01-003576PL Department Of Insurance vs. Donald Dean Hooley, Ii Status: Closed Recommended Order on Monday, January 28, 2002.

Summary: Department presented sufficient evidence to prove a violation of Subsections 626.611(4), (7), (8), (9), and 626.621(2), Florida Statutes.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) Case No. 01 - 3576PL

)

DONALD DEAN HOOLEY, II, )

)

Respondent. )

)

RECOMMENDED ORDER

Upon due noti ce, William R. Cave, an Administrative Law

Judge for the Division of Administrative Hearings, held a formal

hearing in this matter on November 14, 2001, in Tampa, Florida.

APPEARANCES

For Petitioner: Anthony B. Miller, Esquire

Da vid Busch, Esquire

Department of Insurance

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

For Respondent: Charles D. Hinton, Esquire

Deane & Hinton, P.A.

Post Office Box 7473

St. Petersburg, Florida 33739

STATEMENT OF THE ISSUES

Should Respondent's license as an insurance ag ent in the

State of Florida be disciplined for the alleged violation of

certain provisions of Chapter 626, Florida Statutes, as set

forth in the Administrative Complaint and, if so, what penalty

should be imposed?

PRELIMINARY STATEMENT

By a nine - count Admi nistrative Complaint dated

August 1, 2001, and filed with the Division of Administrative

Hearings (Division) on September 10, 2001, the Department of

Insurance (Department) is seeking to revoke, suspend, or

otherwise discipline Respondent's license as an insurance agent

in the State of Florida.

As grounds therefor, the Department alleges in each count

of the Administrative Complaint that Respondent violated

Subsections 626.611(4),(7),(8), and (9), Florida Statutes, and

Subsection 626.621(2), Florida Stat utes, in that Respondent:

(1) acted as an agent for Alliance Trust (n/k/a Chemical

Trust), a foreign corporation, offering unregistered securities

for sale in the State of Florida; and (2) had an insurance

agent/client relationship with the purchasers of the investment.

By a Petition for Administrative Hearing dated August 24, 2001,

Respondent disputed the charges and requested an administrative

hearing. By letter dated September 10, 2001, the Department

referred this matter to the Division for the assi gnment of an

Administrative Law Judge and for the conduct of an

administrative hearing.

At the hearing, the Department presented the testimony of

Imogene R. Skipper, Edward C. Dandignac, Jr., Dorothy Dandignac,

Theodore Dostal, Laura Royal, Alice Lowe, Ro bert W. Marsh, and

Julia Marsh. The Department's Exhibits 1A, 2A, 3A, 1B, 3B, 6B,

7B, 2C, 3C, 5C, 2D, 3D, 4D, 6D, 8D, and 2E were admitted in

evidence. The Department's Exhibit AA was rejected. Upon being

rejected, the Department then proffered its Exhi bit AA. The

videotaped depositions of Raymond Frederick Grossman and Mildred

Carolyn Grossman were received in lieu of their live testimony

at the hearing. Respondent testified in his own behalf but did

not offer any other witness. Respondent's Composit e Exhibits A

(A - 1 through A - 12), B (B - 1 though B - 33, and B - 35), C (C - 1

through C - 15), D (D - 6 through D - 65), and Exhibits D - 1 and D - 5

were admitted in evidence.

A two - volume Transcript was filed with the Division on

November 30, 2001. The parties timely fi led their Proposed

Recommended Orders.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence

adduced at the hearing, the following relevant findings of fact

are made:

1. The Department is the agency of the State of Florida

vested with t he statutory authority to administer the

disciplinary provisions of Chapter 626, Florida Statutes.

2. Respondent, at all times material to the dates and

occurrences referenced in the Administrative Complaint, was

licensed as an insurance agent in the Stat e of Florida.

Respondent is also currently licensed in the State of Florida as

a life and life and health insurance agent.

