02-001763PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Peter H. Myers Status: Closed Recommended Order on Wednesday, September 4, 2002.

Summary: Respondent failed to properly prepare required monthly escrow statements; allowed personal broker license to lapse. However, due to the circumstances surrounding these offenses, recommend lesser penalty than guidelines suggest.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 02 - 1763PL

)

PETER H. MYERS, )

)

Respondents. )

)

RECOMMENDED ORDER

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

on July 9, 2002, by video teleconference in Tallahassee, and

Daytona Beach, Florida, before the Division of Administrative

Hearings, by its designated Adminis trative Law Judge, Barbara J.

Staros.

APPEARANCES

For Petitioner: Donna K. Ryan, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

400 West Robinson Street

Hurston Building - North Tower, Suite N308

Orlando, Florida 32801

For Respondent: Howard Hadley, Esquire

2352 Carolton Road

Maitland, Florida 32751

STATEMENT OF THE ISSUES

Is Respondent, Peter H. Myers, guilty of the allegations

contained in the Administrative Complaint issued by Petitioner

and, if so, what is the appropriate penalty.

PRELIMINARY STATEMENT

Petitioner, in C ount I of its Administrative Complaint,

accuses Respondent, Peter H. Myers, of failure to properly

prepare the required monthly escrow statement reconciliations in

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

Code, and therefore in viol ation of Section 475.25(1)(e),

Florida Statutes.

Count II of the Administrative Complaint accuses Respondent

of having operated as a broker without being the holder of a

valid and current license as a broker in violation of Section

475.42(1)(a), Florida Statutes, and, therefore, in violation of

Section 475.25(1)(e), Florida Statutes.

Based upon the foregoing, Count III of the Administrative

Complaint accuses Respondent of having been found guilty for a

second time of any misconduct that warrants his suspe nsion in

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

Respondent Myers disputed the allegations in the

Administrative Complaint and timely requested an administrative

hearing. The request for hearing was forwarded to the Division

of Administrative Hearings on or about May 6, 2002. A hearing

was scheduled for July 9, 2002. On July 5, 2002, Respondent

filed an Amendment to His Pre - Hearing Statement or in the

Alternative Motion to Dismiss.

Respondent's Amendment to Pre - Hearing Statement or in the

Al ternative Motion to Dismiss was heard at the commencement of

the hearing. Respondent was permitted to amend his pre - hearing

statement; however, Respondent's Motion to Dismiss was denied.

At hearing, Petitioner presented the testimony of Gail

Hand. Petiti oner's Exhibits numbered 1, 3, 5, 6, 7, 10, and 11

were admitted into evidence. Petitioner's Exhibit numbered 4

was rejected. 1/ Respondent testified on his own behalf and

presented the testimony of Joseph Roth. Respondent's Exhibit

numbered 1 was admitt ed into evidence.

Official recognition was taken of Chapters 20, 120, 455,

and 475, Florida Statutes, and Chapter 61J - 2, Florida

Administrative Code.

A Transcript consisting of one volume was filed on July 29,

2002. The parties were given an opportunity to submit post -

hearing submissions within 20 days of the filing of the hearing

transcript. Respondent filed a Proposed Recommended Order on

August 8, 2002. Petitioner filed a Proposed Recommended Order

on August 15, 2002. Respondent filed a Motion to S trike

Petitioner's Proposed Recommended Order. Petitioner filed a

response. Upon consideration, the Motion to Strike is denied.

The parties' Proposed Recommended Orders have been considered in

the preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioner is the state agency charged with the

responsibility and duty to prosecute administrative complaints

pursuant to Section 20.165 and Chapters 120, 455, and 475,

Florida Statutes.

2. Respondent Myers is a licensed real estate broker,

having b een issued license number BK - 0646846.

3. Ocean Village Sales & Rentals, Inc. (Ocean Village) is

a real estate broker corporation and Respondent is the

qualifying broker for said corporation.

Background

4. Petitioner and Respondent were involved in earl ier

disciplinary cases in 1998 and 1999. On or about December 7,

1999, Petitioner and Respondent entered into a Stipulation which

resolved DBPR Case Nos. 98 - 81236 and 99 - 80423. The Stipulation

placed Respondent on probation for a period of one year from the

effective date of the Final Order of the Florida Real Estate

Commission (FREC), which adopted the stipulation and was issued

on or about January 19, 2000. The Stipulation read in pertinent

part as follows:

Respondent agrees not to hold or maintain

any escrow, trust or real estate related

escrow or trust funds for the one(1) year

probationary period. Respondent is

permitted to be a signatory on the operating

and payroll accounts for his brokerage firm

only. Respondent shall place all escrow,

trust or real estate related funds with a

title company, attorney, or other proper

depository as permitted under Chapter 475,

Fla. Stat., and Fla. Admin. Code r. 61J2 .

