The Issue The primary issue in this case is whether Respondent misrepresented or failed to disclose material terms and conditions pertaining to annuities that he sold to several senior citizens. If Respondent were found guilty of any disciplinable offense, then the next issue would be whether Petitioner should impose discipline for such violations as Respondent may be found to have committed.
Findings Of Fact At all times relevant to this case, Respondent Peter S. Tust ("Tust") held a valid license to transact business in Florida as a life insurance agent, which authorized him to sell products such as life and health insurance policies and fixed and variable annuities. This case arises from two separate transactions in which Tust sold an insurance product known as an equity index annuity to (a) Dora Indiviglia and (b) Abraham and Elaine Gelch. Petitioner Department of Financial Services ("DFS" or the "Department") is the state agency charged with administering the provisions of the Florida Insurance Code, among other responsibilities. The Department alleges that Tust fraudulently induced Ms. Indiviglia and the Gelchs to purchase annuities that were not suited to their respective financial needs. Because Tust is a licensed insurance agent, he falls within the Department's regulatory and disciplinary jurisdiction. Broadly speaking, an annuity is a contractual arrangement pursuant to which an insurance company, in exchange for a premium (or purchase price), agrees to pay the owner or his beneficiary a specified income for a period of time. Annuities are generally classified as "fixed" or "variable." Under a fixed annuity, the benefit is paid according to a predetermined interest rate. With a variable annuity, the premium is invested on the owner's behalf in, for example, stocks or bonds, and the amount of the benefit, when paid, reflects the performance of that investment, be it positive or negative. Fixed annuities can be either "immediate" or "deferred." An immediate fixed annuity is one under which the insurer begins paying the benefit upon purchase of the annuity. Under a deferred annuity, in contrast, the premium is allowed to grow over time, until the contract "matures" or is "annuitized" and the insurer begins paying the benefit. The equity index annuities which Tust sold to Ms. Indiviglia and the Gelchs are considered fixed deferred annuities. An equity index annuity is a contract under which the insurer agrees to pay a benefit based on a premium that earns interest at a rate determined by the performance of a designated market index such as the S&P 500. The premium is not invested in the market for the owner's account (as would be the case with a variable annuity). Rather, to explain the concept in the simplest terms, the interest rate rises (or falls) in relation to the index's performance, within predetermined limits. (None of the annuities involved in this case permitted the interest to fall below zero; that is, an owner's principal was never at risk of being lost due to the market's performance.) It is undisputed that the equity index annuities which Tust sold to Ms. Indiviglia and the Gelchs were approved for sale to senior investors by the Department. Equity index annuities are typically long-term investments. Owners of such annuities have limited access to the funds invested and accumulating in their accounts, although some equity index annuities permit yearly penalty-free withdrawals at set percentages. The accrued interest is generally not taxed until the funds are withdrawn or the benefit is paid under annuity. Besides taxes, the purchaser may incur substantial surrender penalties for canceling the contract and receiving his funds ahead of a specified date. Some equity index annuities identify a date——often many years in the future——on which the insurer will "annuitize" the contract if it has not done so already at the purchaser's request. This date is sometimes called the "maturity date." The benefit payable under the annuity is determined based on the account's value as of the maturity date, and the payments to the owner or beneficiary of the annuity begin at that time. Under the annuities in question here, the purchaser was not required to keep his or her funds invested until the maturity date. Rather, subject to certain limitations not at issue, the purchaser could elect to "annuitize" his or her contract practically at any time and thereby begin receiving the annuity payments. Therefore, in this case at least, the fact that the maturity date was beyond a purchaser's expected lifespan is not, of itself, compelling proof that the annuity was an unsuitable investment for him or her. The Indiviglia Transaction. In February 2005, Ms. Indiviglia attended one of the luncheon seminars that Tust routinely conducted in restaurants near his place of business in Boca Raton, Florida. At these seminars, Tust provided a meal and a sales presentation to his invitees. Tust made clear to those in attendance that he was selling equity index annuities and would recommend the purchase of this sort of annuity to anyone interested for whom such an investment would be suitable. Ms. Indiviglia was interested and made an appointment to meet with Tust. She was 65 years old at the time. As she told Tust when they met on February 25, 2005, Ms. Indiviglia's annual income was about $41,000, which she received from pensions and Social Security. She had recently sold some property and wanted to invest the proceeds, which amounted to about $150,000. Ms. Indiviglia had made financial investments before meeting Tust. She had invested in the stock market beginning in the late 1970s. Additionally, she had invested in a 401k account when she worked for the investment bank J.P. Morgan, had purchased mutual funds outside of the 401k, and had bought a variable annuity through another broker in 2003 or 2004. Ms. Indiviglia told Tust her goals were safety, growth, and future income. Upon meeting with Tust, Ms. Indiviglia agreed to purchase an equity index annuity from Fidelity and Guaranty Life Insurance Company ("F&G") for a premium of approximately $149,000. By purchasing this particular product, Ms. Indiviglia was eligible for, and received, a bonus of approximately $15,000, which was added to her account. If she surrendered (or canceled) this annuity during the first 14 years, however, Ms. Indiviglia would pay a penalty, starting at 18% for a cancellation during the first year and declining each year thereafter until the fourteenth year, when the surrender penalty would be 1%. The maturity (or annuity) date on Ms. Indiviglia's annuity was April 22, 2030. (Because she would be 90 years old by that time, the chances were good that Ms. Indiviglia would surrender or annuitize the contract before the maturity date.) In applying for the F&G annuity, Ms. Indiviglia executed an Annuity Application, a Confirmation Statement, and a Senior Annuity Suitability Acknowledgement. On page one of the Senior Annuity Suitability Acknowledgement, Ms. Indiviglia declined to answer certain questions related to her financial needs and objectives by placing a check mark beside the following statement: "No, I decline to answer the questions below, but I believe a Fidelity and Guaranty Life or Americom Life and Annuity annuity contract meets my needs for my financial situation." Ms. Indiviglia placed her signature and the date (3/8/2005) beneath this statement. On the second page of the Senior Suitability Acknowledgement, Ms. Indiviglia manifested her understanding of several statements, including the following, which she checked: ? This is not a short-term investment. ? Cash withdrawals from or a complete surrender of the contract are subject to certain limitations and charges as described in the contract. ? Surrender charges/fees may be incurred as a result of liquidating certain existing accounts; however, I believe this transaction to be in my best interest. Ms. Indiviglia placed her signature and the date (3/8/2005) below these statements. Tust delivered the F&G annuity contract to Ms. Indiviglia on May 16, 2005. Ms. Indiviglia executed a Delivery Receipt acknowledging that she had received not only the annuity contract, but also a contract summary. On the "Policy Information" page of the contract, which is Page 1, in boldfaced type, were the following provisions: RIGHT TO CANCEL. If you decide not to keep this policy, return it within 10 days after you receive it. It may be returned to any of our agents or it may be mailed to us.The return of this policy will void it from the beginning. Any premium paid will be refunded within 10 days of our receipt of this policy. YOU HAVE PURCHASED AN ANNUITY POLICY. CAREFULLY REVIEW THIS POLICY FOR LIMITATIONS. CANCELLATION MAY RESULT IN A SUBSTANTIAL PENALTY KNOWN AS A SURRENDER CHARGE. On Page 2 of the contract, the Annuity