99-002917 Department Of Business And Professional Regulation, Florida Real Estate Commission vs. Marjorie A. Koutroubis And Prestige International Realty Corporation Status: Closed Recommended Order on Wednesday, February 9, 2000.

Summary: When Respondents` reconciliation statements revealed a shortage in the disbursement escrow account and no explanation for the shortage was provided, Respondents violated 475.25(1)(k), Florida Statutes. Recommended fine and reprimand.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, FLORIDA )

REAL ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) Case No. 99-2917

)

MARJORIE A. KOUTROUBIS AND )

PRESTIGE INTERNATIONAL REALTY )

CORPORATION, )

)

Respondents. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings,

by its duly-designated Administrative Law Judge, Carolyn S.

Holifield, held a formal hearing on November 23, 1999, by video

teleconference, between Tallahassee and Tampa, Florida.

APPEARANCES

For Petitioner: Ghunise Coaxum, Esquire

Department of Business and

Professional Regulation

Division of Rea l Estate

400 West Robinson Street, Suite N-308

Orlando, Florida 32801

For Respondent: Stephen F. Ricci, Qualified Representative

Prestige International Realty Corporation

1111 North Westshore Boulevard

Tampa, Florida 33607

STATEMENT OF THE ISSUES

This issues in this case are: (1) Whether Respondent failed

to maintain trust funds in the real estate brokerage escrow bank

account or some other property depository until disbursement

thereof was properly authorized in violation of Section

475.25(1)(k), Florida Statutes; (2) Whether Respondent is guilty

of fraud, misrepresentation, concealment, false promises, false

pretenses, dishonest dealings by trick, scheme or device,

culpable negligence, or breach of trust in a business transaction

in violation of Section 475.25(1)(b), Florida Statutes; and (3)

If so, what penalty should be imposed on her real estate license.

PRELIMINARY STATEMENT

On August 19, 1998, Petitioner, Department of Business and

Professional Regulation, Division of Real Estate (Department),

filed a four-count Administrative Complaint against Respondents,

Marjorie A. Koutroubis and Prestige International Realty,

Corporation, alleging that they had violated Sections

475.25(1)(k) and 475.25(1)(b), Florida Statutes.

Counts I and III of the Administrative Complaint allege the

Respondent Koutroubis and Respondent Prestige International

Realty, Corporation, respectively, violated Section 475.25(1)(k),

Florida Statutes, by failing to maintain trust funds in the real

estate brokerage escrow bank account or some other depository

until disbursement of such funds were properly authorized.

Counts II and IV of the Administrative Complaint alleged that

Respondents violated Section 475.25(1)(b), Florida Statutes, by

being guilty of misrepresentation, concealment, false pretenses,

dishonest dealings by trick, scheme or device, culpable

negligence, or breach of trust in a business transaction.

Respondents challenged the allegations and requested a

formal hearing and also filed a cross-complaint seeking

compensation for "unjust loss of income incurred and punitive

damages for the emotional, physical, and professional suffering

intentionally and wrongfully imposed."

At hearing, Respondents were advised that the undersigned

was without jurisdiction to decide the issues raised in the

cross-complaint and to award the damages sought therein.

Accordingly, Respondent's cross-complaint is hereby dismissed.

At hearing, Petitioner called two witnesses, Michael Day and

George Sinder and had four exhibits received into evidence.

Respondent Koutroubis testified on her own behalf and presented

the testimony of two witnesses, Nora Scandella and Stephen Ricci.

Respondents' Exhibits 1 and 3 were received into evidence.

Respondents' Exhibit 2 was proffered.

The Transcript of the proceeding was filed on December 8,

1999. Both parties filed Proposed Recommended Orders.

FINDINGS OF FACT

1. Petitioner is a state licensing and regulatory agency

charged with the responsibility and duty to prosecute

administrative complaints pursuant to the laws of the State of

Florida, in particular, Chapters 455 and 475, Florida Statutes,

and Chapter 61J2, Florida Administrative Code.

2. Respondent Marjorie Koutroubis, is and was at all times

material hereto, a licensed Florida real estate broker having

been issued License No. BK-039112.

3. Respondent Prestige International Realty Corporation

(Prestige International Realty), is and was at all times material

hereto, a corporation registered as a Florida real estate broker

having been issued Registration CQ-0274989. The business is

located at 1111 North Westshore Boulevard, No. 212, Tampa,

Florida 33607.

4. At all times material hereto, Respondent Koutroubis was

licensed and operating as qualifying broker and officer of

Prestige International Realty.

5. On or about September 11, 1997, Michael Day, an

investigator with the Department, went to the office of Prestige

International Realty to conduct an audit of escrow accounts being

held by Respondents. However, Mr. Day was unable to complete the

audit on that day because the company's records were unavailable

as a result of a computer problem.