3. During the late 1990's, Respondent became a selling

agent for an entity known as Alliance Trust, which later merged

with Chemic al Trust, and is now known as Chemical Trust.

4. Respondent first learned of Chemical Trust through Jim

Hicks of West Shore Agency of Michigan. Jim Hicks provided

Respondent with selling and marketing materials for the

investments, which were marketed a s "guaranteed contracts"

(Guaranteed Contract marketing materials).

5. Respondent gave the Guaranteed Contract marketing

materials to Imogene Skipper, Edward Dandignac, Dorothy

Dandignac, Theodore Dostal, Alice Lowe, Robert Marsh, Julia

Marsh, Raymond Gro ssman and Mildred Grossman and had each of

them sign a compliance verification form to that effect.

6. The Guaranteed Contract marketing materials contained a

six - page U.S. Guarantee Corporation (U.S.G.C.) Balance Sheet,

dated July 13, 1999, which listed several financial

representations, including U.S.G.C.'s Accounts Receivable, Real

Estate, Partnerships, Total Assets, Liabilities, Net Equities,

Total Net Liabilities and Net Equity, Certificates of Deposit,

and various accounting representations. Respond ent did not have

a background in financials. However, he made no effort to

verify the accuracy of U.S.G.C's financial statements in order

to protect his customers' investments. U.S.G.C. did not have

the financial wherewithal to guarantee investors' inves tments.

7. The Guaranteed Contract marketing materials listed

several members of its "Staff," including Barry Goldwater, Jr.

(Vice President/Director); Kenneth R. Pinckard (Executive

Director/Vice President); Stephen M. Hammer (Chief Financial

Officer); K enneth Turner (Vice President/Comptroller); etc.

Respondent did not verify that any of these individuals was

actually on the staff of U.S.G.C.

8. The Guaranteed Contract marketing materials asserted

that U.S.G.C. had provided financial support to various

charitable organizations, including Compassion International,

St. Mary's Food Bank, World Missions, Salvation Army, Food for

the Poor, Tennessee, US, etc. Respondent made no attempt to

verify these representations.

9. The Guaranteed Contract marketing m aterials, in the

"Explanation of the Trust" section, falsely states, "This is a

Trust and has satellite offices throughout the USA. This Trust

has been providing clients steady streams of interest and the

return of their principal since its inception." R espondent made

no effort to verify which, if any, of these clients existed or

if the clients were being provided steady streams of interest

and return of their principal.

10. The Guaranteed Contract marketing materials, in the

Explanation of the Trust sec tion, falsely states, "Profits are

made by the Trust by buying and selling financial instruments

and physical properties. The US Government sells Investment

Grade Paper Backed by Treasury Notes on a daily basis and the

Trust has Buyers purchasing large bl ocks at discounts. . . ."

Respondent did not know what Investment Grade Paper Backed by

Treasury Notes was, and made no attempt to determine what this

term implied.

11. The Guaranteed Contract marketing materials, in the

"Explanation of the Trust" sectio n, falsely states: "The Trust

also buys distressed properties with plans already drawn for

conversion and then sell at a profit immediately. The Bonding

Company approves all investments. This insures the integrity of

each investment and its guarantee. There is in excess of SIX

Billion Dollars security on the investor's investment."

Respondent made no effort to verify these financial

representations in order to protect his clients.

12. Respondent made no effort to determine if U.S.G.C. was

authorized to transact insurance in the State of Florida.

13. Respondent, after reviewing the Guaranteed Contract

marketing materials, considered U.S.G.C. to be a legitimate

corporation. However, Respondent made no effort to determine if

U.S.G.C. was a legitimate cor poration, notwithstanding his

testimony to the contrary, which lacks credibility.

14. At all times material hereto, U.S.G.C. was not

licensed as an insurance company or a bonding company, and,

although a registered corporation in the State of Nevada, it w as

not a registered corporation in the State of Florida.