Respondent further agrees not to be a

signatory on any escrow, trust or real

estate related ac count with the exception of

the operating and payroll accounts for his

brokerage firm for the one (1) year

probationary period.

5. In compliance with the terms of the stipulation,

Respondent placed his escrow account with Joseph Roth, a

certified p ublic accountant and licensed real estate broker in

the State of Florida.

6. In the Stipulation, Respondent admitted to, among other

things, failure to prepare the required written monthly escrow

statement reconciliations in violation of Rule 61J2 - 14.0 12(2)

and (3), Florida Administrative Code, and, therefore, in

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

Escrow accounts audit

7. Gail Hand is an Investigation Specialist II with the

Department of Business and Professional Regulation (the

depar tment). She has approximately 16 years of regulatory and

investigative experience with the department. When she started

working with the department, she conducted from 20 to 30 trust

account audits per month. She routinely conducts audits and

inspection s of the records of real estate brokers.

8. When reviewing escrow accounts, Ms. Hand's review of

escrow accounts has two components. First, she reviews the bank

statement reconciliations which compares the statement balance

to the checkbook balance. Nex t she reviews a comparison of the

bank statement reconciliations with the broker's total trust

liability. The broker's total trust liability is the total of

all the money that the broker is holding in his trust or escrow

account.

9. On or about Janu ary 26, 2001, Ms. Hand conducted an

office inspection and escrow account audit of Respondent's

business, Ocean Village. Respondent and his daughter were

present. During this inspection and audit, Ms. Hand requested

to inspect financial documents of the c ompany. Respondent and

his daughter provided all documents requested and were very

cooperative during the course of the audit. Ms. Hand inspected

the November and December 2000 bank reconciliation statements

from the escrow trust account of Ocean Village and determined

that they were properly prepared.

10. However, Ms. Hand determined that the determination of

the broker's trust liability was not properly prepared in that

she could not identify the broker's total trust liability from a

review of the docu ments provided by Respondent. The

calculations in Respondent's financial records included broker's

money, bank fees, and negative owner balances. According to

Ms. Hand, the reconciled checkbook to bank statement balance

should be compared to a balance th at does not include broker's

money, bank fees or negative owner balances. Because of this,

she could not identify the total broker's trust liability. She

normally does not have trouble identifying a broker's total

trust liability when conducting an audit .

11. During the audit, Respondent could not identify the

total broker's trust liability. Respondent deferred to his

accountant, Mr. Roth. Ms. Hand did not discuss the financial

documents which she reviewed as part of the audit with Mr. Roth

because, "Mr . Myers was responsible."

License renewal

12. Respondent's renewal fees for his corporate

registration and his individual broker's license became due in

March 1999. Respondent renewed his corporate registration in

March 1999 but failed to renew his indiv idual broker's license.

Respondent did not renew his individual broker's license until

February 2001. At that time, he paid for the time period in

which he was in arrears and for another 24 months in the future,

as well as a late fee or penalty.

13. R espondent continued to conduct real estate

transactions during the period of time that his individual

broker's license was in involuntary inactive status.

CONCLUSIONS OF LAW

14. The Division of Administrative Hearings has

jurisdiction over the subject mat ter and the parties to this

proceeding in accordance with Sections 120.569 and 120.57,

Florida Statutes.

15. The Department of Business and Professional

Regulation, Division of Real Estate, has the duty to regulate

real estate licenses in Florida pursuan t to Chapter 475, Florida

Statutes. Petitioner has the burden of proving the material

allegations of the Administrative Complaint by clear and

convincing evidence. Ferris v. Turlington , 510 So. 2d 292 (Fla.

1987).

16. Because he is a broker, Respondent is charged with the

knowledge of Chapter 475, Florida Statutes. Wallen v. Florida

Department of Professional Regulation , 568 So. 2d 975 (Fla. 3rd

DCA 1990).

17. Section 475.25(1)(e), Florida Statutes, authorizes the

FREC to take disciplinary action against a licensee who has

violated any of the provisions of Chapter 475, Florida Statutes,

or any lawful order or any rule made or issued under Chapter 455

or 475, Florida Statutes.

18. Rule 61J2 - 14.012, Florida Administrative Code, reads

as follows:

61J2 - 14.0212 Broker's Records.

(1) A broker who receives a deposit as

previously defined shall preserve and make

available to the BPR, or its authorized

representative, all deposit slips and

statements of account rendered by the

deposit ory in which said deposit is placed,

together with all agreements between the

parties to the transaction. In addition,

the broker shall keep an accurate account of

each deposit transaction and each separate

bank account wherein such funds have been

deposi ted. All such books and accounts

shall be subject to inspection by the DPR or

its authorized representatives at all

reasonable times during regular business

hours.