Date of April 22, 2030, was plainly disclosed, as was the "Surrender Factor" for each policy year from first (18%) to the fourteenth (1%). Three pages later, on Page 5, under the boldfaced heading, "SURRENDERS," appeared the following: Surrender Charge A surrender charge may be imposed on withdrawals and at death. The surrender charge equals the surrender factor for the appropriate policy year, as shown on the policy information page, multiplied by the amount of the account value withdrawn. The account value withdrawn consists of the amount paid upon a surrender request, or applied to an annuity option, and the surrender charge thereon. Waiver of Surrender Charges The surrender charge will not apply to the account value if payments are made under an annuity option. The Policy Information page clearly identified the Riders and Endorsements to the contract, one of which was entitled, "Partial Withdrawals Without Surrender Charges Rider." That Rider, which was attached to the contract, provided as follows: After the first policy anniversary, a portion of the account value withdrawn will not be subject to a surrender charge. The amount, which can be surrendered without a surrender charge, is up to 10% of the premiums paid, less any amounts previously surrendered in the current policy year which were not subject to the surrender charges. Maximum Benefit: the total maximum amount, which can be surrendered without a charge, is 25% of the premiums paid. Once the maximum amount has been surrendered without charges, any additional surrenders will incur a charge, unless additional premium is paid. Ms. Indiviglia held the F&G annuity into the third policy year. In or around July 2007, she made a penalty-free withdrawal of $12,000. Then, about a month later, she elected to surrender the contract, incurring a 16% penalty for the early withdrawal of her account balance. Although the evidence is not clear as to precisely how Ms. Indiviglia fared, financially, in this transaction, it is undisputed that, notwithstanding the surrender penalty, she actually made money on the investment——at least about $2,000 and perhaps as much as $14,000 or so. The provisions of the F&G annuity which DFS alleges Tust misrepresented or failed to disclose to Ms. Indiviglia were clearly stated, unambiguously, in the contract itself. The evidence fails to convince the undersigned to find, without hesitancy, that Tust misrepresented or failed truthfully to disclose to Ms. Indiviglia any of the F&G annuity contract's material terms and conditions, knowingly made other false representations of material fact about the product, or otherwise made any false promises in connection with the investment. Likewise, the evidence is insufficient to convince the undersigned that the F&G annuity was an inappropriate investment for Ms. Indiviglia, taking into account her stated financial needs and goals, age, wealth, and relative sophistication as an investor. To the contrary, viewing the evidence as a whole, the undersigned determines that the F&G annuity fell squarely within the range of reasonable investments for a person having Ms. Indiviglia's investment profile. The Gelch Transaction. In September 2006, Abraham Gelch, 73, and his wife Elaine, 68, attended one of Tust's luncheon seminars. Mr. Gelch was a retired accountant; to that time he had been primarily responsible for his family's financial decisions. Although Mrs. Gelch denied being knowledgeable regarding investments when she testified in this proceeding, she is well-educated, holding a bachelor's degree and a master's degree, and was sufficiently conversant at hearing regarding the subject annuities to persuade the undersigned that she was and is able to comprehend the particulars of the transaction in issue. After the seminar, the Gelchs met with Tust to discuss purchasing equity index annuities. At the time, they were living on Social Security plus the returns on their investments. The Gelchs had, in 2006, financial investments totaling nearly $2 million, most of which wealth was held in a brokerage account at Morgan Stanley. According to their U.S. income tax return, which they gave to Tust, the Gelchs' adjusted gross income for 2005 was approximately $100,000, about $35,000 of which was derived from investments, according to other information the Gelchs provided Tust. At the meeting with Tust, Mr. Gelch completed a "financial goals and needs" form on which he ranked his investment objectives in order of importance. He ranked the items from 1 to 6, with "1" being the most important, as follows: Protecting my assets from losses 1 Growing my assets 2 Generating more income 3 Leaving money to my children/heirs 6 Replacing my pension income for my spouse if I pass first 4 Protecting my assets from taxes at death 5 Mr. Gelch placed his signature and the date (09/27/06) below this enumeration of his priorities as an investor. On the same form, Mr. Gelch expressed his agreement with the statement, "It is important that my investments are 100% safe from this point forward," and he expressed disagreement with the statement, "I am willing to take some risk (and possible losses) with my investments." Mr. Gelch disclosed on the form that he and his wife had suffered investment losses of $300,000 between 2000 and 2002. In completing the statement, "My greatest financial concern is ," Mr. Gelch wrote: "OUTLIVING MY INCOME." Ultimately, Mr. and Mrs. Gelch agreed to purchase six equity index annuities, two issued by Allianz Life Insurance Company of North America ("Allianz"), and four by Midland National Life Insurance Company ("Midland"), for premiums totaling, in the aggregate, approximately $1.4 million. These annuities were similar in concept to the F&G annuity that Ms. Indiviglia had purchased, having interest rates pegged to market indices, surrender charges for early termination, limitations on penalty-free withdrawals, annuity dates some years in the future, and strong protection against loss of principal.1 With the Allianz annuities, surrender penalties declined over ten years, from 15% in the first year down to 2.14% in the tenth policy year. After one year, the Gelchs could withdraw up to 10% of the premium annually without penalty, to a maximum (over the first 10 policy years) of 50% of the premium paid. Under the Allianz annuities, the Gelchs could begin making systematic withdrawals of credits——that is, they could take distributions of interest earned on their accounts—— without penalty after the fifth policy year. The maturity dates for the Allianz annuities were in 2016. The Midland annuities, like the others, provided for surrender penalties, which declined from 18% to 2% over fourteen years. After the first year, the Gelchs could withdraw up to 10% of the "accumulation value" (premiums paid plus interest earned) of each policy annually without penalty, up to the entire value of the respective annuity. The maturity dates for the Midland annuities fell in 2048 and 2053. In connection with the applications for the Allianz annuities, Mr. and Mrs. Gelch each completed the following forms: Application for Annuity, Product Suitability Form, and Statement of Understanding. In the Product Suitability Form, the Gelchs identified a net worth of more than $1 million and confirmed prior investments in certificates of deposit, fixed annuities, variable annuities, and stocks/bonds/mutual funds. In a section entitled, "Accessing your money," the Gelchs indicated that they intended to access the funds in "10 or more years" as a lump sum. Each Allianz Statement of Understanding is a five page document that identifies the terms of the annuities, including the surrender charges and the methods of calculating interest. The Statements of Understanding do not guarantee a 6-9% return, which is what Mrs. Gelch testified Tust had promised the annuities afforded. Instead, for an indexed investment, each document states, "At the end of each contract year, the capped monthly returns are added together to calculate your indexed interest for that year. If this sum is negative, the indexed interest for that year will be zero." In connection with the applications for the Midland annuities, the Gelchs were provided Annuity Disclosure Statements, which identified the liquidity provisions and contained the following declaration: I understand that [this] annuity is a long- term contract with substantial penalties for early surrenders. A surrender charge is assessed, as listed below on any amount withdrawn, whether as a partial withdrawal or full surrender, that is in excess of the penalty-free amount applicable. The surrender charges vary by product option and decline as [shown in the table.] (Emphasis in original; table in original not reproduced here.) Mr. And Mrs. Gelch each signed and dated this declaration, manifesting their understanding of