consistent with those disclosed by the broker on the Good Faith Estimate Form at the initial interview. Of the closed loan files reviewed, these closing statements were missing from seven files. Respondent admits that several closed loan files did not have the required closing costs statement form enclosed. He attributes this, however, to the failure of his processor, an assistant, to place the closing statement in the file. They were not presented at hearing or thereafter. The investigators examined the Good Faith Estimate Forms in those files which culminated in loans and found that the form utilized by the Respondent failed to contain language, required by statute, which summarized the limits and conditions of recovery from the Mortgage Brokerage Guaranty Fund. Respondent contends that the pertinent statutory section was not in existence at the time he was engaged in mortgage brokerage activities. This was found to be not true. The Act became effective July 1, 1986 and the files surveyed were from the period August, 1986 through August, 1987. Examination of the Good Faith Estimate Forms used by the Respondent in each of the cases which culminated in loan closing revealed that Respondent consistently underestimated closing costs. This resulted in the borrowers generally paying higher closing costs than was initially disclosed to them. On -loans applied for by Mr. and Mrs. Snyder, Mr. Iyer, and Mr. Toland. Respondent redistributed loan points to himself in an amount higher than that which was agreed to by the parties. In the Toland case, Mr. Toland agreed to pay a 1% loan origination fee in the amount of $996.00. The settlement statement dated approximately 2 months later reflected that Toland paid Respondent a loan origination fee of $1,128.00 in addition to a 1% ($664.00) loan discount fee to the lender. This latter mentioned discount fee was not disclosed in advance to Mr. Toland on the estimate form nor was the excess loan origination fee charged. It should be noted here that a second Good Faith Estimate Form, dated nine days after the original, reflecting a 3% loan origination fee, was found in the file. Though signed by Respondent, this second form was not signed by the borrower as required. It cannot, therefore, serve to support Respondent's claim that he advised the Tolands of the higher cost by this second form. There is no showing that the Tolands were aware of it. In the Iyer case, the estimate form dated September 19, 1986 reflected a points and origination charge of $1,332.50 which is 1% of the mortgage loan amount of $133,250.00. The Iyers were subsequently approved for a mortgage in the amount of $145,600.00. The closing statement dated March 6, 1987, almost six months later, reflects that the Iyers paid a 2% loan origination fee of $2,740.00 to Mortgage Associates and a load discount fee of $685.00 to the lender. Here again the Respondent claims that a second cost estimate form reflecting a 2% point and origination fee of $2,912.00 was subsequently executed by the Iyers. However, this second form, found in Respondent's files, is undated and fails to reflect the signature of either Respondent or the Iyers. It cannot, therefore, serve as proof that the Iyers were made aware of the change. It does appear, as Respondent claims, that the bottom of the second form, (here, a copy) , was excluded from the copy when made, but there is no evidence either in the form of a signed copy or through the testimony of the Iyers, that they were aware of the change. Consequently, it is found that the Iyers had not been made aware of the second estimate and had not agreed to pay as much as they did, in advance. As to the Snyder closing, both Mr. Snyder and Respondent agree that it was their understanding at the time the loan was applied for, that Respondent would attempt to obtain a lower interest rate for them than that which was agreed upon in the application and in the event a lower rate was obtained, Respondent's commission points would remain the same as agreed upon in the brokerage agreement. In that case, as Respondent points out, his commission is based on the mortgage amount, not the interest rate, and he would be entitled to the agreed upon percentage of the loan face amount regardless of the interest rate charged by the lender on the loan. The Snyders had agreed to a 1% commission to Respondent plus a 1% loan origination fee to the lender. When the lender agreed to lend at par, without an origination fee, Respondent appropriated that 1% to himself, thereby collecting the entire 2% called for in the application. This was improper. Respondent's claim that it is an accepted practice in the trade is rejected. The Snyders initially made demand upon the Respondent for reimbursement of that additional 1% and ultimately had to hire an attorney to pursue their interests. Respondent subsequently made a $400 partial reimbursement payment of the amount owed but nothing further notwithstanding the fact that the Snyders ultimately secured a Judgement in Pinellas County Court against him for $1,082.52 plus interest, attorney's fees and costs. As a result, the Florida Mortgage Brokerage Guarantee Fund will reimburse the Snyders for their loss. According to the investigators, the Snyders Toland, and Iyer files, in addition to the problems described, also reflected that Respondent received payments for other items which should have gone into an escrow account. These included such things as credit reports and appraisal fees. The Department requires that any money received by a broker other than as commission, be placed in the broker's escrow account pending proper disbursement. Respondent did not have an escrow account. Mr. Gonzalez looked at Respondent's overall operation, including closed files, in an attempt to correlate