03-000886PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Brian John Wilkes Status: Closed Recommended Order on Friday, August 22, 2003.

Summary: Respondent real estate broker responsible for misrepresentations and negligence of his agents. Agents misused client funds, failed to account, and failed to keep proper records; suspension, fine and restitution.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Cas e No. 03 - 0886PL

)

BRIAN JOHN WILKES, )

)

Respondent. )

)

RECOMMENDED ORDER

A final hearing was held before Daniel M. Kilbride,

Administrative Law Judge, Division of Administrative Hearings,

in St. Petersburg, Florida, on June 18, 2003. The following

appearances were entered:

APPEARANCES

For Petitioner: Christopher DeCosta, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street

Suite N801

Orlando, Florida 32802

For Respondent: No appearance

STATEMENT OF THE ISSUES

Whether Re spondent failed to preserve and maintain broker

records in violation of Section 475.5015, Florida Statutes.

Whether Respondent committed culpable negligence or breach

of trust in any business transaction in violation of Subsection

475.25(1)(b), Florida Statutes.

PRELIMINARY STATEMENT

In the Administrative Complaint, filed December 19, 2003,

Petitioner, Department of Business and Professional Regulation,

Division of Real Estate, alleged that Respondent violated

certain provisions of Florida law. Respond ent disputed the

charges and requested a formal hearing. This matter was

referred to the Division of Administrative Hearings on March 12,

2003, and it was set for hearing. This matter was transferred

to the undersigned Administrative Law Judge, and a for mal

hearing was scheduled for June 18, 2003. Respondent, who is

living in the United Kingdom, indicated he would not attend, but

filed several documents that he requested this tribunal to

review.

At the hearing, Respondent did not appear. After a

reason able period of time, the hearing proceeded, and Petitioner

offered 29 exhibits that were received into evidence.

Petitioner called one witness, Investigator David Guerdan of the

Department of Business and Professional Regulation. The

Transcript was filed on July 25, 2003. At the request of

Petitioner, the parties were given until August 15, 2003, in

which to file proposed findings of fact and conclusions of law.

Petitioner filed its proposals on August 12, 2003. Respondent

has not filed any proposals a s of the date of this Recommended

Order. All citations relating to Chapter 120 are to Florida

Statutes (2002) unless otherwise indicated. All citations to

Chapter 475 are to Florida Statutes (2001).

FINDINGS OF FACT

1. Petitioner is a state licensing an d regulatory agency

charged with the duty to prosecute administrative complaints

pursuant to the laws of the State of Florida, in particular,

Section 20.30, Chapters 120, 455, and 475, and the rule

promulgated thereto.

2. Respondent is and was at all time s material hereto a

licensed real estate broker in the State of Florida, having been

issued License No. 600642 in accordance with Chapter 475.

3. The last license was issued to Respondent as a broker

of Cascade Referral Service, Inc., 2439 Bee Ridge Road,

Sarasota, Florida.

4. At all times material, Respondent was the president

and registered agent of Knightsbridge Park International (KPI),

a corporation under the laws of Florida.

5. At all times material, Respondent was the registered

agent of an entity called Knightsbridge Vacation Homes (KVH).

6. Between August 14, 1999, through May 21, 2001,

Respondent was an active broker/officer of Knightsbridge Realty,

Inc. (KRI).

7. In the Fall of 1999, Sharon Malecki (Malecki), a

resident of Wisconsin, met wi th Respondent's wife, Janet Wilkes,

who was vice - president of KPI, to discuss engaging KPI's

services in managing Malecki's property in Kissimmee, Florida.

8. On or about February 14, 2000, as a result of this

initial contact, Malecki entered into a contr act with KPI to

manage her property. Respondent signed the contract as

president of KPI.