the surrender charges, which charges, as the disclosure form further explained, "allow the company to invest long-term, and in turn, generally credit higher yields." In addition, on the respective disclosure forms that the Gelchs signed, each of them specifically refused (by signing or placing initials next to the word "Decline"), a 7-year surrender charge option offering no bonus; and a 10-year surrender charge option offering a 5% bonus. Instead, Mr. And Mrs. Gelch each separately requested (by signing or placing initials next to the word "Elect"), the 14-year surrender charge option offering a 10% bonus. Mr. Gelch also completed a Deferred Annuity Suitability Form for Midland, which among other things included the following: 4. An annuity is a long-term contract with substantial penalties for early surrenders and/or distributions. In answering the following question, do not include the funds used to purchase this annuity contract, or any funds from annuities already owned. Do you have sufficient available cash, liquid assets or other sources of income for monthly living expenses and emergencies? Yes ? No (Emphasis in original; check mark handwritten on original.) Mr. Gelch affixed his signature to the suitability form, immediately below a declaration stating: I acknowledge that I have read this Deferred Annuity Suitability Form and believe this annuity meets my needs and is suitable. To the best of my knowledge and belief, the information above is true and complete. Mr. and Mrs. Gelch owned the Allianz and Midland annuities for a little more than a year before surrendering them in January of 2008. The surrender penalties for such early terminations, which charges had been fully disclosed to the Gelchs, were steep: 18% on the Midland annuities and 15% on the Allianz annuities. Despite the surrender penalties, which totaled approximately $200,000, the Gelchs' net loss on the investments (owing to their decision to surrender the annuities so soon after purchasing them) was only about $23,000, due to the investment gains and the bonuses. The provisions of the Allianz and Midland annuities which DFS alleges Tust misrepresented or failed to disclose to the Gelchs were clearly stated, unambiguously, in the written disclosures provided to the Gelchs, not to mention in the contracts themselves. The Gelchs, in turn, gave Tust (and through him the issuing insurers) numerous objective manifestations, in writing, of their understanding of these material terms and conditions. The evidence fails, ultimately, to convince the undersigned to find, without hesitancy, that Tust misrepresented or failed truthfully to disclose to the Gelchs any of the annuity contracts' material terms and conditions, knowingly made other false representations of material fact about the products, or otherwise made any false promises in connection with the Gelchs' investments. Likewise, the evidence is insufficient to convince the undersigned that the Allianz and Midland annuities were inappropriate investments for the Gelchs, taking into account their stated financial needs and goals, respective ages, health, wealth, and relative sophistication as investors. To the contrary, viewing the evidence as a whole, the undersigned determines that the annuities fell squarely within the range of reasonable investments for persons having the Gelchs' investment profile. Ultimate Factual Determinations. In view of the historical facts found above, the undersigned has determined, based the appropriate standard of proof (discussed below) as applied to the evidence adduced at hearing, that Tust is not guilty of any of the following offenses with which he was charged: (a) willfully misrepresenting the terms of any annuity contract as proscribed in Section 626.611(5), Florida Statutes; (b) demonstrating a lack of fitness or trustworthiness to engage in the business of insurance, which is punishable under Section 626.611(7), Florida Statutes; (c) engaging in fraudulent or dishonest practices, a disciplinable offense pursuant to Section 626.611(9), Florida Statutes; (d) willfully failing to comply with, or of violating, a provision of law, which is punishable under Section 626.611(13), Florida Statutes; violating any applicable provision of law, which may subject the violator to discipline under Section 626.621(2), Florida Statutes; (e) engaging in unfair methods of competition or deceptive acts, as prohibited in Section 626.9541, Florida Statutes; and (f) failing to present accurately and completely every fact essential to a client's decision, as required under Florida Administrative Code Rule 69B-215.210. Moreover, although Tust did not have the burden to prove his innocence in any respect, the greater weight of the evidence nevertheless persuades the undersigned to determine that he did, in fact, fulfill the obligations he owed to Ms. Indiviglia and the Gelchs under Section 627.4554, Florida Statutes, which governs transactions involving sales of annuities to senior consumers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a Final Order finding Peter S. Tust not guilty of the charges that were brought against him in this proceeding. DONE AND ENTERED this 3rd day of November, 2009, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 3rd day of November, 2009.
The Issue The issue in this case is whether Respondent, Joseph John Ripa, committed the offenses alleged in a First Amended Administrative Complaint issued by Petitioner, the Department of Financial Services, on May 11, 2006, and amended on October 16, 2006, and, if so, what penalty should be imposed.
Findings Of Fact The Parties. Petitioner, the Department of Financial Services (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for, among other things, the investigation and prosecution of complaints against individuals licensed to conduct insurance business in Florida. Ch. 626, Fla. Stat.1 Respondent Joseph John Ripa was, at the times relevant, licensed in Florida as a life and health (2-18) insurance agent. Mr. Ripa's license number is A220906. At the times relevant to this matter, Mr. Ripa was associated as an agent with Fidelity Assurance, Inc. (hereinafter referred to as "Fidelity Assurance"), an insurance agency. As an agent for Fidelity Assurance, Mr. Ripa sold annuities, including equity indexed annuities, to a target clientele of individuals 65 years of age or older. Equity Indexed Annuities. Very broadly speaking, an "annuity" is an insurance/investment product whereby a person invests money in exchange for regular payments over a period certain, over one or more specified individuals' lifetimes, or over a combination of life(s) and a period certain. There are two primary types of annuities: one is called a "fixed" annuity because payments are made in fixed amounts or in amounts that increase by a fixed percentage; the other is called a "variable" annuity because payments vary according to the investment performance of a specific type of investments, typically bond and equity mutual funds. Fixed annuities maybe "deferred" or "immediate." With a deferred fixed annuity, an investment of money is made and the earnings thereon are deferred both in payment and for tax purposes until payment at a later time. An immediate fixed annuity is one where an investment of money is made and payments (a potion of principal and earnings) begin immediately. Immediate annuities usually have "mortality" component also: upon the death of the annuitant, payments are made to a beneficiary. Within the past ten years or so, equity indexed deferred annuities, a form of fixed annuity, has been developed and marketed in Florida. The features of this type of annuity are far more complex than the traditional fixed annuity. For any annuity, and especially an equity indexed deferred annuity, a prospective annuitant must understand a number of things about the annuity: (a) the overall product features; (b) investing; (c) tax impacts of the annuity; (d) the projected rates of return and how certain those rates are; (e) the risks associated with the insurance company, or "credit risk"; (f) liquidity of the investment; and (g) fees or costs associated with the annuity. There are several features of deferred annuity products, including equity indexed deferred annuities, which can have adverse consequences for some annuitants: (a) it is far more complex than traditional fixed annuities; (b) the uncertainty of the return on the annuitant's investment; (c) the treatment of income from the annuity as ordinary income rather than capital gains; (d) the treatment for tax purposes to beneficiaries (no stepped-up basis or capital gains); (e) the lack of liquidity and surrender charges; (f) inflexibility in changing or "rebalancing" the mix of assets invested in; and (g) fees associated with the annuity. Count I: The VandenBosch Transactions. In