15. Respondent received a document from Clifton Wilkinson,

Trustee for Alliance Trust dated August 1, 1999, which stated:

"News and Information Regarding Misinformation and Opinions of

Some State Ag encies Concerning the Nature of Alliance Trust and

Similar Entities. They are exempt from State Securities Laws."

Therefore, sometime around August 1, 1999, Respondent was made

aware that some state agencies took the position that the

investments (Guarant eed Contracts) being offered by Alliance

Trust (n/k/a Chemical Trust) were securities and were not exempt

from state securities laws and regulations.

16. Respondent did not seek advice from the agency of the

State of Florida charged with the responsibilit y of regulating

securities as to whether the State of Florida considered these

investments to be securities and subject to securities

regulations. Likewise, Respondent did not seek any legal advice

from an independent counsel as to whether these investmen ts were

in fact securities and subject to state securities regulations.

17. Respondent made no independent inquiry into whether

these investments were in fact securities and subject to

securities laws and regulations, but relied solely on

information rece ived from Chemical Trust and two other agents

for Chemical Trust in coming to the conclusion that these

investments were not securities and not subject to securities

laws and regulations.

18. Respondent did not personally invest in the Chemical

Trust inve stments. However, he did tell Edward Dandignac and

Theodore Dostal that he had personally invested in Chemical

Trust investments.

19. Respondent earned a commission from the sale of the

Chemical Trust investments.

20. Respondent's commission from the sa le of Chemical

Trust investments constituted properties involved in Virgil

Womack's violation of Title 18, United States Code, Section

1956(h), and were subject to forfeiture pursuant to Title 18,

United States Code, Section 982(a)(1). Respondent made a

p ayment of $63,302.29, through his attorney to the Receiver on

June 18, 2001.

21. Chemical Trust's investment product (Guaranteed

Contract) was an investment contract and thereby a security as

defined under Subsection 517.021(19)(q), Florida Statutes. As a

security, the Guaranteed Contract was required to be registered

in the State of Florida under Section 517.07, Florida Statutes,

unless it was exempt from registration under Section 517.051 or

517.061, Florida Statutes. The Guaranteed Contract was neithe r

an exempt security under Section 517.051, Florida Statutes nor

an exempt transaction under Section 517.061, Florida Statutes.

Therefore, the Guaranteed Contract was required to be registered

in the State of Florida.

22. An individual must be licensed i n the State of Florida

in order to sell or offer securities in the State of Florida.

Respondent was neither licensed to sell nor to offer securities

in the State of Florida.

23. The monies paid to Chemical Trust for the investments

were deposited in the personal bank accounts of Virgil Womack,

Clifton Wilkinson, Lewey Cato, and Alvin Tang, the principals of

Chemical Trust, and used for their personal benefit and to

promote the fraudulent scheme.

24. The Florida Department of Banking and Finance had

infor mation concerning previous securities violations by Virgil

Womack and Clifton Wilkinson. Womack committed securities

violations in Georgia in 1997, and Wilkinson committed

securities violations in North Dakota, Iowa, Kansas, and

Illinois in June 1999. Th is information was contained in the

National Association of Securities Dealers Regulation Central

Registration Depository (NASDAQ CRD) database that was

accessible to the public in general, and to the Respondent

specifically, through the Florida Department of Banking and

Finance through telephonic communication.

25. Imogene Skipper, age 74, of Dover, Florida, is a

retired school custodian. Skipper worked as a custodian for 19

years. Skipper met Respondent in 1997 when he came to her home

as a representat ive of Remington Estate Services, Inc., Fort

Worth, Texas, to assist her in setting up a revocable living

trust. The trust agreement would allow her to plan an orderly

distribution of her assets without having to go through probate.

26. In 1999, Responde nt persuaded Skipper to liquidate the

existing annuities with American Investors and transfer the

funds to Chemical Trust. In doing so, Skipper suffered

$1,665.49 in surrender charges for policy number 303313 and

$1,171.25 for policy number 303467. Respo ndent told Skipper

that Chemical Trust would reimburse her these surrender charges.