6. On January 12, 1998, Mr. Day returned to the office of

Prestige International Realty, and performed an audit of two

escrow accounts being held by Respondents, the security deposit

account, and the disbursement account.

7. In conducting the audit, Mr. Day used and relied upon

information contained in documents provided to him by Respondent

Koutroubis or her employees.

8. The audit of Respondents' escrow accounts revealed that

the security deposit account was balanced but the disbursement

account had a shortage.

9. According to Prestige International Realty's December

1997 escrow reconciliation statement, the closing balance or the

broker's trust liability was $2,700.00 and the adjusted account

balance was $996.15. The difference between the broker's trust

liability and adjusted account balance reflected a shortage of

$1,703.85 in the escrow account being maintained by Respondents.

10. The subject Prestige International Realty's

reconciliation statements contained no description or explanation

to explain the discrepancy described in paragraph 9. Moreover,

neither Respondent Koutroubis nor Mr. Ricci could explain the

reason for the apparent shortage.

11. The subject reconciliation form was prepared by

Mr. Ricci and signed by Respondent Koutroubis. Prior to signing

the reconciliation sheet, Respondent Koutroubis did not question

the figures on the sheet. Rather she accepted the figures

provided on the form by Mr. Ricci.

12. After the January 12, 1998, audit of Prestige

International Realty's escrow accounts, Mr. Day met with

Respondent Koutroubis and discussed the findings of the audit.

Mr. Day told Respondent Koutroubis that the only way to correct

or resolve the problem of the shortage of funds in the escrow

account was to deposit $1,703.85 into Prestige International

Realty's account.

13. Respondent Koutroubis did not know why there was a

shortage in the escrow account. Nevertheless, in an effort to

resolve the problem, she immediately wrote a check for $1,7903.85

and deposited it into the Prestige International Realty's bank

account.

14. Mr. Day recorded the findings of the Audit on the

Department's Office Inspection and Escrow/Trust Account Audit

Form (Audit Form). In the "Remarks" section of the form, Mr. Day

noted that in one instance, the improper reconciliation form had

been used. With regard to the shortage in the rental

distribution account. Mr. Day wrote, "Broker to transfer

shortage for rental distribution." In the "Corrective Action"

section of the form, Mr. Day wrote, "see above" and "use correct

reconciliation sheet."

15. The Audit Form also included items which required the

investigator to indicate what, if any, action was taken in a

case. The investigator was to respond "yes" or "no" to each of

the following: (1) Was a citation issued; (2) Was a notice of

noncompliance issued; and (3) Was a complaint docketed. On the

Audit Form, Mr. Day indicated that no citation or notice of

noncompliance was issued to Respondents but that a complaint was

docketed.

16. Respondent Koutroubis and Mr. Day signed the Audit Form

on January 14, 1998.

17. After Respondent Koutroubis signed the Audit Form and

wrote a check for the amount of the shortage, she mistakenly

believed that no further action would be taken with regard to the

cited violations. Respondent Koutroubis' belief was based on the

fact that no citation or notice of noncompliance was issued and

on her understanding of Mr. Day's comments concerning how to

resolve the shortage in the escrow account.

18. Neither Mr. Day nor any other Department employee told

Respondent Koutroubis or Mr. Ricci that if a check were written

to cover the shortage in the escrow account, that the Department

would take no further action.

19. Mr. Day believed that the likely reason for the

shortage in the disbursement account was that proceeds were

disbursed prior to checks clearing.

20. After the subject audit of R espondents' 1997 records,

Respondent Koutroubis began using a new form to prepare Prestige

International Realty's monthly reconciliation statements.

21. As of the date of the hearing, there is no indication

that there have been shortages or overages in the Prestige's

escrow accounts since the January 1998 audit.

CONCLUSIONS OF LAW

22. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding. Section 120.57(1), Florida Statutes.

23. The D epartment is statutorily empowered to suspend,

revoke, or otherwise discipline the real estate license of any

licensee in Florida found guilty of any act enumerated in Section

475.25, Florida Statutes.

24. The Department has the burden of proof in this

proceeding and to prevail, must show by clear and convincing

evidence that Respondent committed the acts alleged in the

Administrative Complaint and the reasonableness of any penalty to

be imposed. Department of Banking and Finance v. Osborne Stern ,

670 So. 2d 932 (Fla. 1996); Ferris v. Turlington , 510 So. 2d 292

(Fla. 1987).

25. In Evans Packing Company v. Department of Agriculture

and Consumer Services , 550 So. 2d 112, 116, n. 5 (Fla. 1st DCA

1989), the court explained:

[C]lear and convincing evidence requires that

the evidence must be found to be credible;

the facts to which the witnesses testify must

be distinctly remembered; the evidence must

be precise and explicit and the witnesses

must be lacking in confusion as to the facts

in issue. The evidence must be of such

weight that it produces in the mind of the

trier of fact the firm belief of [sic]

conviction, without hesitancy, as to the

truth of the allegations sought to be

established.