December 2003 Mr. Ripa met with Emil and Georgette VandenBosch at their Boynton Beach, Florida home. Emil was 88 years of age at the time and Georgette was 89 years of age. While the evidence failed to prove their exact net worth, they were retired and of relatively modest means.2 As a consequence of the December 2003 meeting, Mr. Ripa sold a fixed deferred annuity in the amount of $108,900.69, contract number 449001, from American Investors Life Insurance Company (hereinafter referred to as "American Investors")(hereinafter referred to as the "First VandenBosch Annuity"). The annuitant was Georgette VandenBosch. The First VandenBosch Annuity, while allowing up to a 10 percent withdrawal from the annuity, after the first year the annuity was in force, once a year. For any other withdrawal from the annuity the contract provided for a 12 percent, 12-year declining surrender charge. Consequently, in order for the VandenBosches to fully access the annuity without penalty, Ms. VandenBosch would have to live until she was at least 101 years of age. Her life expectancy at the time she purchased the First VandenBosch Annuity was only 5.35 years, a fact that Mr. Ripa knew or should have been aware of. The sale of the First VandenBosch Annuity generated commissions of $7,895.30 for Mr. Ripa or his agency, Fidelity Assurance. In January 2004, Mr. Ripa again met with the VandenBosches, this time selling them a $26,520.11 deferred annuity, half in a traditional fixed annuity and half in an equity indexed annuity, contract number 449729, from American Investors (hereinafter referred to as the "Second VandenBosch Annuity"). The annuitant was Emil VandenBosch. Within four months after purchasing the Second VandenBosch Annuity, Mr. VandenBosch, through Mr. Ripa, invested an additional $22,200.00 into the annuity, for a total investment of $48,620.11. The Second VandenBosch Annuity, while allowing up to a 10 percent withdrawal of the annuity once a year after the first year, provided for a 12 percent, 10-year declining surrender charge for any other withdrawals. Consequently, in order for Mr. VandenBosch to fully access the annuity without penalty, Mr. VandenBosch would have to live until he was at least 99 years of age. His life expectancy at the time he purchased his annuity was only 4.85 years, a fact that Mr. Ripa knew or should have been aware of. The sale of the Second VandenBosch Annuity generated commissions of $4,862.02 for Mr. Ripa or his agency, Fidelity Assurance. It has been the practice of the VandenBosches, that Mr. VandenBosch handled all financial transactions impacting the family. It is, therefore, inferred that Mr. VandenBosch was responsible for the purchase of the First and Second VandenBosch Annuities. While neither Emil nor Georgette VandenBosch testified at the hearing of this matter,3 one of their children, Donald VandenBosch did. While much of his testimony constituted hearsay, not subject to any exception under Chapter 90, Florida Statutes,4 he did testify credibly that Mr. VandenBosch was, at the times relevant to this matter, experiencing declining health. His declining health included macular degeneration, which impacted his eye sight, and a decline in his mental capacity. While the evidence failed to prove clearly and convincingly that Mr. VandenBosch was unable to read the documents involved with the purchase of the First and Second VandenBosch Annuities, it is found that, due to his declining mental capacity and the complexity of the contracts for the annuities, Mr. VandenBosch relied heavily, if not exclusively, on Mr. Ripa's representations concerning the policies Mr. Ripa sold them. In January 2005, the VandenBosches, along with their son, Donald VandenBosch, arranged to meet with Ripa. During that meeting the VandenBosches told Mr. Ripa that they desired to access their investments and needed his assistance to avoid the high penalties associated with withdrawals.5 Mr. Ripa accurately explained that the only way to avoid the surrender penalties and access their investments currently would be to make a once-a-year withdrawal of up to 10 percent of the annuities. After emphasizing to Mr. Ripa that they did not want to incur any penalties, Mr. Ripa was instructed to arrange for them to make a 10 percent withdrawal from the First VandenBosch Annuity, which Mr. Ripa explained would amount to the equivalent of approximately $950.00 to $970.00 per month. At no time during the meeting was their any instruction given to Mr. Ripa to arrange for the cancellation of either of the annuities or the purchase of any other product. Mr. Ripa agreed to prepare the necessary paperwork to carry out the VandenBosches' instructions. The events of the January 2005 meeting support a finding that the First and Second VandenBosch Annuities did not meet the VandenBosches' financial goals and were not suitable investments for them. In particular, it is inferred that the VandenBosches did not want to invest in a product that so severely restricted their access to their assets. Despite the clear instructions to Mr. Ripa concerning the VandenBosches' wishes,6 Mr. Ripa presented the VandenBosches with forms for their execution subsequent to their January 2005 meeting which resulted in the cancellation of the First VandenBosch Annuity and the purchase of a new immediate fixed annuity from American Investors, contract number 473129. As a result of these transactions, the VandenBosches incurred a surrender penalty of $11,301.65, the very result they had explicitly told Mr. Ripa they wished to avoid. The monthly payments received by the VandenBosches through the newly purchased fixed annuity were very close to the amount of money they would have received by taking a penalty- free yearly withdrawal and dividing that amount on a monthly basis. There was, therefore, no apparent reason why the VandenBosches would have incurred the penalty of $11,301.65 imposed upon them for canceling the First VandenBosch Annuity. These transactions were carried out by Mr. Ripa despite instructions to contrary, despite the severe penalty incurred by the VandenBosches, and without any discernable reason. It is, therefore, inferred that Mr. Ripa, at best, simply failed to adequately explain the transactions or, at worst, deceived the VandenBosches into believing the documents he provided for their signature were consistent with their instructions during the January 2005 meeting. Count II: The Tuinstra Transaction. In May of 2004, Gerald Tuinstra met with Mr. Ripa at his Boynton Beach home. Mr. Tuinstra was 83 years of age at the time. His wife, Marcella, was 80 years of age and had recently moved into a nursing home. Mr. Tuinstra contacted Mr. Ripa because he was interested in creating an income source with money he had received from the sale of some property. He wanted to create an income source in order to help with the funding of his wife's nursing home expenses, while avoiding the exhaustion of his limited assets. Additionally, Mr. Tuinstra was interested in protecting his property against possible loss which might be caused by the need to seek government funding for his wife's nursing home costs. At the time of his meeting with Mr. Ripa, the money which Mr. Tuinstra was interested in investing was deposited in a bank where it was earning approximately 4 percent interest. Mr. Tuinstra explained his investment goals to Mr. Ripa during their meeting and Mr. Ripa assured him that both goals could be achieved through products offered by Mr. Ripa. As to the goal of creating an income source, Mr. Ripa told Mr. Tuinstra that he would earn 7.37 percent interest on his investment for the first year and would likely earn more in following years. Mr. Ripa told Mr. Tuinstra that he would receive $391.05 per month, writing this amount on notes he left with Mr. Tuinstra. Mr. Ripa did not inform Mr. Tuinstra that the annuity he was proposing was subject to the risk of earning even less then he was currently earning from his bank account or even earning nothing. Mr. Ripa also assured Mr. Tuinstra that his investment would be protected, meeting his second investment goal. Based upon Mr. Ripa's representations, which were, at best, misleading, Mr. Tuinstra purchased a $40,000.00 equity indexed deferred annuity from American Investors, contract number 458412, recommended by Mr. Ripa (hereinafter referred to as the "Tuinstra Annuity"). Mr. Tuinstra's wife was made the annuitant. The money used to make this purchase constituted substantially all of Mr. Tuinstra's liquid assets. The commission on the sale of the Tuinstra Annuity was $4,200.00. The Tuinstra Annuity provided for a 17 percent surrender charge for the first three years of the contract, declining to a 3 percent charge in the 13th year. Mr. Tuinstra's life expectancy at the time of the purchase was 6.65 years. Mr. Tuinstra