27. Skipper purchased these annuities when her children

were young. The annuities were funded by a $5.00 deduction from

Skipper's weekly paycheck. Skipper was reluctant to transfer

her annuity funds to Chemical Trust. However, Respondent kept

reminding her that the 10 per cent return on her investment was

good. Also, Skipper considered Respondent to be an honest,

decent, and well respected man.

28. Skipper invested $17 ,820.00 in Chemical Trust through

Respondent. This figure represented two checks, each written to

Chemical Trust by Skipper, in the amount of $8,910.00 each. In

return Chemical Trust issued two Guaranteed Contracts in the

amount of $10,158.00 each for a total of $20,316.00. The

difference in amount of the two contracts ($20,316.00) and the

amount of Skipper's checks ($17,820.00) was $2,496.00, which was

supposed to reimburse Skipper for the surrender fees on her

annuities. However, the surrender fees we re $2,836.74, which

resulted in Skipper not being reimbursed for surrender fees in

the amount of $340.74.

29. Respondent supplied Skipper with documents explaining

the Chemical Trust investments. Respondent had Skipper sign a

compliance verification stat ing that Respondent had fully

explained and delivered documentation concerning the Guaranteed

Contracts.

30. The Cover Page of the Guaranteed Contract marketing

material had "Chemical Trust" in bold print. At the bottom of

the same page, the language "A Guaranteed Contract" appeared

along with Respondent's name, address, and telephone number.

The second page was entitled "Explanation of the Trust." The

third page was titled "CHEMICAL TRUST" and consisted of

information concerning "QUALIFICATIONS," "FINA NCIAL STRENGTH,"

and "BOND PROVIDER." This page contains certain terms such as:

(a) "After funds have cleared, you will receive your Contract

and Surety Bond"; (b) "With over $725 million in assets to

protect clients, Chemical Trust is dedicated to provi de you the

safety, liquidity, and protection you expect in today's

uncertain environment"; (c) "U.S. Guarantee Corporation's

financial statement is in excess of 2.4 billion dollars"; and

(d) " Please note: Due to confidentially U.S. Guarantee

Corporation a nd Fidelity National will be unable to provide any

information to you without the consent of the Trust. ***If you

wish to contact either of these it must be coordinated by

Chemical Trust ." (Emphasis furnished)

31. After her funds cleared, Skipper was pr ovided a

"Certificate of Grantor" for each investment. The first page

had a bold CHEMICAL TRUST" logo and was identified as a

"Certificate of Grantor." Among the terms were: (a) "SIMPLE

INTEREST AT THE FIXED RATE OF 10 PERCENT PER ANNUM"; and (b)

THIS P RINCIPAL AMOUNT IS SECURED BY A SURETY BOND ISSUED BY U.S.

GUARANTEE CORPORATION."

32. The guarantee of ten percent per annum interest was

higher than the amount Skipper was receiving on the annuities

that she had liquidated.

33. The second page had the U.S. Guarantee Corporation

logo at the top and was titled "Payment Surety Bond" with

Chemical Trust as Principal, U.S. Guarantee Corporation, as

Surety, and Imogene R. Skipper, as Trustee.

34. Skipper identified the guarantee of ten percent

interest and h er full trust in Respondent as the factors that

influenced her decision to make the Chemical Trust investments.

35. Skipper lost her entire investment with Chemical

Trust.

36. Edward Dandignac, age 70, of Inverness, Florida, is a

retired Boar's Head prov ision carrier. Dorothy Dandignac is the

spouse of Edward Dandignac. Dorothy Dandignac, age 67, of

Inverness, Florida, is a retired housewife. The Dandignacs

first had contact with Respondent when he came to their home to

set up a revocable living trust in April 1998.