between income and outgo to insure that Respondent's operation was in compliance with the statute. In addition to his search for an escrow account, Mr. Gonzalez also examined Respondent's "Loan Journal" which by statute is required to contain an entry for each transaction in each loan. The purpose of this journal is to provide a continuing record to show when each item in the loan processing was accomplished. In Mr. Gonzalez' opinion, the Respondent's journal was inadequate. It contained repeat and conflicting entries for specific items which hindered the investigators' ability to determine an audit trail. In addition, all required information was not put in the journal in complete form in each account. In the opinion of the investigators, the Respondent's violations were significant in that they made it impossible for the Department to determine compliance with statutes and Department rules and inhibited the compliance examination. All in all, Respondent's way of handling his accounts, his failure to maintain an escrow account, and his unauthorized increase in commission income, all indicated his actions were not in the best interest of his clients. The investigators concluded that clients funds were not being handled properly and that the purpose of Chapter 494, Florida Statutes, to protect the consumer, was not being met. In Mr. Gonzalez' opinion, Respondent's method of business constituted incompetence as a mortgage broker and "possibly" fraudulent practice. It is so found. Both Mr. Gonzalez and Mr. Grosmaire indicated they had extreme difficulty in attempting to locate Respondent after the complaint was filed by Mr. Snyder, in order to conduct their examination. They finally located him at a site different from that which appeared in the records of the Department. Respondent contends that the Department had been notified in writing within the required time, of his change of location when he filed a notice of fictitious name. He contends that after filing his notice of name change, he received no response from the state but took no action to inquire whether the change had been made. In any case, his current address was in the phone book and had the agents chose to look there, they would have found him. Respondent contends that the good faith estimates required by the statute are just that, an estimate, and that actual figures may vary from and exceed these estimates. This is true, but there is a procedure provided whereby the broker is to notify the client of a change in advance and if the change exceeds a certain amount, it may constitute grounds for voiding the contract. In paragraph 7 of the complaint, Petitioner alleges that Respondent used a form for the estimates which failed to contain a statement defining the maximum estimated closing costs. Review of the statement offered herein reflect this to be a fair analysis. However, Respondent claims that certain items cannot be predicted accurately in that some companies charge more than others for the same item and it was his practice to insert in the estimate portion of the form a "worst case scenario." However, at no time did he address in his form what could be the maximum a prospective purchaser might be expected to pay. Respondent "doesn't like" the total picture painted by the investigators concerning his operation. He claims it is cot a fair and accurate representation. In many cases, he claims, he expended funds on behalf of clients in excess of that he received in either commission or reimbursement and even though he may have received more than entitled in some cases, it "evens out over a period of time." Though this may be so, it is no way to do business. The state requires the keeping of accurate records and, just as the broker should not be required to assume responsibility for other than his own misconduct, neither should the client be required to pay more than is his legal obligation. Respondent professes to know the mortgage business and he resents having his qualifications as a mortgage broker questioned. In his opinion, he has trained himself well and has acted in good faith on the basis of the information available to him at the time. He ignores the impact of the Judgement of the court in the Snyder matter because he feels it was "unilateral." He believes the law is designed to protect the client and he wants to know who protects the broker. It is for that very reason, he contends, that fees paid in advance are not refundable. Mr. Sample feels the Department should be more informative to the brokers and get the governing regulations updated more quickly. Respondent cherishes his license and claims he needs it to make a living. He went out of business once before, several years ago, because of bad business conditions, (the reason he uses for not complying with the court order), but did not declare bankruptcy because he wanted to go back into business and pay off the judgements against him. Though he has been back in business for several years, he has failed to make any effort to pay off any of his former creditors even though in his former operation, he improperly tapped his escrow account for other business expenses.