9. The contract required Respondent and KPI to provide

general management services to Malecki and to provide a monthly

accounting showing all income and expenses for a period of one

year commencing on March 1, 2000. The contract also required

Malecki to keep a balance of $500 as a "management reserve

balance." Respondent and KPI were required to deposit any

amounts held in excess of the reserve amount in Malecki's b ank

account.

10. Implicit in the monthly accounting requirement was

that KPI and Respondent would collect the rental proceeds from

Malecki's property and remit the proceeds to Malecki.

11. At the same time the parties executed the contract,

Malecki sen t KPI a check for $500 to be kept in the escrow

account for incidental maintenance and repairs of the property.

12. Between August 10, 2000, and August 24, 2000, KPI

placed a tenant by the name of "Plant" in Malecki's property and

collected $1,214.29 in re nt from the tenant.

13. Between August 29, 2000, and September 12, 2000, KPI

placed a tenant by the name of "Lusted" in Malecki's property

and collected $1,309 in rental income funds from the tenant.

14. The monthly accounting for August of 2000, purport s to

represent that KPI paid Malecki $616.42 toward the balance owed.

Malecki never received this payment.

15. Respondent failed to remit any of the above - referenced

funds to Malecki.

16. Respondent sent Malecki a letter dated November 7,

2000, in which he terminated the management contract and

promised to send Malecki a final accounting "as soon as

possible."

17. On or about January 2, 2001, Respondent sent Malecki a

letter, in which he acknowledged that there had been a "major

accounting breakdown." In the letter, Respondent promised to

make an interim payment within the next week.

18. Subsequent to receipt of the two letters, Malecki made

various attempts to obtain an accounting of the rental proceeds

due. Respondent never remitted nor accounted for the funds.

19. At all times material, Respondent failed to account

for the $500 deposit he held for the benefit of Malecki.

20. In June of 1999, a real estate broker by the name of

John Young (Young) referred Isabel Benitez (Benitez) to

Respondent af ter she bought a home through Young.

21. On or about June 23, 1999, Benitez signed a contract

with Respondent to manage her property located at 7981 Magnolia

Bend Court, Kissimmee, Florida. The contract period was for one

year and was renewed for an addi tional year in June of 2000.

22. Although structured in the form of a lease, there was

a clear understanding that KPI and Respondent were performing

property management services and were obligated to pay a

guaranteed amount to Benitez every month.

23. Th e contract required Benitez to place a $500 deposit

with Respondent and KPI as a "management deposit" to be used for

incidental expenses associated with the management of the

property.

24. In approximately August of 2000, Benitez stopped

receiving monthly payments from KPI.

25. During the latter part of 2000, Benitez made various

attempts to contact Respondent to determine the whereabouts of

the monies due her.

26. On or about December 14, 2000, Benitez sent Respondent

a letter, in which she requested the monies due her under the

contract.

27. On or about December 15, 2000, Respondent faxed to

Benitez a response to her letter, in which he accepts her

termination of the contract and confesses that he had "not been

involved in property management matters, let alone accounting

aspects . . . ."

28. On or about January 2, 2000, Respondent mailed to

Benitez a letter informing her that there had been an

"accounting breakdown," and promising to make an interim payment

within a week.

29. A review of an accounti ng provided to Benitez, dated

February 9, 2001, indicates that Respondent owes Benitez funds

in excess of $8,473.

30. At all times material, Respondent has failed to remit

the funds due or otherwise account for said funds.

31. Around February of 2001, Th irza Neal (Neal), a

resident of Washington, D.C., engaged the services of KRI to

manage her property located at 114 Dornock Street, Davenport,

Florida.

32. Neal delivered a check for $1,000 to a Chris Turner

(Turner), who was an agent of KRI, for the "sta rt - up of utility

costs."

33. At some point, Neal decided not to engage the services

of KRI, and on March 12, 2001, Neal sent an e - mail to Turner, in

which she terminated the management contract and requested a

return of her deposit. The above e - mail cont ains an indication

that it was copied to the attention of Respondent.