37. Several months after setting up the irrevocable living

trust, Edward Dandignac told Respondent that he was having

problems with his Oppenheimer funds, Fidelity funds, and other

funds. Respondent advised Edward Dandignac that he would

p robably do better with an investment in some annuity.

38. Subsequently, Respondent sold Edward Dandignac an

annuity with Bradford Life and an annuity with United Life.

Later, Respondent approached Edward Dandignac concerning

Chemical Trust and reviewed t he Chemical Trust documents with

Edward Dandignac and explained to him that he could make a

better return, up to ten percent. Respondent also advised

Edward Dandignac that Chemical Trust would cover the surrender

charges. Respondent went through the Guar anteed Contract

marketing materials with Edward Dandignac. As to the integrity

of Chemical Trust and U.S. Guarantee Corporation, Respondent

advised Edward Dandignac the companies were "backed" and

"protected."

39. Based on Respondent's representatio ns and the

Guaranteed Contract marketing materials, Edward Dandignac

determined that an investment with Chemical Trust would be

secured and guaranteed. Subsequently, Edward Dandignac decided

to invest part of his and his wife's life savings in Chemical

T rust through Respondent.

40. Edward Dandignac liquidated one of his annuities and

had the funds transferred to Chemical Trust.

41. Respondent advised Edward Dandignac that he had

personally invested in Chemical Trust.

42. Because Responde nt had worked with the Dandignacs in

getting them the annuities, which were making better money than

their stock, and the fact that Respondent had also invested in

Chemical Trust, the Dandignacs trusted Respondent in regard to

their investment in Chemical Trust.

43. One of the business cards given to the Dandignacs by

Respondent listed "Insurance," "Estate Plans," and "Investments"

as the areas in which he was involved.

44. Edward Dandignac identified the Guaranteed Contract

marketing material as being similar to the documents given to

him by Respondent. This material was the same as the Guaranteed

Contract marketing material provided to Skipper by Respondent.

45. The Dandignacs expected a return on their investment

with Chemical Trust but instead lost $25,444.89.

46. Theodore Dostal, age 74, of Port Richey, Florida,

first had contact with Respondent in October 1997, when

Respondent delivered a revocable living trust to him through

Senior Estates Services. Shortly thereafter, Resp ondent and

Dostal discussed other investments.

47. Between October 28, 1997, and July 27, 1998, Dostal

transferred varying amounts from his revocable living trust to

purchase three different annuities from Respondent with Bradford

Life.

48. Sub sequently, Respondent furnished Dostal the

Guaranteed Contract marketing materials identical to those

provided to Skipper by Respondent. Based on the Guaranteed

Contract marketing materials and Dostal discussions with, and

his trust in Respondent, Dostal invested in Chemical Trust.

Dostal's investment in Chemical Trust involved the purchase of:

(1) a Certificate of Grantor dated September 24, 1999, in the

amount of $17,327.00; (2) a Certificate of Grantor dated

September 28, 1999, in the amount $92,010.0 0; (3) a Certificate

of Grantor dated October 11, 1999, in the amount of $10,000.00

and; (4) a Certificate of Grantor dated November 10, 1999, in

the amount of $37,120.00. Each Certificate of Grantor was

issued by Chemical Trust and was backed by a Paymen t Surety Bond

backed by U.S. Guarantee Corporation Other than the terms

specific to Dostal, the Certificate of Grantor and the Payment

Surety Bond referenced above are the same as those issued to

Skipper.

49. Of the monies he invested with Chemical Trust, Dostal

lost $56,000.00.

50. Respondent told Dostal that he had personally invested

in Chemical Trust

51. Alice Lowe, an elderly lady, is a retired office

manager. Lowe currently lives in Orlando, Florida. Lowe

purchased an annuity pro duct from Respondent in April 1998.

Subsequently, Lowe liquidated her annuity and at the suggestion

of Respondent invested $39,914.95 in the Chemical Trust

investments, which she lost plus the surrender charges in the

amount of $4,350.73 for a total loss of $44,229.85.

