99-003309 Department Of Business And Professional Regulation, Division Of Real Estate vs. Mike J. Zorc Status: Closed Recommended Order on Wednesday, June 14, 2000.

Summary: Realtor is guilty of having an excessive overage in his escrow account and of failing to properly reconcile his escrow account.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 99-3309

)

MIKE J. ZORC, )

)

Respondent, )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case

on March 22, 2000, by telephone conference call before Claude B.

Arrington, a duly-designated Administrative Law Judge of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Ghunise Coaxum, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

400 West Robinson Street, Suite N-308

Orlando, Florida 32801

For Respondent: Eugene J. O'Neill, Esquire

Gould, Cooksey, Fennell, O'Neill,

Marine, and Carter, P.A.

979 Beachland Boulevard

Vero Beach, Florida 32963

STATEMENT OF THE ISSUE

Whether Respondent, a licensed real estate broker,

committed the violations alleged in the Administrative Complaint

and, if so, the penalties that should be imposed.

PRELIMINARY STATEMENT

Respondent is a licensed real estate broker and a licensed

general contractor. His real estate license is placed with his

company, Zorcorp Builders, Inc. On May 21, 1999, Petitioner

filed an Administrative Complaint against Respondent that

contained two counts. Count I charged Respondent with

depositing or intermingling personal funds with funds being held

in escrow in violation of Rule 61J2-14.008(1)(c), Florida

Administrative Code, and in violation of Section 475.25(1)(e),

Florida Statutes. Count II charged Respondent with failing to

prepare monthly written reconciliation statements of his escrow

account in violation of Rule 61J2-14.012(2) and (3), Florida

Administrative Code, and Section 475.25(1)(e), Florida Statutes.

Respondent timely challenged the allegations of the

Administrative Complaint, the matter was referred to the

Division of Administrative Hearings, and this proceeding

followed. On October 19, 1999, the undersigned entered an Order

Granting Continuance and Placing Case in Abeyance based on the

representation that the parties had entered into a settlement

agreement they wanted to present to the Florida Real Estate

Commission (FREC). The settlement agreement was subsequently

rejected by FREC, and the matter was rescheduled for final

hearing.

At the final hearing, Petitioner presented the testimony of

Dawn Luchik (an investigator employed by Petitioner) and offered

four exhibits, each of which was accepted into evidence.

Respondent testified on his own behalf, but presented no other

testimony and no exhibits.

A Transcript of the proceedings was filed on April 19,

2000. At the request of the parties, the time for filing post-

hearing submissions was set for May 31, 2000. Petitioner filed

a Proposed Recommended Order, which has been duly considered by

the undersigned in the preparation of this Recommended Order.

Respondent advised at the final hearing that he would rest on

the arguments he made during the course of the final hearing.

FINDINGS OF FACT

1. Petitioner is a licensing and regulatory agency of the

State of Florida charged with the responsibility and duty to

prosecute administrative complaints pursuant to Chapters 455 and

475, Florida Statutes, and Chapter 61J2, Florida Administrative

Code.

2. At all times pertinent to this proceeding, Respondent

was a licensed real estate broker in accordance with Chapter

475, Florida Statutes. The last license issued to Respondent,

license number 0325134, was issued to him in care of Zorcorp

Builders, Inc., 2208 Buena Vista Boulevard, Vero Beach, Florida

32960.

3. Respondent is also a licensed general contractor. Both

his real estate business and his contracting business are

operated out of his residence.

4. On August 13, 1998, Dawn Luchik, an investigator

employed by Petitioner, conducted a routine inspection of

Respondent's real estate offices. As part of her inspection,

Ms. Luchik audited Respondent's escrow account. 1/

5. As of August 13, 1998, Respondent's escrow account

contained the sum of $8,909.76. Ms. Luchik determined that the

total trust liability was $8,140.00, which included a bank

charge in the amount of $7.46. Deducting the total trust

liability and the bank charge from the amount in the account

revealed an overage in the escrow account in the amount of

$769.76. Respondent testified that the overage represented

earned commissions that he left in the escrow account in an

effort to keep enough money in the account to avoid bank

charges. Those earned commissions constituted Respondent's

personal or brokerage business funds.

6. Rule 61J2-14.010(2), Florida Administrative Code,

provides as follows:

A broker is authorized to place and

maintain up to $200 of personal or brokerage

business funds in the escrow account for the

purpose of opening the account, keeping the

account open, and/or paying for ordinary

services.

7. Respondent testified that he was unaware of Rule 61J2-

14.010(2), Florida Administrative Code, before Ms. Luchik's

inspection. After he learned of that Rule, Respondent

immediately withdrew the sum of $600 from his escrow account,

leaving an overage of less than $200.

8. There was a conflict in the evidence as to whether

Respondent reconciled his escrow account on a regular basis.

Ms. Luchik testified that she found no evidence that Respondent

attempted to reconcile his escrow account on a monthly basis.

