02-001113 Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco, vs. Craig D. Kemp And Elsie L. Kemp, D/B/A Cedar Food Mart Status: Closed Recommended Order on Tuesday, July 2, 2002.

Summary: Department showed licensee had non-tax paid cigarettes in store in violation of statute. Department failed to show tax paid alcoholic beverages were not purchased by agent as permitted by statute.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC )

BEVERAGES AND TOBACCO, )

)

Petitioner, )

)

vs. ) Case No. 02 - 1113

)

CRAIG D. KEMP AND ELSIE L. )

KEMP, d/b/a CEDAR FOOD MART, )

)

Responde nts. )

________________________________)

RECOMMENDED ORDER

A formal hearing was held pursuant to notice in the above

style case by Stephen F. Dean, assigned Administrative Law Judge

of the Division of Administrative Hearings, on May 21, 2002, in

Jacksonville, Florida.

APPEARANCES

For Petitioner: Sherrie Barnes, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Talla hassee, Florida 32399 - 0792

For Respondent: Did not appear and was not represented.

STATEMENT OF THE ISSUE

Whether the Respondents purchased cigarettes and alcoholic

beverages from other than licensed distributors contrary to

statute.

PRELIMINARY STATEMENT

The Division of Alcoholic Beverages and Tobacco,

Petitioner, filed an administrative complaint against the

Respondents, and advised them of their right to a formal

hearing. The Respondents requested f ormal hearing, and the

Petitioner forwarded the case to the Division of Administrative

Hearings to conduct a formal hearing. The case was set for

formal hearing on May 21, 2002, and notice was provided to the

parties as required by law.

Prior to the comme ncement of the hearing, the Petitioner

moved to have jurisdiction relinquished because the Respondents

had failed to respond to requests for admissions setting forth

the essential factual elements contained in the administrative

complaint. This motion was filed within three working days of

the date set for hearing. This motion was denied as untimely.

At the commencement of the hearing, the Petitioner was

present and ready to proceed. The Respondents were neither

present nor represented. The record refle cted that the

Respondents had not responded to the initial order. The

Respondents’ notice was not returned to the Division of

Administrative Hearing as undeliverable. After approximately 30

minutes, when the Respondents did not appear, the Petitioner was

permitted to proceed.

The Petitioner renewed its motion to relinquish

jurisdiction, and it was denied as untimely. The Petitioner

called Cynthia Britt and Sabrina Maxwell to testify. The

Petitioner moved into evidence the records of the Respondents’

l icensure under seal of the document custodian as Petitioner’s

Exhibit A. The Petitioner attempted to introduce cigarettes

seized by the investigators from the Respondents; however, they

were examined and noted, and counsel was directed to have them

remain in the possession of the Petitioner.

The Transcript was filed on June 5, 2002. Neither party

filed proposed findings or post hearing briefs.

FINDINGS OF FACT

1. On August 21, 2002, Cynthia Britt and Sabrina Maxwell,

agents of the Petitioner, conducte d a routine inspection of the

Respondents’ convenience store. At the beginning of the

inspection, Britt and Maxwell identified themselves as agents of

the Petitioner and asked for access to the area behind the

counter and to see Respondents' license.

2. When Agent Britt moved behind the counter, she saw

several packages of cigarettes in the overhead storage display

that did not bear the State of Florida tax stamp. Agent Britt

seized these packages of cigarettes. Agent Britt identified 55

packages of ci garettes she seized as Petitioner’s Composite

Exhibit D. The trier of fact examined these cigarettes and

returned the exhibit to the Petitioner to secure them as part of

the record.

3. Agent Britt asked Ms. Kemp for invoices for the

purchase of their ci garettes. These receipts were produced and

they were also seized. Agent Britt identified these receipts as

Exhibit E, the receipts for purchases from unlicensed

distributors, and Exhibit F, the receipts from licensed

distributors. 1

4. The recei pts reflected that the Respondents had

purchased cigarettes for resale from other retailers and from

the Navy Exchange. The cigarettes that did not have tax stamps

were purchased from the Navy Exchange.

5. Ms. Kemp indicated to the agents that cigarettes were

purchased from these retailers and the Navy Exchange because the

wholesalers required that they purchase too many, or charged

them so much for small quantities that they could buy them more

cheaply at retail.

6. In the process of reviewing the rec eipts for the

purchase of the cigarettes, the Agent Maxwell discovered six

receipts for the purchase of alcoholic beverages. She conducted

a search of the premises and found beverages corresponding to

the brands purchased on the receipts; however, there w as no way

to ascertain whether these beverages were the actual ones

purchased.

CONCLUSIONS OF LAW

7. The Division of Administrative Hearings has

jurisdiction over the subject matter and parties in this case.