52. Lowe could not recall receiving the Guaranteed

Contract marketing materials. However, she did recognize her

signature on the verification form which confirms that she

received the Guaranteed Contract marketing materials. As such ,

the documents she received would have contained the same terms

as the documents received by Skipper.

53. The ten percent interest per annum was a factor in

Lowe's decision to invest in Chemical Trust investment along

with her confidence in Responde nt.

54. Robert Marsh, an elderly man, is a retired mechanic,

and is married to Julia Marsh. Currently, the Marshes live in

Bradenton, Florida. The Marshes became acquainted with

Respondent about May 2, 1998, when Respondent delivered a

revocable li ving trust to them through Remington Estate

Services. After this initial contact, the Marshes' interaction

with Respondent consisted of Respondent's stopping by a few

times, talking to Respondent on the telephone, and discussing

investments with Responden t. During all visits with Respondent,

both Robert Marsh and Julia Marsh were present. Likewise, the

Marshes discussed all financial matters jointly before making a

final decision concerning financial matters.

55. The Marshes had an existing annuity that was earning

interest at the rate of 2.37 or 3.00 percent, which they were

not pleased with. Subsequently, the Marshes transferred some of

the money from the existing annuity to purchase an annuity with

Respondent. Afterwards, Respondent visited wit h the Marshes

every two to three months. During this time, Respondent

discussed Chemical Trust investments with the Marshes and

advised them that Chemical Trust was a "good company" that the

company "had been around a long time" and "the investments" were

a "good deal."

56. The Marshes transferred, through Respondent, their

funds from two annuities and an IRA to Chemical Trust.

57. The Marshes invested over $23,000.00 in Chemical Trust

investments. Originally the Marshes lost all of their

in vestment. However, they recouped all but $2,300.00 through

the efforts of the U.S. Government. The $2,300.00 was surrender

charges for early withdrawal of their annuities.

58. Based on Respondent's representations, the Marshes

expected to be reim bursed for surrender charges, receive ten

percent interest per annum, the principal amount to be secured

by a surety bond, and to receive a $700.00 bonus.

59. The Marshes were provided Chemical Trust's Guaranteed

Contract marketing materials from Res pondent, which was

identical (contained the same terms) to the Guaranteed Contract

marketing material provided to Skipper.

60. Mildred Grossman, age 79, of Debary, Florida, is a

retired secretary. Raymond Grossman, age 80, also of Debary,

Florida, i s the spouse of Mildred Grossman. Raymond Grossman is

retired Methodist minister. The Grossmans became acquainted

with Respondent when he came to their home to deliver a

revocable living trust as a representative of Remington Estate

Services, Inc. After his initial contact with the Grossmans,

Respondent visited them every one to three months to check on

their needs.

61. Because the Grossmans were seriously considering the

possibility that one of them would be going into a nursing home

or some type of assisted living facility, Respondent encouraged

the Grossmans to purchase annuities. Consequently, the

Grossmans cashed in their life insurance policies and their

certificates of deposit and purchased annuities from Respondent

through American Investor s.

62. After they purchased the annuities, the Grossmans were

still concerned as to whether they could afford potential

retirement home expenses. The Grossmans discussed their

concerns with Respondent, and he advised them that they could

get a bet ter return on their investment if they switched to

Chemical Trust investment.

63. Respondent represented to the Grossmans that their

principal investment was protected by a surety payment bond

issued by U.S. Guarantee Corporation, that they would rec eive a

guaranteed ten percent interest per annum return for seven

years, and that they would be reimbursed for surrender charges

incurred when they transferred their funds to Chemical Trust.

64. The Grossmans lost approximately $36,900.00 from their

investment with Chemical Trust through Respondent. This amount

constituted their life savings, leaving them about $2,000.00 in

the bank.