was not informed of these provisions of the contract by Mr. Ripa during their meeting. In fact, Mr. Ripa led Mr. Tuinstra to believe that he would be receiving monthly payments throughout the term of the annuity. The Tuinstra Annuity that Mr. Ripa had assured Mr. Tuinstra would provide the monthly income he desired, actually failed to provide for any payment. The only provision for a return of his investment without penalty during the first 13 years of the contract was the allowance of a 10 percent withdrawal, after the first year of the contract, on an annual basis, which was not what Mr. Tuinstra asked for or was told he was limited to. When the actual contract for the Tuinstra Annuity was received by Mr. Tuinstra from American Investors, he read the contract and realized that much of what Mr. Ripa had told him about what he was purchasing was incorrect. He then began making efforts to cancel the policy, which he was ultimately able to do. It was during these efforts that he learned for the first time about the withdrawal penalties, not from reading the rather lengthy contract, but from an unidentified man he spoke to about the contract at Fidelity Assurance. Count III: The Putnam Transaction. In March of 2005, the son of Louis Bruno, who was 90 years of age at the time, was pursuing court proceedings to be appointed Mr. Bruno's guardian. Mr. Bruno was living in Boyton Beach, Florida at the time with his companion of 15 or so years, Irene Putnam. Due to his advanced age and lack of short-term memory, Mr. Bruno was unable to manage his own finances, instead, relying upon Ms. Putnam, who had a power of attorney from Mr. Bruno. Ms. Putnam was 82 years of age at that time. At some time shortly before a hearing was scheduled to be held on the guardianship matter, Ms. Putnam and Mr. Bruno discussed the upcoming proceeding with Mr. Ripa, whom Mr. Bruno and Ms. Putnam had known as a friend for a number of years. Mr. Ripa agreed to testify at the court proceeding on behalf of Mr. Bruno. At some point during their discussion, Mr. Ripa asked Mr. Bruno and Ms. Putnam whether they realized that, if Mr. Bruno lost the court proceeding, his son would have authority over all of his assets, including $18,000.00, which Mr. Bruno maintained in two separate bank accounts. This money represented Mr. Bruno's liquid assets at the time. The possibility of losing control of his money was not something that Mr. Bruno or Ms. Putnam had considered and, in response to Mr. Ripa's warning, they asked him if he knew how they could avoid this result. Mr. Ripa told Mr. Bruno and Ms. Putnam that he knew how the money could be protected until after the proceeding. They unequivocally explained to Mr. Ripa that they did want to protect the money, but for only a short period of time. Their intent, which was fully explained to Mr. Ripa, was to re-take possession of the money immediately after the guardianship proceeding ended, in which they expected to prevail. Instead of carrying out Mr. Bruno's clear, unequivocal goal, Mr. Ripa, no more than two or three days before the March 2005 guardian proceeding, sold Mr. Bruno an $18,000.00 equity indexed deferred annuity from American Investors, contract number 476076, with Ms. Putnam as the annuitant7 (hereinafter the "Putnam Annuity"). The Putnam Annuity provided for penalties for withdrawal of the annuity during the first 10 years of the contract, starting at 12 percent during the first year and declining thereafter. Ms. Putnam, whose life expectancy was 8.45 years, would have had to survive to age 92 in order to withdraw the full annuity without penalty. Mr. Bruno would have had to live to age 100 to do so. The commission on the sale of the Putnam Annuity was $1,800.00. Following Mr. Bruno's successful defense of the guardianship proceeding, Ms. Putnam spoke to Mr. Ripa about the retrieval of the $18,000.00 investment. Having received the actual contract, however, Ms. Putnam realized that the Putnam Annuity was not what Mr. Bruno and she had believed they were purchasing. Indeed, having relied totally on Mr. Ripa to protect Mr. Bruno's money for a very short time, including allowing him to complete all of the paperwork for them, she had not even realized that Mr. Bruno had purchased an annuity of any kind prior to receiving the contract. In response to her inquiry, Mr. Ripa suggested that Ms. Putnam have Mr. Bruno surrender another annuity which he owned, one without surrender charges, thereby obtaining cash for his immediate needs and avoiding any surrender charges on the Putnam Annuity. While this suggestion would have allowed Mr. Bruno to replace the $18,000.00 he had tied up in the Putnam Annuity, it was not an option that had ever been discussed with Mr. Bruno or Ms. Putnam and was contrary to what they had requested that Mr. Ripa do with the $18,000.00. Count IV: The LaValley Transactions. In September 2005, Mr. Ripa met with Virginia LaValley at her Boyton Beach, Florida home. Ms. LaValley, who lived alone, was 75 years of age at the time. Ms. LaValley had been evidencing signs of dementia as early as 2003, and her symptoms had continued to increase up to the time Mr. Ripa met with her.8 She had begun to have difficulty remembering simple words to describe objects as early as 2003. During 2005 (prior to September), she had expressed the belief that a computer-generated form letter had been personally written to her; she had begun piling her mail on the dining room table rather than deal with it; she believed that she would "go to jail" if she threw out any of the mail sent to her; she had sealed return envelopes from solicitations she had received and written words to the effect that she would not mail them until the addressees provided her with stamps, a demand that the addressees could not be aware of without the letters being mailed to them, a fact that Ms. LaValley did not understand; and she had stopped reconciling her checkbook or otherwise keeping up with her personal finances.9 Janet Yocum, a friend and an individual who had sold annuities to Ms. LaValley in the 1990's, noticed as early as 2003 that Ms. LaValley was having difficulty following simple instructions concerning the completion and return of a form that Ms. Yocum had sent to Ms. LaValley. It was obvious to Ms. Yocum, although she did not see Ms. LaValley on a regular basis, that Ms. LaValley was losing her ability to understand even simple matters long before Mr. Ripa's meeting with Ms. LaValley. While Mr. Ripa was not aware of some of the foregoing events, it is found that Ms. LaValley's state of health in September 2005 should have been evident to Mr. Ripa when he met with her. If nothing else, Mr. Ripa should have realized that Ms. LaValley was not capable of understanding the complexities of fixed annuity contracts, much less equity indexed deferred annuity contracts. Despite what must have been obvious to him, Mr. Ripa convinced Ms. LaValley during his September 2005 meeting to surrender six annuities which she had purchased from Jackson National Life Insurance Company (hereinafter referred to as "Jackson National") between 1993 and 1997. Mr. Ripa also convinced Ms. LaValley to use the proceeds from the Jackson National annuities, which were old enough to avoid any surrender charges for their surrender and provided for a minimum return of at least 3 percent, to purchase two American Investors annuities (hereinafter referred to jointly as the "LaValley Annuities"). One of the LaValley Annuities, contract number 499901, was an equity indexed deferred annuity for which Ms. LaValley paid $19,500.00. The other, contract number 500794, was also an equity indexed deferred annuity in the amount of $19,079.49. Both provided surrender penalties over 15 years, with a penalty for the first year of 19 percent. Ms. LaValley, whose life expectancy at the time was 12.6 years, would have to live until she was 91 years of age to avoid any surrender penalty. The minimum interest on the annuities was 2 percent compared to the minimum 3 percent rate of the Jackson National policies. During his meeting with Ms. LaValley, Mr. Ripa gave her a company brochure from American Investors' parent, "Amerus." There were a number of handwritten notations on the brochure written by Mr. Ripa. One notation indicates "7%" and is followed by Mr. Ripa's initials. Next the heading "Fixed Strategy" is the notation "3%." While there was no evidence explaining what was said about these notations, they all emphasize "positive" aspects or selling points for the annuity products sold to Ms. LaValley. What Ms. LaValley took from the meeting and, likely, the notations, is that she would be earning 7 percent each year on the LaValley Annuities.10 As further evidence of her declining mental state, when Ms. LaValley received a letter from American Investors' parent company within two