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Respondent, Howard E. Sample's license as a mortgage broker in Florida be revoked. RECOMMENDED this 15th day of September, 1988 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of September, 1988. APPENDIX TO RECOMMENDED ORDER IN CASE NUMBER 88-2858 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Insofar as Petitioner's submission refers to testimony of a witness, that is considered as a proposed finding of fact. FOR THE PETITIONER; Accepted and incorporated herein & 3. Accepted and incorporated herein 4. & 5. Accepted and incorporated herein Accepted and incorporated herein & 8. Accepted and incorporated herein Rejected as contra to the evidence A conclusion of law and not a finding of fact & 11a Accepted and incorporated herein Accepted Accepted and incorporated herein Accepted Accepted and incorporated herein - 18. Accepted 19. - 21. Accepted and incorporated herein Accepted & 24. Accepted and incorporated herein 25. & 26. Accepted and incorporated herein Accepted &-29. Accepted 30. - 34. Accepted and incorporated herein FOR THE RESPONDENT: Nothing Submitted by way of Findings of Fact COPIES FURNISHED: Elise M. Greenbaum, Esquire Office of the Comptroller 400 West Robinson St. Suite 501 Orlando, Florida 32801 Howard E. Sample 2465 Northside Drive Apartment 505 Clearwater, Florida 34621 Honorable Gerald Lewis Ccmptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 Charles L. Stutts, Esquire General Counsel Department of Banking and Finance Plaza Level, The Capitol Tallahassee, FL 3 2399-0350
Findings Of Fact Abraham Scott, Jr., is a registered general contractor with the FCILB and holds general contractor's license no. RG0008305. Pursuant to an agreement entered during April, 1975, Respondent and Mrs. Ruth Jenkins of Lake Butler entered into a contract for construction of a home at a cost of $37,000. To finance the project, Mrs. Jenkins secured a loan from Guaranty Federal Savings & Loan Association of Starke, Florida in the amount of $30,600 and she additionally paid Respondent approximately $5,913.57. Guaranty Federal Savings & Loan had disbursed approximately 90 percent of the construction loan to Respondent when Mrs. Jenkins received liens filed against her property in the amount of approximately $9,579.53. The lienors included Lake City Industries, North Florida Concrete, Mayo Electric, Roy Ward Wholesale Distributors, Sawyer Slade Gas Company and a local carpet distributor. At that juncture, Mrs. Jenkins complained to Respondent regarding the liens filed against her property and the fact that the house was not completed as per their agreement to no avail. Thereafter, Mrs. Jenkins contacted Mr. Harold K. Davis, Branch Manager of Guaranty Federal Savings & Loan Association, who terminated all further disbursements of the construction loan. At that point, approximately $28,436.50 had been disbursed to Respondent. Mr. Hermon Cherry, investigator with FCILB investigated the Jenkins' complaint and discussed the matter with Respondent. Mr. Cherry testified that Respondent advised him that he had used part of the money from the Jenkins' project to complete a job in Hamilton County and that when the proceeds from that job were received, those receipts would be used to satisfy liens placed against the Jenkins property. Petitioner's Exhibit #3, is a statement given to investigator Cherry on March 22, 1976, by Respondent. The statement is somewhat corroborative of Cherry's testimony that Respondent used portions of the construction loan monies received from the Jenkins project to complete another job. Respondent acknowledged that he was having financial problems in another county "in which I have money from this job tied in the amount of $2,500. As soon as I can collect this money from these jobs, I will clear this matter up". (See Petitioner's Exhibit #3). Respondent acknowledged that he had monies due him from a project he had completed in Jasper, Florida and that this job was completed prior to the commencement of the Jenkins project. However, he failed to state that all obligations due and owing on that job in Jasper had been satisfied or that all unpaid subcontractors, materialmen, etc., who furnished materials, supplies or labor, in connection with the Jasper project had been paid. Based on that statement and Respondent's acknowledgement that the liens had been placed on the Jenkins project based on his financial difficulties with another project in which he clearly stated in Petitioner's Exhibit #3 that money from the Jenkins project had been tied up on another project, I find that the two matters, when coupled together provides proof positive that the Respondent diverted funds received for completion or the Jenkins project to another project and as a result thereof, he was unable to fulfill the terms of his obligation and contract with Mrs. Jenkins, in violation of Chapter 468.112(2)(e). During the course of the hearing, Respondent introduced evidence indicating that a settlement agreement was being worked out to resolve the differences with Mrs. Jenkins property and to satisfy all lien claimants who had filed liens against Mrs. Jenkins' property. Mrs. Jenkins acknowledged the settlement agreement and indicated her willingness to accept the terms thereof as full satisfaction of Respondent's obligations to her pursuant to the construction of her home. (See Respondent's Exhibit #1.) Respondent testified further that he intends to fulfill all of the remaining deficiencies that may exist with respect to the Jenkins property and that he at all times intended to fulfill his obligations to her. For these reasons, I shall recommend that the Respondent's registered general contractor's license be suspended rather than revoked.
Recommendation Based on the foregoing findings of fact and conclusions of law, I recommend that the Respondent's registered general contractor's license be suspended for a period of 90 days in accord with the authority contained in Chapter 468.112(3)(a), F.S. DONE AND ENTERED this 21st day of February, 1977, in Tallahassee, Florida. COPIES FURNISHED: Barry Sinoff, Esquire 1010 Blackstone Building Jacksonville, Florida 32202 J. K. Linnan Executive Director Florida Construction Industry Licensing Board Post Office Box 8621 Jacksonville, Florida 32211 Mr. Abraham Scott, Jr. Route 1, Box 503 Lake City, Florida JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675