65. Respondent strongly suggested that the Grossmans

invest in Chemical Trust. In fact, one of strongest motiv ating

factors for the Grossmans' decision to invest in Chemical Trust

was their faith and trust in Respondent.

66. The Guaranteed Contract marketing materials provided

to the Grossmans were identical (containing the same terms) to

those provided to S kipper.

67. As a result of the lost investments, the Grossmans:

(1) were forced to move from a condo to mobile home; (2) cannot

provide financial help to their children; and (3) can no longer

afford an assisted living home.

68. The Chemical Tru st enterprise was a deliberate and

largely transparent scheme to swindle Florida residents.

69. Respondent either knew or should have known, had he

made good faith attempt to verify the representations contained

in the Guaranteed Contract marketing m aterials and the

information furnished to him by other agents, employees,

officers or staff of Chemical Trust, that Chemical Trust

investments were worthless. Respondent failed to make a due

diligence inquiry in this regard.

70. Respondent employed either his past or then current

insurance/client relationship with Imogene Skipper, Robert and

Julia Marsh, Raymond and Mildred Grossman, Alice Lowe, and

Edward and Dorothy Dandignac to gain their trust and then abused

that trust by his failure to properly research and verify the

claims made by Chemical Trust, a fellow insurance agent, others

associated with Chemical Trust investments, and those otherwise

contained in the Guaranteed Contract marketing materials.

71. Respondent was the source of injury to Imogene

Skipper, Robert and Julia Marsh, Raymond and Mildred Grossman,

Alice Lowe, and Edward and Dorothy Dandignac by inappropriately

attempting to act in multiple roles as their insurance agent and

as an agent for Chemical Trust. As a result of Resp ondent's

actions, Imogene Skipper, Robert and Julia Marsh, Raymond and

Mildred Grossman, Alice Lowe, and Edward and Dorothy Dandignac

were sold an investment that was nothing more than a scheme to

swindle those who invested. The aggregate loss to the Chem ical

Trust investment scheme by Skipper, the Marshes, the Grossmans,

Lowe, the Dandignacs, and Dostal was approximately $200,000.

72. Under the circumstances of this case, the

participation of Respondent in the sale of Chemical Trust

investments to S kipper, the Dandignacs, Dostal, Lowe, the

Marshes, and the Grossmans was "in the conduct of business under

the [insurance license]" and "in the course of dealing under the

[insurance] license."

CONCLUSIONS OF LAW

73. The Division of Administrative Hearin gs has

jurisdiction over the parties and the subject matter of this

proceeding pursuant to Subsections 120.57(1), Florida Statutes.

74. The burden of proof is on the party asserting the

affirmative of an issue before an administrative tribunal,

Florida De partment of Transportation v. J.W.C. Company, Inc .,

396 So. 2d 778 (Fla. 1st DCA 1981). To meet this burden, the

Department must establish facts upon which its allegations are

based by a clear and convincing evidence. Department of Banking

and Finance, D ivision of Securities and Investor Protection v.

Osborne Stern and Company , 670 So. 2d 932 (Fla. 1996) and

Subsection 120.57(1)(j), Florida Statutes.

75. Subsections 626.611(4),(7),(8), and (9), Florida

Statutes, provide:

The department shall deny an application

for, suspend, revoke, or refuse to renew or

continue the license or appointment of any

applicant, agent, title agency, solicitor,

adjuster, customer representative, service

representative, or managing general agent,

and it shall suspend or r evoke the

eligibility to hold a license or appointment

of any such person, if it finds as to the

applicant, licensee, or appointee any one or

more of the following applicable grounds

exist:

* * *

(4) If the license or appointment is

willfully used, or to be used, to circumvent

any of the requirements or prohibitions of

this code.

* * *

(7) Demonstrated lack of fitness or

trustworthiness to engage in the business of

insurance.

(8) Demonstrated lack of reasonably

adequate knowledge and technical com petence

to engage in transactions authorized by the

license or appointment.

