02-001280 Mickie A. Leonard And Last Chance Special, Inc. vs. Department Of Banking And Finance Status: Closed Recommended Order on Friday, November 1, 2002.

Summary: Trustee proposed in Petitioner`s divestiture plan unacceptable as neither qualified to serve nor independent.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MICKIE A. LEONARD AND LAST )

CHANCE SPECIAL, INC., )

)

Petitioner, )

)

vs. ) Case No. 02 - 1280

)

DEPARTMENT OF BANKING AND )

FINANCE, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this

case on August 26 - 28, 2002, in Tallahassee, Florida, before

J. D. Parrish, a designated Administrative Law Judge of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Edward W. Do ugherty, Jr., Esquire

Igler & Dougherty, P.A.

1501 East Park Avenue

Tallahassee, Florida 32301

For Respondent: Richard T. Donelan, Jr., Esquire

Robert Alan Fox, Esquire

Department of Banking and Finance

101 East Gaines Street

Fletcher Building, Suite 526

Tallahassee, Florida 32399 - 0350

STATEMENT OF THE ISSUE

Whether the Petitioner's divestiture plan complies with

the F inal Order entered by the Respondent on June 9, 2000.

PRELIMINARY STATEMENT

In November of 2001, the Respondent, Department of

Banking and Finance (Department), rejected a divestiture plan

submitted by Mickie A. Leonard. Such plan was purportedly

submitted to comply with a Final Order that had been entered

in June of 2000. On or about March 22, 2002, the Petitioners

filed a request for an administrative hearing in order to

challenge the denial of the plan. The matter was then

forwarded to the Division of Administrative Hearings for

formal proceedings.

At the hearing, the Petitioners presented testimony from

Mickie A. Leonard, Charles S. Meyer, and Alex Hager. The

Respondent offered testimony from Alex Hager, Marvin Blitz,

Tony Fernandez, Ingrid Aquino, and Linda Townsend. All

exhibits marked and received into evidence (or proffered) are

identified in the five - volume Transcript of the proceedings

filed in this cause on September 26, 2002.

On October 16, 2002, the Department filed its Proposed

Recommend ed Order (PRO) that has been considered in the

preparation of this Recommended Order. The Petitioners filed

a Notice of Withdrawal of Petition for Formal Hearing after

the Department's PRO had been filed. The Notice announced

that the Petitioner, Mickie A. Leonard, had submitted a Second

Amended Divestiture Plan. Further, such Notice maintained

that submission of the amended plan rendered the instant

action moot as the Petitioners were withdrawing their request

for hearing.

FINDINGS OF FACT

1. On June 9, 2000, the Department entered a Final Order

and Order for Divestiture Plan (the Final Order) as a result

of proceedings filed and identified in this record as DOAH

Case No. 99 - 1664.

2. The Final Order resulted from a settlement reached

among Mickie A. Leonard, James McLaughlin, Thomas Leonard,

Raymond Hensler, and the Department. The understanding of

settlement was memorialized in the transcript of DOAH Case No.

99 - 1664.

3. The underlying issue of the matter, and hence the

divestiture dispute, stemm ed from the Petitioner, Mickie A.

Leonard's, attempt to control Sunniland Bank (the bank).

Ms. Leonard and other bank shareholders have long - standing

disagreements as to the bank and its control, and operation.

4. The Department erroneously thought those

disagreements had been put to rest by virtue of the settlement

of DOAH Case No. 99 - 1664.

5. Indeed the terms of the Final Order required

Mickie A. Leonard to abandon her efforts to exercise control

over the bank. Moreover, the Final Order recognize d that

Ms. Leonard was not to seek control of the bank in the future.

She was to divest herself of the majority interest in the

voting securities of the bank and in furtherance of that

action was to:

2. Within 15 days of the date of this

Order, Ms. Leonard must submit her proposed

divestiture plan in accordance with the

stipulation contained in Exhibit A for

incorporation in the agreed final discussed

in the stipulation. This plan must provide

for the accomplishment of divestiture

within 90 days of th e date of this Order.

The plan must provide assurances that

Ms. Leonard will not be able to exercise

ownership or control of 25% or more of the

voting securities of Sunniland Bank. The

plan must provide for divestiture of

control either by outright sale of all

shares owned or controlled by Leonard in

excess of 24.9% of the bank's total issued

shares or by the establishment of a trust

to hold such shares, which trust will be

controlled by an independent trustee

acceptable to the Department under the

ter ms of a trust agreement approved by the

Department.

6. Instead of complying with the terms of the Final

Order, the Petitioner filed an appeal to the Fourth District

Court of Appeal. During the time the matter was on appeal the

Petitioner did not file a divestiture plan. The appellate

court did not stay the Final Order.

7. Eventually the Final Order was affirmed on appeal and

a mandate was issued. Subsequently, the Department once again

directed the Petitioner to file the divestiture plan no later

than March 4, 2001.

8. Once again, the Petitioner did not timely file the

divestiture plan. In fact, the Petitioner ignored the

Department's Final Order and direction to file the divestiture

plan until April of 2001. Then, after the Department had

notified her that it would seek civil monetary penalties if

the plan were not filed, Ms. Leonard submitted a divestiture

plan.