Slomowitz v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983).

26. The Administrative Complaint against Respondent

contains four counts. Count I alleges that Respondent Koutroubis

is guilty of failure to maintain trust funds in the real estate

brokerage bank account until disbursement was properly authorized

in violation of Section 475.25(1)(k), Florida Statutes. Count II

alleges that Respondent Koutroubis is guilty of fraud,

misrepresentation, concealment, false promises, false pretenses,

dishonest dealing by trick, scheme or device, culpable

negligence, or breach of trust in a business transaction in

violation of Section 475.25(1)(b), Florida Statutes.

27. Counts III and IV allege that Respondent Prestige

International Realty is guilty of the same conduct charged

against Respondent Koutroubis in Counts I and II of the

Administrative Complaint.

28. With regard to Counts I and III, Rule 61J2-14.012,

Florida Administrative Code, provides in part:

(2) At least monthly, a broker shall cause

to be made a written statement comparing the

broker's total liability with the reconciled

bank balance(s) of all trust accounts. The

broker's trust liability is defined as the

sum total of all deposits received, pending

and being held by the broker at any point in

time . . . The broker shall review, sign and

date the monthly statement-reconciliation.

(3) Whenever the trust liability and the

bank balances do not agree, the

reconciliation shall contain a description or

explanation for the difference(s) and any

corrective action taken in reference to

shortages or overages of funds in the

account(s) . . . .

29. The Department has met its burden as to Counts I and

III of the Administrative Complaint. The clear and convincing

evidence established that Respondents' trust liability and bank

balances for the period audited did not agree. Moreover, the

evidence established that Respondents' reconciliation forms for

that time period failed to include a description or explanation

for the differences. While the undisputed evidence shows that

Respondent Koutroubis took corrective action to resolve the

shortage, once she became aware of the problem, that action does

not absolve her from being penalized for failing to comply with

Section 475.25(1)(k), Florida Statutes, and Rule 61J2-14.012(2

and (3), Florida Administrative Code.

30. Counts II and IV of the Administrative Complaint allege

that the Respondents are:

Guilty of fraud, misrepresentation, false

promises, false pretenses, dishonest dealing

by trick, scheme, or device, culpable

negligence, or breach of trust in any

business transaction in violation of Section

475.25(1)(b), Florida Statutes.

31. In this case, there are no factual allegations of

conduct by Respondents that would give rise to the charges. More

significantly, there is no evidence that Respondent Koutroubis,

as a broker or officer of Prestige International Realty, engaged

in any conduct that constitutes "fraud, misrepresentation,

concealment, false promises, false pretenses, dishonest dealing

by trick, scheme, or device, culpable negligence or breach of

trust in a business transaction." In the absence of such

evidence, the Department has failed to meet its burden or proving

by clear and convincing evidence the allegations contained in

Counts II and IV of the Administrative Complaint.

32. The discipline that may be imposed against a real

estate licensee are: revocation, suspension for a period not

exceeding ten years, imposition of an administrative fine not to

exceed $1,000 for each count or separate offense, a reprimand,

probation, and any or all of the foregoing. Section 475.25(1),

Florida Statutes, and Rule 61J2-24.001(3), Florida Administrative

Code.

33. According to Rule 61J2-24.001(3), Florida

Administrative Code, the recommended penalty for a violation of

Section 475.25(1)(k), Florida Statutes, is a minimum of a 90-day

suspension of license and $1,000.00 fine up to a maximum of

revocation of license.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of

Law, it is:

RECOMMENDED that a final order be entered finding

Respondents guilty of violating Section 475.25(1)(k), Florida

Statutes; imposing an administrative fine of $1,000.00 on

Respondent Koutroubis; issuing a reprimand to Respondent Prestige

International Realty; and dismissing Counts II and IV of the

Administrative Complaint.

DONE AND ENTERED this 9th day of February, 2000, in

Tallahassee, Leon County, Florida.

___________________________________

CAROLYN S. HOLIFIELD

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Talla hassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 9th day of February, 2000.

COPIES FURNISHED:

Ghunise Coaxum, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

400 West Robinson Street, Suite N-308

Orlando, Florida 32801

Stephen F. Ricci, Qualified Representative

Prestige International Realty Corporation

1111 North Westshore Boulevard

Tampa, Florida 33607

Barbara D. Auger, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Herbert S. Fecker, Division Director

Florida Real Estate Commission

400 West Robinson Street

Post Office Box 1900

Orlando, Florida 32802-1900

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15

days from the date of this Recommended Order. Any exceptions to

this Recommended Order should be filed with the agency that will

issue the final order in this case.