weeks after purchasing the LaValley Annuities congratulating her on her purchases. Ms. LaValley, apparently not realizing what the letter meant, wrote a note dated "10/4/200[5]"11 on it stating that "I do not want American Investors Life. Please Cancel." Her signature followed this note. This letter, with her handwritten reply, was returned to American Investors. Whether Ms. LaValley intended to "cancel" the LaValley Annuities or simply thought the letter was a solicitation to purchase insurance is not clear. If the former, she clearly evidenced intent to cancel the LaValley Annuities; if the latter, she evidenced a lack of understanding about what she had done only two weeks before. American Investors apparently treated Ms. LaValley's instructions literally as evidence of her intent to cancel the LaValley Policies, apparently informing Mr. Ripa. Mr. Ripa then revisited Ms. LaValley and prepared a letter for her signature repudiating her attempt to cancel the annuities. The letter, Petitioner's Exhibit 10, was faxed from Fidelity Assurance's fax machine on October 13, 2005. The Unsuitability of the VandenBosch, Tuinstra, Putnam and LaValley Annuities. Given the ages of the annuitants at the time of the purchase of the various annuities at issue in this case (all except one of which were equity indexed deferred annuities; the other was a deferred fixed annuity), their relatively modest financial situations, the long-term nature of the annuities and the high penalties associated with accessing their investments should the need arise (all of the individuals involved would have had to outlive their life expectancies in order to access their investments without penalty), the VandenBosch Annuities, the Tuinstra Annuity, the Putnam Annuity, and the LaValley Annuities were not suitable investments for those individuals, a fact which Mr. Ripa knew or should have known. The foregoing conclusion is also supported by the VandenBosches' efforts not too long after purchasing their annuities to unsuccessfully access their investments and their expression of disappointment upon learning of the severe withdrawal penalties associated with accessing their investments; Mr. Tuinstra's explanation of his intended investment goals when he purchased his annuity and the failure of the Tuinstra Annuity to meet those goals; Ms. Putnam's and Mr. Bruno's explanation of their intended short-term investment goal when the Putnam Annuity was purchased and the failure of the Putnam Annuity to meet that goal; and Ms. LaValley's obvious impaired ability to understand the nature of the transactions carried out by Mr. Ripa, transactions that make no sense from a financial point of view. Finally, the conclusion that the investments at issue in this case were sold to inappropriate purchasers is based upon the obvious failure of Mr. Ripa to perform a basic suitability analysis at the time he sold the annuities to the any of the individual involved or, if he did perform such an analysis, his failure to recognize that the annuities were not a suitable investment for those individuals. The VandenBosches, the Tuinstras, Ms. Putnam and Mr. Bruno, and Ms. LaValley were all individuals of somewhat advanced age and modest financial resources. It is hard to imagine how Mr. Ripa could have performed the type of financial risk analysis he should have performed for these individuals and still concluded that the annuities sold to them were appropriate. None of the individuals were looking for such long-term investments and it was proved that some expressed interest in short-term investments or investments that would create an immediate income stream: the VandenBosches expressed their desire for a return of their funds shortly after Mr. Ripa sold them their annuities; Mr. Tuinstra testified convincingly of his desired investment outcome (income producing and asset protection); and Ms. Putnam testified convincingly that she and Mr. Bruno only wanted to protect his funds for a few weeks. Despite these known goals, Mr. Ripa sold the VandenBosches, the Tuinstras, and Ms. Putnam and Mr. Bruno a product which did nothing but thwart those goals. Jurisdiction.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department finding that Joseph John Ripa violated the provisions of Chapter 626, Florida Statutes, described, supra, requiring that he pay an administrative fine of $40,000.00 and revoking his licensure as a life and health agent. DONE AND ENTERED this 16th day of May, 2007, in Tallahassee, Leon County, Florida. S LARRY J. SARTIN 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 16th day of May, 2007.
The Issue Does Respondent, Ynnor Distribution Group, Inc., owe Petitioner, William E. Gable, Jr., d/b/a Gable Enterprises, $13,430.02 for the sale of four shipments of watermelons?
Findings Of Fact On July 17, 2001, Mr. Gable sold Ynnor 42,330 pounds of watermelon for $3,128.19. (Exhibit 1) On July 17, 2001, Mr. Gable sold Ynnor 42,740 pounds of watermelon for $3,150.70. (Exhibit 2) On July 19, 2001, Mr. Gable sold Ynnor 46,283 pounds of watermelon for $4,165.47. (Exhibit 3) On July 24, 2001, Mr. Gable sold Ynnor 44,540 pounds of watermelon for $2,985.70. (Exhibit 4) The total amount Ynnor owed Mr. Gable was $13,430.02. (Exhibit 4) There was no payment on the account by Ynnor. Mr. Gable called the recipient of the watermelons. They were all received in good shape and payment for the watermelons was made by the recipient to Ynnor. Ynnor did not attend the hearing. No evidence was received on the amount Ynnor alleged as a counterclaim.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter its final order finding that Respondent, Ynnor Distribution Group, Inc., owes Petitioner, William E. Gable, the amount of $13,430.02. DONE AND ENTERED this 27th day of November, 2002, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of November, 2002. COPIES FURNISHED: Kathy Alves Fidelity & Deposit Company of Maryland Post Office Box 87 Baltimore, Maryland 21203 Ronald S. Booth, Sr. Ynnor Distribution Group, Inc. Post Office Box 1202 Winter Haven, Florida 33882-1202 William E. Gable, Jr. Gable Enterprises 6511 Bradley Road Marianna, Florida 32448 Brenda D. Hyatt, Bureau Chief Bureau of License and Bond Department of Agriculture and Consumer Services Mayo Building 407 South Calhoun Street, Mail Stop 38 Tallahassee, Florida 32399-0800
The Issue The issue in this case is whether the Petitioners established entitlement to $22,165 of abandoned property being held by the Respondent, the Department of Banking and Finance, Division of Finance, under Chapter 717, Fla. Stat. (1993).
Findings Of Fact On or about December 21, 1992, the National Abandoned Property Processing Corporation delivered to the Department of Banking and Finance, Division of Finance, $22,165 in cash derived from the cash acquisition of McGraw-Edison Company on May 30, 1985, Cooper Industries, Inc. Cooper Industries indicated that the cash, representing $65 per common share for 341 unexchanged shares, had been abandoned by Helen A. Block, 1116 North 13th Court, Hollywood, Florida 33019, and that the owner's account number was 000148084992, but Cooper Industries does not have a social security or tax identification number or any other information to identify the owner. Richard Steel-Reed and Donald E. Block are the adult sons of, and heirs to the estate of, a Helen A. Block who died in California on August 6, 1989, after having resided in Chatsworth, California, for approximately three to five years. Prior to residing in California, and in particular in 1983, she resided at 3901 South Ocean Drive, Hollywood, Florida. But there is no evidence that she ever resided at 1116 North 13th Court, Hollywood, Florida 33019. The Petitioners were unable to produce any stock certificates or account statements or any other evidence directly identifying their mother as the owner of the $22,165 at issue in this case. The Petitioners were unable to prove, by a preponderance of the evidence, that their mother was the owner of the $22,165 at issue in this case.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Respondent, the Department of Banking and Finance, enter a final order denying the Petitioners' claim to the $22,165 being held by the Department. RECOMMENDED this 2nd day of August, 1994, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of August, 1994. COPIES FURNISHED: Bruce G. Kaufmann, Esquire 11151 66th Street North Suite 401 Largo, Florida 34643 Paul C. Stradler, Jr., Esquire Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399 Honorable Gerald Lewis Comptroller The Capitol, Plaza Level Tallahassee, Florida 32399-0350 William G. Reeves, Esquire General Counsel Office of the Comptroller The Capitol, Room 1302 Tallahassee, Florida 32399
The Issue Whether Choice Plus, LLC is entitled to Unclaimed Property Account Number 103851316.