9. The Department's rejection of that plan resulted in

the instant case.

10. The Petitioner has presented no credible explanation

f or why the divestiture plan in accordance with the Final

Order was not timely submitted.

11. The Petitioner did not implement any divestiture

plan that would have complied with the terms of the Final

Order.

12. The actions purportedly taken to attempt compliance

with the Final Order failed to provide any reasonable

assurance that the Petitioner intended to abandon ownership or

control of the bank.

13. As of August of 2001, the divestiture was

incomplete. On August 6, 2001, the Petitioner's attorney

advi sed the Department that Petitioner's shares would be sold

to "the Kouzmine Group." That event never happened.

14. To attempt compliance with the Final Order the

Petitioner next proposed that Mr. Meyer act as trustee of her

shares. The Department rejected the proposal.

15. After employing the criteria in Sections 655.0385,

658.20, 658.21, 658.27, and 658.28, Florida Statutes, the

Department rejected Mr. Meyer as he did not have the

appropriate experience to serve as an independent trustee.

Moreover , it is determined that Mr. Meyer was not sufficiently

informed of the facts or sufficiently independent of the

Petitioner to qualify as an independent trustee.

16. Additionally, Mr. Meyer refused or failed to submit

financial information regarding his experience and business

dealings from which the Department might judge his suitability

to serve as a trustee for the Petitioner. Even at hearing Mr.

Meyer was reluctant to discuss his business dealings or

financial circumstances. It may well be that Mr. Me yer

considers such information none of the Department's business.

It is precisely the Department's business.

17. None of the proposals provided for the independent

voting of the Petitioner's shares for purposes of selling the

shares. Each proposal also allowed the Petitioner to revoke

it at will -- with or without Department approval.

18. Mr. Meyer has never served as an independent

trustee. He has never worked for nor been on the board of

directors for a bank. Mr. Meyer has no training or business

ex perience to qualify him to serve as a fiduciary or trustee.

19. As of the date of hearing, the Petitioner had not

provided any assurance that she would not be able to exercise

ownership or control of no more than 24.9% of the voting

securities of the bank.

20. The Petitioner has demonstrated a pattern of conduct

suggesting gross indifference to the Department's Final Order

and authority.

CONCLUSIONS OF LAW

21. The Division of Administrative Hearings has

jurisdiction over the parties to and the subjec t matter of

these proceedings. Section 120.57, Florida Statutes.

22. The instant case was referred to the Division of

Administrative Hearings based upon the Petitioner's challenge

to the denial of the divestiture plan. Now, by reason of the

Notice of Withdrawal of Petition for Formal Hearing, the

Petitioner maintains the matter is moot as she has submitted a

Second Amended Divestiture Plan.

23. The Petitioner did not seek leave to file such

amendment. Nothing in the record suggests the Department

con curred with or agreed to the filing of an amendment.

Curiously, the Department filed a Proposed Recommended Order

(and presumably spent time preparing same) for no apparent

reason if the Department has consented to an amendment. More

important, nothing in the record suggests the Petitioner is

entitled to file an amendment.

24. As a matter of law, the Petitioner was required to

divest her shares so that she no longer owns or controls the

bank. She absolutely failed to do so in a timely manner.

Moreove r, by now filing a second amended plan for divestiture

the Petitioner must recognize that the prior submission was

flawed or she is once again seeking to obtain additional time

before divestiture may be compelled by a court of law. In

either case, the Petitioner's indifference to the authority of

the Department is beyond rational thought.

25. The language of the Final Order was clear and

unambiguous. The Petitioner was to divest. She did not do

so. Mr. Meyer is not qualified by experience or training t o

serve as an independent trustee. His judgment and lack of

candid response to the Department also place his candidacy in

question. A trustee must be a person capable of independent

thought and action and Mr. Meyer is simply not qualified to

take Ms. Leonard on.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions

of Law, it is RECOMMENDED that the Department of Banking and

Finance enter a Final Order rejecting the divestiture plan.

DONE AND ENTERED this 1st day of November, 2002, in

Tal lahassee, Leon County, Florida.

___________________________________

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Fili ng (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1st day of November, 2002.

COPIES FURNISHED :

Richard T. Donelan, Jr., Esquire

Robert Alan Fox, Esquire

Department of Banking and Finance

101 East Gaines Street

Fletcher Building, Suite 526

Tallahassee, Florida 32399 - 0350

Edward W. Dougherty, Jr., Esquire

Igler & Dougherty, P.A.

1501 Ea st Park Avenue

Tallahassee, Florida 32301

Honorable Robert F. Milligan

Office of the Comptroller

Department of Banking and Finance

The Capitol, Plaza Level 09

Tallahassee, Florida 32399 - 0350

Robert Beitler, General Counsel

Department of Banking and Finance

Fletcher Building, Suite 526

101 East Gaines Street

Tallahassee, Florida 32399 - 0350

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

exceptio ns to this Recommended Order should be filed with the

agency that will issue the Final Order in this case.