(9) Fraudulent or dishonest practices in

the conduct of business under the license or

appointment.

76. Subsection 626.621 (2), Florida Statutes, provides:

The department may , in its discretion,

deny an application for, suspend, revoke, or

refuse to renew or continue the license or

appointment of any applicant, agent,

solicitor, adjuster, customer

representative, service representative,

managing general agent, or claims

invest igator, and it may suspend or revoke

the eligibility to hold a license or

appointment of any such person, if it finds

that as to the applicant, licensee, or

appointee any one or more of the following

applicable grounds exist under circumstances

for which s uch denial, suspension,

revocation, or refusal is not mandatory

under s. 626.611:

* * *

(2) Violation of any provision of this

code or of any other law applicable to the

business of insurance in the course of

dealing under the license or appointment.

77. The Department has shown by clear and convincing

evidence that Respondent committed the acts as alleged in Counts

II through VII, of the Administrative Complaint and has thereby

violated Subsections 626.611(4),(7),(8), and (9), Florida

Statutes, and Subsection 626.621(2), Florida Statutes.

78. The Department presented no evidence as to the

allegations of Count I and IX of the Administrative Complaint.

Therefore, Counts I and IX should be dismissed.

79. The parties stipulated that Count VII I of the

Administrative Complaint should be dismissed.

80. Under Rules 4 - 231.080(4), (7), (8), and (9), Florida

Administrative Code, the stated penalty for violation of either

Subsection 626.611(4) or (7) or (8) or (9), Florida Statutes, is

a three - month or six - month or six - month or nine - month

suspension, respectively. Under Rule 4 - 231.090(2), Florida

Administrative Code, the stated penalty for violation of

Subsection 626.621(2), Florida Statutes, is a three - month

suspension. Under Rule 4 - 231.040(1)(a), Florida Administrative

Code, the highest "penalty per count" for each of the six counts

is a nine - month suspension. Adding each of the penalties per

count gives a total penalty of 54 months. See Rule 4 -

231.040(2), Florida Administrative Code. However, S ubsection

626.641(1), Florida Statutes, does not allow the Department to

suspend a license for more than two years . Under Rule 4 -

231.040(3), Florida Administrative Code, the final penalty shall

be the total penalty, as adjusted to take into consideration any

aggravating or mitigating factors. Under Rule 4.231.160,

Florida Administrative Code, the Department may, if warranted,

after consideration of the aggravating or mitigating factors,

increase or decrease the penalty to any penalty authorized by

law.

RE COMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, and after careful consideration of both aggravating and

mitigating factors set forth in Rule 4 - 231.160(1), Florida

Administrative Code, it is

RECOMMENDED that the Department enter a final order finding

Respondent, Donald Dean Hooley, II, guilty of violating

Subsections 626.611(4), (7), (8), (9), and 626.621(2), Florida

Statutes, and revoking his license and eligibility for licensure

as a life and life health insurance agent in the State of

Florida.

DONE AND ENTERED this 28th of January, 2002, in

Tallahassee, Leon County, Florida.

___________________________________

WILLIAM R. CAVE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCO M 278 - 9675

Fax Filing (850) 921 - 6947

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 28th day of January, 2002.

COPIES FURNISHED :

Charles D. Hinton, Esquire

Deane & Hinton, P.A.

Post Office Box 7473

St. Petersburg, Florida 33739

Anthony B. Miller, Esquire

Department of Insurance

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

Honorable Tom Gallagher

State Treasurer/Insurance Commissioner

Department of Insurance

The Capitol, Plaza Level 02

Tallahassee, Florida 32399 - 0300

Mark Casteel, General Counsel

Department of Insurance

The C apitol, Lower Level 26

Tallahassee, Florida 32399 - 0307

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit exceptions within 15 days

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

Recommended Order should be file d with the agency that will

issue the Final Order in this case.