34. On or about March 26, 2001, Neal sent a certified

letter to Respondent demanding a return of the deposit.

35. On or about March 28, 2001, Neal received a letter

from a gentleman by the name of B.C. Murphy, referencing her

letter to Turner, denying that the check had been deposited into

KRI's account and informing Neal that he had purchased KRI

during the previous year. Eventually, Neal determined that the

bank had inadvertently dep osited the check into KVH's account.

36. Neal made several attempts to contact Respondent

personally and through his attorney and received no response.

37. Neal was eventually able to obtain a reimbursement

from the bank. Respondent neither provided ass istance to Neal,

nor did he remit the funds on his own accord.

38. At some point later, Petitioner began an investigation

and David Guerdan (Guerdan) was assigned to investigate the

case. During the course of his investigation, Guerdan conducted

interv iews of the complaining witnesses and Respondent.

39. On or about September 26, 2001, Guerdan conducted an

interview of Respondent. During the course of the interview,

Respondent was unable to address the specifics of the

complaints. Respondent told Gue rdan that he was not involved in

the day - to - day operations of the business. He stated that his

wife and son actually ran the business and that they had "poor

accounting practices, overspent and ran out of the money."

During the interview, Respondent coul d not be specific as to the

amounts due each owner. Guerdan was unable to determine whether

Respondent paid the funds due to each owner.

CONCLUSIONS OF LAW

40. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter o f this cause

pursuant to Subsection 120.57(1) and Sections 120.569 and

120.60.

41. Revocation of license proceedings are penal in nature;

State ex. rel. Vining v. Florida Real Estate Commission , 281

So. 2d 487 (Fla. 1973), and must be construed strictly i n favor

of the one against whom the penalty would be imposed. Munch v.

Department of Professional Regulation, Division of Real Estate ,

592 So. 2d 1136 (Fla. 1st DCA 1992); Fleischman v. Department of

Professional Regulation , 441 So. 2d 1121 (Fla. 3d DCA 1 983).

42. The standard of proof required in this matter is that

relevant and material findings of fact must be supported by

clear and convincing evidence of record. Department of Banking

and Finance v. Osborne Stern & Company , 670 So. 2d 932 (Fla.

1996) . Petitioner has the burden of proving by clear and

convincing evidence the allegations in the Administrative

Complaint. Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987).

43. Subsections 475.25(1)(b) and (e), as it pertains to

the alleged facts in this matter reads in pertinent part:

(1) The commission may . . . suspend a

license, registration, or permit for a

period not exceeding 10 years; may revoke a

license, registration, or permit; may impose

an administrative fine not to exceed $1,000

for each cou nt or separate offense; . . .

if it finds that the licensee . . . .

(b) Has been guilty of fraud,

misrepresentation, concealment, false

promises, false pretenses, dishonest dealing

by trick, scheme, or device, culpable

negligence, or breach of trust in any

business transaction in this state or any

other state, nation, or territory; has

violated a duty imposed upon her or him by

law or by the terms of a listing contract,

written, oral, express, or implied, in a

real estate transaction; has aided,

assisted , or conspired with any other person

engaged in any such misconduct and in

furtherance thereof; or has formed an

intent, design, or scheme to engage in any

such misconduct and committed an overt act

in furtherance of such intent, design, or

scheme. It is immaterial to the guilt of

the licensee that the victim or intended

victim of the misconduct has sustained no

damage or loss; that the damage or loss has

been settled and paid after discovery of the

misconduct; or that such victim or intended

victim was a customer or a person in

confidential relation with the licensee or

was an identified member of the general

public.

* * *

(e) Has violated any of the provisions of

this chapter or any lawful order or rule

made or issued under the provisions of this

chapter or chapter 455. . . .