8. The Petitioner is charged u nder statute to regulate the

sale of alcoholic beverages and tobacco products in the State of

Florida. Pursuant to that authority, it conducts inspections to

determine if licensees are complying with the laws governing the

sale of these products.

9. Se ction 210.18, Florida Statutes, provides:

(1) Any person who possesses or transports

any unstamped packages of cigarettes upon

the public highways, roads, or streets in

the state for the purpose of sale; or who

sells or offers for sale unstamped package s

of cigarettes in violation of the provisions

of this part; or who willfully attempts in

any manner to evade or defeat any tax

imposed by this part, or the payment

thereof, is guilty of a misdemeanor of the

first degree, punishable as provided in s.

775.0 82 or s. 775.083. Any person who has

been convicted of a violation of any

provision of the cigarette tax law and who

is thereafter convicted of a further

violation of the cigarette tax law is, upon

conviction of such further offense, guilty

of a felony of the third degree, punishable

as provided in s. 775.082, s. 775.083, or s.

775.084.

(2) Any wholesale or retail dealer who

fails, neglects, or refuses to comply with,

or violates the provisions of, this part or

the rules and regulations promulgated by th e

division under this part is guilty of a

misdemeanor of the first degree, punishable

as provided in s. 775.082 or s. 775.083.

Any wholesale or retail dealer who has been

convicted of a violation of any provision of

the cigarette tax law and who is ther eafter

convicted of a further violation of the

cigarette tax law is, upon conviction of

such further offense, guilty of a felony of

the third degree, punishable as provided in

s. 775.082, s. 775.083, or s. 775.084.

* * *

(4)(a) Any person or corpo ration that owns

or is in possession of any cigarettes upon

which a tax is imposed by the cigarette law,

or would be imposed if such cigarettes were

manufactured in or brought into this state

in accordance with the regulatory provisions

of the cigarette la w, and upon which such

tax has not been paid is, in addition to the

fines and penalties otherwise provided in

the cigarette law, personally liable for the

amount of the tax imposed on such

cigarettes; and the division may collect

such tax from such person or corporation by

suit or by restitution if the taxpayer is

convicted, found guilty, or pleads nolo

contendere or guilty to any crime under this

chapter. This paragraph is applicable even

if adjudication is withheld.

( b) This subsection does not apply to a

manufacturer or distributor licensed under

the cigarette law, to a state bonded

warehouse, or to a person possessing not in

excess of three cartons of such cigarettes,

which cigarettes were purchased by such

possesso r outside the state in accordance

with the laws of the place where purchased

and brought into this state by such

possessor. The burden of proof that such

cigarettes were purchased outside the state

and in accordance with the laws of the place

where purcha sed shall in all cases be upon

the possessor of such cigarettes.

(5)(a) All cigarettes on which taxes are

imposed by the cigarette law, or would be

imposed if such cigarettes were manufactured

in or brought into this state in accordance

with the regu latory provisions of such law,

which are found in the possession or custody

or within the control of any person for the

purpose of being sold or removed by him or

her in fraud of the cigarette law or with

design to evade payment of such taxes may be

seized by the division or any supervisor,

sheriff, deputy sheriff, or other law

enforcement agent and shall be forfeited to

the state.

(b) This subsection does not apply to a

person possessing not in excess of three

cartons of cigarettes, which cigarettes w ere

purchased by such possessor outside the

state in accordance with the laws of the

place where purchased and brought into this

state by such possessor.

(6)(a) Every person, firm, or corporation,

other than a licensee under the provisions

of this par t, who possesses, removes,

deposits, or conceals, or aids in the

possessing, removing, depositing, or

concealing of, any unstamped cigarettes not

in excess of 50 cartons is guilty of a

misdemeanor of the second degree, punishable

as provided in s. 775.082 or s. 775.083.

In lieu of the penalties provided in those

sections, however, the person, firm, or

corporation may pay the tax plus a penalty

equal to the amount of the tax authorized

under s. 210.02 on the unstamped cigarettes.

(b) Every person, fir m, or corporation,

other than a licensee under the provisions

of this part, who possesses, removes,

deposits, or conceals, or aids in the

possessing, removing, depositing, or

concealing of, any unstamped cigarettes in

excess of 50 cartons is presumed to ha ve

knowledge that they have not been taxed and

is guilty of a felony of the third degree,

punishable as provided in s. 755.082,

775.083, or 775.084.

(c) This section does not apply to a person

possessing not in excess of three cartons of

such cigarett es purchased by such possessor

outside the state in accordance with the

laws of the place where purchased and

brought into this state by such possessor.

The burden of proof that such cigarettes

were purchased outside the state and in

accordance with the l aws of the place where

purchased shall in all cases be upon the

possessor of such cigarettes.