(2) Once monthly, a broker shall cause to

be made a written statement comparing the

bro ker'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

i ncluded in the monthly statement -

reconciliation shall be the date of

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 t rust

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.

(3) Whenever the trust liability and the

bank balances do not agree, the

reconcilia tion 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). Whenever a trust bank account

record reflects a services charge or fee for

a non - suffic ient check being returned or

whenever an account has a negative balance,

the reconciliation shall disclose the

cause(s) of the returned check or negative

balance and the corrective action taken.

19. The evidence established that Respondent committed a

technical violation of Rule 61J2 - 14.012, Florida Administrative

Code, and therefore a violation of Section 475.25(1)(e), Florida

Statutes. However, Respondent's actions were in strict

accordance with a Final Order issued by FREC which prohibited

him from holding or maintaining any escrow or trust account.

20. Section 475.25(1)(o), Florida Statutes, provides that

discipline may be imposed if it is found that a licensee "has

been found guilty, for a second time, of any misconduct that

warrants his suspen sion." The evidence established that

Respondent committed a technical violation of Rule 61J2 - 14.012,

Florida Administrative Code. Because this was one basis for the

Stipulation and Final Order in the earlier cases involving

Petitioner and Respondent, thi s constitutes a second violation

by Respondent for the same offense.

21. Section 475.42(1)(a), Florida Statutes, states that

"no person shall operate as a broker or salesperson without

being the holder of a valid and current active license." The

e vidence established that Respondent operated as a broker during

the period of time that his broker's license had lapsed due to

failure to review in a timely manner in violation of Section

475.42(1)(a), and, therefore, of Section 475.25(1)(e), Florida

Statu tes.

22. Rule 61J2 - 24.001, Florida Administrative Code, sets

forth a recommended range of penalties for licensees who violate

Chapters 455 or 475, Florida Statutes. The Rule states that for

purposes of this Rule, the order of penalties, ranging fr om

lowest to highest is: reprimand, fine, probation, suspension,

and revocation or denial. The range of penalties for a

violation of Section 475.25(1)(e), Florida Statutes, is from an

eight - year suspension to revocation and an administrative fine

of $100 0.00.

23. For a violation of Section 475.25(1)(o), Florida

Statutes, the usual recommended range of penalties is an

administrative fine of $500.00 and a one - year suspension to

revocation.

24. For a violation of Section 475.42(1)(a), Florida

S tatutes, the recommended range of penalties is a three - year

suspension to revocation.

25. Further, aggravating or mitigating circumstances may

be considered in arriving at an appropriate penalty, including

deviation from these guidelines in imposin g or recommending

discipline.

26. The circumstances surrounding Respondent's violation

of Rule 61J2 - 14.012, Florida Administrative Code, regarding

broker's records, establish mitigation for purposes of the

appropriate penalty. The fact that Responde nt followed the

letter of a FREC Final Order which prohibited him from handling

the escrow accounts and relied upon an accountant in accordance

with the FREC Order establishes mitigating circumstances to

impose a lesser penalty than recommended in Rule 61J 2 - 24.001,

Florida Administrative Code.

27. Petitioner proved that Respondent violated Section

475.42(1)(a), Florida Statutes, because he allowed his

individual broker's license to lapse. In mitigation, once

discovering his error, Respondent paid t he license fee in

arrears as well as a late fee/penalty.

28. Petitioner recommends a penalty of an administrative

fine of $2,500.00. Petitioner does not recommend any period of

suspension. Based upon the foregoing, the penalty sought by

Petitioner is re asonable and accepted as appropriate. Walker v.

Department of Business and Professional Regulation , 705 So. 2d

652 (Fla. 5th DCA 1998).

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law set forth herein, the evidence of rec ord and the demeanor

of the witnesses, it is

RECOMMENDED:

That a final order be entered by the Florida Real Estate

Commission finding the Respondent, Peter H. Myers, guilty of

violating Sections 475.25(1)(e) and (o), and 475.42(1)(a),

Florida Statutes, a nd imposing a fine of $2,500.00.

DONE AND ENTERED this 4th day of September, 2002, in

Tallahassee, Leon County, Florida.

___________________________________

BARBARA J. STAROS

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 4th day of September, 2002.

ENDNOTE

1/ Petitio ner did not offer Exhibits numbered 2, 8, or 9.

COPIES FURNISHED :

Christopher J. De Costa, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street

Hurston Building North Tower, Suite N30 8

Orlando, Florida 32801

Howard Hadley, Esquire

2352 Carolton Road

Maitland, Florida 32751 - 3625

Dean Saunders, Chairperson

Florida Real Estate Commission

400 West Robinson Street

Post Office Box 1900

Orlando, Florida 32802 - 1900

Hardy L. Roberts, III, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All partie s 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.