Findings Of Fact On January 25, 1999, Donald C. Rogers died. On August 19, 1999, the Estate of Donald C. Rogers, (“decedent”) was submitted for probate. The Department received the following described unclaimed property: Account Number: 103851316 Reported Amount: $28,007.01 Reported Name: Rogers, Donald C. Sr. Reported Address: Hillsborough SSN#: None Holder: Clerk of Court Property Type: Cash On March 22, 2005, the probate court entered an Order Granting Petitioner to Distribute Funds and to Distribute Surplus Funds into Registry of Court. The Personal Representative for the Estate had been unable to locate Sean Henry Casner (“Casner”), the decedent’s grandson. Casner’s share of the Estate was $23,689.95. The Order for Discharge was rendered June 24, 2005. On November 3, 2012, Casner executed a Limited Power of Attorney (“LPOA”) authorizing Choice Plus to act on his behalf as Claimant’s Representative. The LPOA disclosed that Choice Plus’ fee was 25 percent of the funds recovered. The 25 percent equaled $5,922.49; the net amount to Casner was $17,767.46. On April 29, 2013, the Department received a completed claim form filed by Choice Plus on behalf of Casner. On August 12, 2013, Choice Plus withdrew its claim on behalf of Casner by email. On August 17, 2013, Casner sold his interest in the property related to the above-referenced account (“account”) to Choice Plus by means of a purchase agreement. On or about August 19, 2013, Casner cashed the $13,029.47 check from Choice Plus for the purchase agreement. On September 3, 2013, the Department received a claim from Choice Plus on behalf of Casner, as the purchaser of the account. The Purchase Agreement disclosed the following: $23,689.95=Approximate Dollar Value of the Property $23,689.95=Amount to be Paid to Buyer $13,029.47=Net Amount to be Paid to Seller Property Account Number(s): 103851316 The Department issued a Notice of Intent to enter a final order denying the claim filed by Choice Plus as the purchaser for the unclaimed property relating to Account Number 103851316. The Department determined Choice Plus failed to comply with section 717.1351, Florida Statutes, by deleting the percentage line in the Purchase Agreement without a flat fee.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is REOMMENDED that a final order be entered granting Choice Plus claim to the unclaimed property Account Number 103851316. DONE AND ENTERED this 24th day of June, 2014, in Tallahassee, Leon County, Florida. S JUNE C. MCKINNEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of June, 2014. COPIES FURNISHED: Seann M. Frazier, Esquire Parker, Hudson, Rainer and Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Josephine Schultz, Esquire Department of Financial Services Legal Services, Room 601 200 East Gaines Street Tallahassee, Florida 32399 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390
The Issue The issues presented for decision herein are whether or not Respondents are guilty of fraud, misrepresentation, concealment and/or breach of trust in a business transaction as is more fully alleged in the Administrative Complaint filed herein dated February 27, 1984.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received and the entire record compiled herein, I hereby make the following relevant factual findings. Respondent, Perry F. Keen, is now, and was at all times material herein, a licensed real estate broker, having been issued license number 0048813. Respondent, Perry F. Koon Agency, Inc., is a corporation licensed as a real estate broker and has been issued license number 0124199 with a business address of 212 East Noble Avenue, Williston, Florida. At all times material herein, Respondent, Perry F. Koon, was licensed and operated as a real estate broker and sole qualifying broker and officer of Respondent, Perry F. Koon Agency, Inc. In September of 1981, Respondents obtained a written open listing agreement from Gracie Williams to sell certain real estate property owned by Williams listed at Southeast Ninth Street, Williston, Florida at an asking price of $8,000 with a 10 percent brokerage commission. (Respondent's Exhibit E) The listing agreement was effective by its terms through June 30, 1982. Respondents were unable to sell the Williams property during the terms of the written listing agreement. However, Respondents continued to market Ms. Williams' property based on an oral agreement. Prior thereto, and specifically during mid-March, 1980, Ms. Gracie Williams borrowed approximately $4,779.60 from Tom and Wilma C. Bailey. Ms. Williams later became injured and was unable to make regular installment payments on the loan from the Baileys. As security for the loan from the Baileys, Ms. Williams gave a mortgage to the Baileys which encumbered the properties here in question (lot 12, block 13 in Williston, Levy County, Florida) as well as other properties owned by Ms. Williams. (Respondent's Exhibit B) The Baileys contacted Ms. Williams, by letter, regarding her past due loan payments and urged her to bring her accounts current as "We cannot continue to carry this account past due." (Respondent's Composite Exhibit H) Being unable to repay the Baileys as agreed, Ms. Williams turned to Respondent 1/ far assistance. Respondent, however, was not interested in an outright purchase of Ms. Williams' property although he agreed to purchase Ms. Williams' property by assuming her loans from the Baileys. (Petitioner's Exhibit 5) On October 26, 1982, Ms. Williams executed a quit claim deed in favor of Respondent's wife, Jettie R. Keen. (Petitioner's Exhibit 1) Thereafter, Respondent renegotiated the loan that he assumed from Ms. Williams in favor of the Baileys whereby the Baileys agreed to accept annual payments of $1,000 each year. During that time, Rachael Breuton as renting the subject property from Ms. Williams paying $70 per month. Respondents were able to sell the property (Williams) to Rachael Breuton for approximately $6,500 by accepting payments of $100 per month. (Respondent's Exhibit D) Respondent thereafter brought the delinquent Williams loan, in favor of the Baileys, current. Once the subject charges were brought by Ms. Williams, she contacted an attorney and filed other charges which have been settled by Respondent. Respondent, as stated earlier, was not interested in purchasing the Williams property from the outset. He merely attempted to assist Ms. Williams by taking this property and assuming the loan in favor of the Baileys to free up other properties, as well the subject property, for Ms. Williams. Respondents have deeded the subject properties back to Ms. Williams as part of this settlement agreement entered into by and between Respondents and Ms. Williams. Ms. Williams denies that she executed a deed to Respondent or, for that matter, anyone until she was paid for her property. Based on all of the documentary evidence received herein, including Respondents' testimony during the hearing, Respondents' version of the events concerning the allegations herein are credited to the extent that Respondents' version conflicts with the version adduced herein by Ms. Williams.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby RECOMMENDED that the Administrative Complaint filed herein be dismissed in its entirety. RECOMMENDED this 23rd day of January, 1985, in Tallahassee, Florida. JAMES E. BRADWELL, 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 23rd day of January, 1985.
The Issue Whether Respondent acted as a real estate agent without being licensed in violation of section 475.42(1)(a), Florida Statutes, and, if so, what penalty should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the administrative hearing, the following findings of facts are made: COMPLAINT This complaint was instituted when Mr. Manning became aware of a $250.00 payment to a Keller Williams real estate agent (KW agent). Upon inquiring, Mr. Manning was told the fee was to pay the KW agent for securing the third tenant of his rental property located at 12522 Belcroft Drive, Riverview, Florida (property). Mr. Manning was not informed that this process would be engaged, and he was caught off guard when the payment came to light. Mr. Manning was also concerned that he was not receiving consistent payments for the rental of his property. PARTIES Petitioner is the state agency charged with the responsibility of regulating the real estate industry pursuant to chapters 455 and 475. Petitioner is authorized to prosecute cases against persons who operate as real estate agents or sales associates without a real estate license. At all times material, Respondent was not a licensed real estate broker, sales associate or agent. Respondent is a co-owner of J & D Associates, a property management company that he owns with his wife, Ms. Woltmann. Additionally, J & D Associates was not licensed as a real estate broker, sales associate or agent. PARTICULARS In 2012, Mr. Manning was serving in the U.S. Air Force, and was stationed in the Tampa Bay area of Florida. At some point, Mr. Manning received military orders to report to Texas for additional cross-training. Mr. Manning wanted to sell his property, and he was referred to Ms. Woltmann, a Florida licensed real estate agent. Mr. Manning and Ms. Woltmann met and discussed the possibility of selling Mr. Manning’s property. Ms. Woltmann performed a market analysis and determined that Mr. Manning would have to “bring money” to a closing in order to sell his property. Mr. Manning made the decision that he would rent his property. Thereafter, Ms. Woltmann introduced Mr. Manning to Respondent. Mr. Manning assumed that Respondent was a licensed real estate