(7) Any sheriff, deputy sheriff, or police

officer, upon the seizure of any unstamped

cigarettes under this section, shall

promptly report such seizure to the division

or its representative, together with a

description of all such unstamped cigarettes

seized, so that the state may be kept

informed as to the size and magnitude of the

illicit cigarette business.

(8)(a) It is unlawful for any person to

conspire with any other person or persons to

do any act in violation of the provisions of

this part, when any one or more of such

persons does or commits any act to effect

the object of the conspiracy.

(b) Any person who violates the provisions

of this subsectio n:

1. If the act conspired to be done would

constitute a misdemeanor, is guilty of a

misdemeanor of the second degree, punishable

as provided in s. 775.082 or s. 775.083.

2. If the act conspired to be done would

constitute a felony, is guilty of a f elony

of the third degree, punishable as provided

in s. 775.082, s. 775.083, or s. 775.084.

10. The inspectors found packages of cigarettes that did

not have the Florida Tax Stamp affixed and receipts for the

purchase of cigarettes from the Nav y Exchange. Cigarettes sold

through the exchange do not bear the Florida Tax Stamp.

11. There were additional receipts for the purchase of

cigarettes from other retailers whose cigarettes would have

borne the Florida Tax Stamp. Those cigarettes c ould not be

segregated from cigarettes purchased from a licensed wholesaler;

however, the evidence supports the conclusion that cigarettes

were purchased for resale from other than a distributor, a fact

that Ms. Kemp admitted.

12. Section 210.15(1) (h), Florida Statutes, provides:

No retail sales of cigarettes may be made at

a location for which a wholesale dealer,

distributing agent, or exporter permit has

been issued. The excise tax on sales made

to any traveling location, such as an

itinerant s tore or industrial caterer, shall

be paid into the General Revenue Fund

unallocated. Cigarettes may be purchased

for retail purposes only from a person

holding a wholesale dealer permit. The

invoice for the purchase of cigarettes must

show the place of b usiness for which the

purchase is made and the cigarettes cannot

be transferred to any other place of

business for the purpose of resale.

13. The Respondents violated Sections 210.15(1)(h) and

210.18, Florida Statutes.

14. Evidence was discove red of similar purchases of

alcoholic beverages from retailers for resale.

15. Section 561.14(3), Florida Statutes, provides:

Vendors licensed to sell alcoholic beverages

at retail only. No vendor shall purchase or

acquire in any manner for the purpose of

resale any alcoholic beverages from any

person not licensed as a vendor,

manufacturer, bottler, or distributor under

the Beverage Law. Purchases of alcoholic

beverages by vendors from vendors shall be

strictly limited to purchases between

memb ers of a pool buying group for which the

initial purchase of the alcoholic beverages

was ordered by a pool buying agent as a

single transaction. No vendor shall be a

member of more than one cooperative or pool

buying group at any time. No vendor shall

im port, or engage in the importation of, any

alcoholic beverages from places beyond the

limits of the state.

16. The statute permits the purchase of beverages by a

retailer from a retailer by a pool buying agent. The statute

does no t define pool buying agent. The Department did not show

that Respondents were not "pool buying agents" or purchased the

subject beverages through a pool buying agency.

17. There was no evidence that beverages for resale were

purchased through the Navy Exchange. All of the beverages had

the required tax stamps.

18. The Respondents having violated Sections 210.18 and

Section 210.15(h), Florida Statutes, have violated Section

561.29(1)(a), Florida Statutes.

19. The evidence shows a violation of t he letter of the

law, but not an intent to principally avoid paying the taxes on

six cartons of cigarettes. The Respondents' motivation was to

avoid the high costs of purchasing cigarettes and alcoholic

beverages in quantity from a wholesale distributor. This is,

moreover, a first offense.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions

of law, it is

RECOMMENDED:

That the Petitioner destroy the cigarettes seized and

impose a fine of $250 on the Respondents for violation of

Sect ion 210.18(1), Florida Statutes; and impose a fine of $250

for violation of Section 210.15(1)(h), Florida Statutes.

It is also recommended that the alleged violations of

Section 561.14(3), Florida Statutes, be dismissed.

DONE AND ENTERED this 2nd day of July, 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 2nd day of July, 2002.

ENDNOTE

1/ The transcript is not clear exactly which receipts were

marked E and which were mar ked F; however, the finding above

reflects the best reading of the transcript.

COPIES FURNISHED:

Sherrie Barnes, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

Craig D. Kemp

Elsie L. Kemp

8716 Lone Star Road

Jacksonville, Florida 32211

Richard Turner, Director

Division of Alcoholic

Beverages and Tobacco

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

H ardy L. Roberts, III, 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 wi thin

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.