Respondent testified that he used a very simple method to

reconcile his escrow account each month, but he conceded that

his method did not comply with the requirements imposed by

Petitioner. 2/ Respondent's testimony established that he

failed to properly reconcile his escrow account on a monthly

basis.

CONCLUSIONS OF LAW

9. The Division of Administrative Hearings has

jurisdiction of the parties to and the subject of this

proceeding. Section 120.57(1), Florida Statutes.

10. Petitioner has the burden of proving by clear and

convincing evidence the allegations against Respondent. See

Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987); Evans Packing

Co. v. Department of Agriculture and Consumer Services , 550 So.

2d 112 (Fla. 1st DCA 1989); and Inquiry Concerning a Judge , 645

So. 2d 398 (Fla. 1994).

11. Petitioner established by clear and convincing

evidence that Respondent violated the provisions of Rule 61J2-

14.008(1)(c), Florida Administrative Code, by maintaining an

overage of more than $200 in his escrow account. This violation

constitutes a violation of Section 475.25(1)(e), Florida

Statutes, as alleged in Count I of the Administrative Complaint.

12. Petitioner also established by clear and convincing

evidence that Respondent failed to properly reconcile his escrow

account in violation of Rule 61J2-14.012(2), Florida

Administrative Code. This violation constitutes a violation of

Section 475.25(1)(e), Florida Statutes, as alleged in Count II

of the Administrative Complaint.

13. Rule 61J2-24.001, Florida Administrative Code,

provides disciplinary guidelines pertinent to this proceeding.

Rule 61J2-24.001(3)(f), Florida Administrative Code, provides

that the usual action of the Petitioner for a violation of

Section 475.25(1)(e), Florida Statutes, shall be to impose a

penalty from an eight-year suspension to revocation and an

administrative fine of $1,000. Rule 61J2-24.001(2), Florida

Administrative Code, authorizes the Petitioner to place

Respondent on probation and to require, as a condition of

probation, that he be required to successfully complete

appropriate post-licensure courses.

14. Rule 61J2-24.001(4), Florida Administrative Code,

authorizes Petitioner to deviate from the penalty guidelines in

cases where aggravating or mitigating circumstances exist. The

severity of the offense, whether the Respondent has been

previously disciplined, and whether there was harm to the public

can be aggravating or mitigating circumstances.

15. In recommending the penalty to be imposed, the

undersigned has considered the relatively small amount of the

overage, the source of those funds, the reason those funds were

left in the escrow account, and the immediate steps taken by

Respondent to correct the overage and to institute an

appropriate reconciliation procedure. The undersigned has also

considered that there was no harm to any member of the public

and that the Respondent has no prior disciplinary history. The

undersigned has further considered that any violation involving

mismanagement of an escrow account is a serious offense. On

balance, it is concluded that the penalty imposed should be less

than that set forth in the disciplinary guideline.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that Petitioner enter a final order

finding Respondent guilty of the violations alleged in Counts I

and II of the Administrative Complaint. It is further

RECOMMENDED that an administrative fine in the amount of $250 be

imposed for each Count (for a total fine of $500), and that

Respondent's licensure be placed on probation for a period of

six months for each violation, to run concurrently. It is

further RECOMMENDED that as a condition of probation, Respondent

be required to complete an appropriate continuing education

course in escrow account management.

DONE AND ENTERED this 14th day of June, 2000, in

Tallahassee, Leon County, Florida.

___________________________________

CLAUDE B. ARRINGTON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, 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 14th day of June, 2000

ENDNOTES

1/ Rule 61J2-14.008(1)(c), Florida Administrative Code,

provides as follows:

(c) "Trust" or "escrow" account means an

account in a bank or trust company, title

company having trust powers, credit union,

or a savings and loan association within the

State of Florida. Only funds described in

this rule shall be deposited in trust or

escrow accounts. No personal funds of any

licensee shall be deposited or intermingled

with any funds being held in escrow, trust

or on condition except as provided in Rule

61J2-14.010(2), Florida Administrative Code.

2/ Rule 61J2-14.012(2), Florida Administrative Code, provides

as follows:

(2) Once 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 minimum information to be

included in the monthly statement-

reconciliation shall be the date the

reconciliation was undertaken, the date used

to reconcile the balances, the name of the

bank(s), the name(s) of the account(s), the

account number(s), the account balance(s)

and date(s), deposits in transit,

outstanding checks identified by date and

check number, an itemized list of the

broker's trust liability, and any other

items necessary to reconcile the bank

account balance(s) with the balance per the

broker's checkbook(s) and other trust

account books and records disclosing the

date of receipt and the source of the funds.

The broker shall review, sign and date the

monthly statement-reconciliation.

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

Eugene J. O'Neill, Esquire

Gould, Cooksey, Fennell, O'Neill,

Marine, and Carter, P.A.

979 Beachland Boulevard

Vero Beach, Florida 32963

Herbert S. Fecker, Division Director

Division of Real Estate

Department of Business and

Professional Regulation

Post Office Box 1900

Orlando, Florida 32802-1900

Barbara D. Augur, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

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.