agent. If he had known that Respondent was not a licensed real estate agent, Mr. Manning would not have hired Respondent. On or about April 26, 2012, Respondent executed a “Management Agreement”5/ (Agreement) with Mr. Manning, regarding his property. The Agreement provided in pertinent part the following: EMPLOYMENT & AUTHORITY OF AGENT The OWNER [Mr. Manning] hereby appoints J & D Associates as its sole and exclusive AGENT to rent, manage and operate the PREMISES [12522 Belcroft Drive, Riverview, Florida]. The AGENT is empowered to institute legal action or other proceedings on the OWNER’S behalf to collect the rents and other sums due, and to dispossess tenants and other persons from the PREMISES for cause. * * * RESPONSIBILITIES OF THE AGENT: In addition to the forgoing authorizations, the AGENT will perform the following functions on the OWNER’S behalf. Collect all rents due form [sic] the tenants. Deduct from said rent all funds needed for proper disbursements of expenses against the PROPERTY and payable by the OWNER, including the AGENT’S compensation. Collect a security deposit received from a tenant of the PROPERTY and place it into an escrow account as required by the laws of the State of Florida. COMPENSATION OF THE AGENT: In consideration of the services rendered by the AGENT, the OWNER agrees to pay the AGENT a fee equal to FIFTY PERCENT (50%) OF THE FIRST MONTH’S RENT AND ten percent (10%) per month of the monthly rent thereafter during the term of the tenancy as management fees for the PROPERTY. In the case of holding over the lease beyond the terms of the lease by the same tenant, the Fifty (50%) up front [sic] fee shall also be waived and only the TEN PERCENT (10%) per month fee shall apply. The Fifty (50%) fee shall apply to new tenants only. In the case of a tenant moving out within the first three months of the tenancy, then the fee for obtaining a new tenant and new lease shall be only FIFTEEN PERCENT (15%) of the first month’s rent from the new tenant and TEN PERCENT (10%) of the monthly rent thereafter. (Emphasis added via underline.) At various times, Respondent provided Mr. Manning a list of eligible tenants. Also, Respondent would provide his opinion as to who would be the best candidate to rent the property. Mr. Manning would, “nine times out of ten,” go with Respondent’s recommendation for the rental tenant. In June 2012, “Richard L. Sovich J & D Associates, Agent For Elijah Manning,” executed a “Residential Lease for Single Family Home and Duplex” with a tenant. On the signatory page, the following printed form language is found on the upper half of the page: This Lease has been executed by the parties on the date indicated below: Respondent’s signature is over the “Landlord’s Signature line, “As” “Agent.” On the lower half of the signatory page, the following printed form language is found; the handwritten information is found in italics: This form was completed with the assistance of Name Richard Sovich Address 1925 Inverness Greens Drive Sun City Center, Fl 33573-7219 Telephone No. 813/784-8159 Ms. Woltmann testified that she had a listing agreement for each time she listed Mr. Manning’s property for rent. With each listing agreement, Ms. Woltmann was able to list the property in the multiple-listing system (MLS)6/ while she was associated with the Century 21, Shaw Realty Group. The three listings, as found in Respondent’s composite Exhibit E, included (along with other information) the list date, a picture of the property taken by Ms. Woltmann, and the dates the property would be available: May 5, 2012, for the rental beginning on June 1, 2012, at $1,550.00 per month; November 1, 2012, for the rental beginning on December 1, 2012, at $1,550.00 per month; and March 14, 2014, for rental beginning on May 1, 2014, at $1,600.00 per month. Each time the property was rented, Ms. Woltmann changed the MLS listing to reflect the actual lease dates: June 16, 2012; December 13, 2012; and May 19, 2014, and each was rented at the monthly rental price listed. Ms. Woltmann claimed that the rental price had to be lowered for the second rental. However, the documentation that she confirmed she inputted into the MLS at the time the property was rented, reflects the rental price was not lowered during the second rental period.7/ The rental price was actually raised for the third rental period. Ms. Woltmann also claimed she procured the first two tenants for Mr. Manning’s property and waived (with the consent of her broker agent) her lease fee each time. Three years ago (2014) during the Manning lease periods, Ms. Woltmann “left abruptly” the real estate company she was working for and that company “is now closed.” Yet, she testified that those listing agreements “should be there” if she went back to her broker and asked for them. Based on inconsistencies in her testimony, Ms. Woltmann’s testimony is not credible. Mr. Manning received payments from Respondent for approximately three years totaling “about $45,000.” Mr. Manning paid Respondent “maybe four or five thousand dollars. Maybe a little bit less” for his service. Respondent admitted he received compensation from the rental of Mr. Manning’s property for approximately three years, but denied that he procured any tenants for the property. It is determined that the testimony of Respondent and his wife Ms. Woltmann, is not credible and persuasive. Neither can be considered “disinterested.” The testimony of Mr. Manning is more credible. As the investigator supervisor, Mr. McAvoy is knowledgeable about the purpose of conducting unlicensed activity investigations. Its purpose is “to investigate matters surrounding unlicensed activity within the real estate profession . . . so to protect the public from possible harm surrounding those transactions.” Each investigator is required to record the amount of time spent in an investigation. An investigation was undertaken regarding Mr. Manning’s complaint. Petitioner incurred $49.50 in investigative costs during this case.
Recommendation Upon consideration of the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Florida Real Estate Commission finding Richard Sovich in violation of section 475.42(1)(a), Florida Statutes, as charged in the Administrative Complaint; and imposing an administrative fine of $500, and $49.50 as reasonable costs. DONE AND ENTERED this 5th day of May, 2017, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK 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 5th day of May, 2017.
The Issue The issue for disposition in this case is whether Respondent has implemented an agency statement that meets the definition of a rule, but which has not been adopted pursuant to section 120.54, Florida Statutes.
Findings Of Fact The Board of Trustees of the Internal Improvement Trust Fund (Board) is charged with the management of state lands, including sovereign submerged lands. § 253.03(1), Fla. Stat. The Department of Environmental Protection (Department) is charged with the duty to “perform all staff duties and functions related to the acquisition, administration, and disposition of state lands, title to which is or will be vested in the Board of Trustees of the Internal Improvement Trust Fund.” § 253.002(1), Fla. Stat. The City of Titusville operates a municipal marina, which includes a 205-slip docking facility for mooring of commercial and recreational vessels (Marina), on sovereignty submerged lands leased from the Board. Petitioner owns a Florida-registered vessel which he keeps at the Marina pursuant to an annual mooring/dockage agreement. On June 9, 2009, the City of Titusville and the Board entered into a “fee waived” lease renewal and modification for a parcel of sovereignty submerged land in the Indian River (Lease). The Lease allows the Marina to operate “with liveaboards as defined in paragraph 26, as shown and conditioned in Attachment A, and the State of Florida Department of Environmental Protection, Consolidated Environmental Resource Permit No. 05-287409-001, dated December 31, 2008, incorporated herein and made a part of this lease by reference.” Paragraph 26 of the Lease provides that: 26. LIVEABOARDS: The term “liveaboard” is defined as a vessel docked at the facility and inhabited by a person or persons for any five (5) consecutive days or a total of ten (10) days within a thirty (30) day period. If liveaboards are authorized by paragraph one (1) of this lease, in no event shall such “liveaboard” status exceed six (6) months within any twelve (12) month period, nor shall any such vessel constitute a legal or primary residence. On or about July 31, 2015, Petitioner and the City of Titusville entered into the annual contractual mooring/dockage agreement, paragraph 4 of which provides that: 4. LIVEABOARDS: For the purposes of this Agreement, the term “liveaboard” is defined herein as a vessel docked at the facility and inhabited by a person or persons for any five (5) consecutive days or a total of ten (10) days within a thirty (30) day period. Pursuant to requirements of the City’s Submerged Land Lease with the State of Florida, no vessel shall occupy the Marina in this “1iveaboard” status for more than six (6) months within any twelve (l2) month period, nor shall the Marina Facility constitute a legal or primary residence of the OWNER. Petitioner asserts that the alleged agency statement regarding “liveaboard” vessels “unreasonably and arbitrarily denies me the unrestricted right to stay on my vessel by limiting the number of consecutive days during which I may occupy the vessel,” and that “[t]he Board’s non-rule policy denies me the unrestricted freedom to enjoy my vessel as a second home.”