44. Section 475.5015 reads in pertinent part:

Brokerage business records. -- Each broker

shall keep and make available to the

department such books, accounts, and records

as will enable the department to determine

whether suc h broker is in compliance with

the provisions of this chapter. Each broker

shall preserve at least one legible copy of

all books, accounts, and records pertaining

to her or his real estate brokerage business

for at least 5 years from the date of

receipt of any money, fund, deposit, check,

or draft entrusted to the broker or, in the

event no funds are entrusted to the broker,

for at least 5 years from the date of

execution by any party of any listing

agreement, offer to purchase, rental

property management a greement, rental or

lease agreement, or any other written or

verbal agreement which engages the services

of the broker. If any brokerage record has

been the subject of or has served as

evidence for litigation, relevant books,

accounts, and records must be retained for

at least 2 years after the conclusion of the

civil action or the conclusion of any

appellate proceeding, whichever is later,

but in no case less than a total of 5 years

as set above. Disclosure documents required

under ss. 475.2755 and 475. 278 shall be

retained by the real estate licensee in all

transactions that result in a written

contract to purchase and sell real property.

45. Rule 61J2 - 14.012(1), Florida Administrative Code,

reads in pertinent part:

(1) A broker who receives a depo sit 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

depository in which said deposit is placed,

together with all agreements between the

parti es 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

deposited. All such books and accounts

shall be subject to inspection by the BPR or

its authorized representatives at all

reasonable times during regular business

hours.

46. A real estate licensee can be disciplined for a

violation of Subsection 475.25(1)(b) in his own personal

business affairs. La Rossa v. Department of Business and

Profe ssional Regulation , 474 So. 2d 322, 324 (Fla. 3d DCA 1985).

Under the above - referenced section, a licensee can be

disciplined for actions that are not broker activities as

defined by Section 475.01 because the Real Estate Commission

reserves the right to consider issues of character when

evaluating the fitness of a licensee to continue to practice.

See McKnight v. Florida Real Estate Commission , 202 So. 2d 199,

200 (Fla. 2d DCA 1967).

47. A real estate broker is responsible for the

misrepresentations an d negligence of his agents. See generally

Frailoli v. Bobby Bird Real Estate, Inc. , 630 So. 2d 1131, 1132

(Fla. 2d DCA 1993). See also Department of Business and

Professional Regulation v. Cooper , 1989 WL 644276 (DOAH

April 18, 1989) (holding allegation s attributable to

Respondent's agent/husband under agency theory). Here, although

it appears that Respondent tried to shift the blame to his wife

and son, even if this claim is credible, he would still be

liable under Subsection 475.25(1)(b) based on trad itional agency

principles.

48. Petitioner has presented clear and convincing

testimony and evidence that Respondent is guilty of culpable

negligence or breach of trust in a business transaction by

committing either gross negligence in conducting his busin ess

affairs or gross negligence in entrusting his affairs to his

wife and son.

49. The evidence is clear that Respondent's flagrant

violation of the standard of care resulted in harm to all three

complaining witnesses.

50. Respondent received clients' fu nds and possession of

real property and violated the trust given to him by failing to

supervise or otherwise operate diligently in his affairs. These

failures are further exemplified by his lack of diligence in

responding to Neal's requests for an account ing of the check

that was inadvertently deposited in KVH's account.

51. Petitioner has proved by clear and convincing evidence

that Respondent is guilty of failing to keep or maintain records

to enable Petitioner to determine whether Respondent is in

comp liance with Chapter 475.

52. After Petitioner's investigator interviewed

Respondent, it became clear that Respondent could not provide

Petitioner with an accounting regarding the disposition of

$60,000 in client trust funds.

53. Relative to the above - sta tutory prohibitions, the

Commission's disciplinary guidelines are codified in

Rules 61J2 - 24.001(2) and (3), Florida Administrative Code.

54. These rules provide that the usual penalty for a

breach of trust or culpable negligence is a $1,000 fine to a

one - year suspension.

55. For a violation of Section 475.5015 and Subsection

475.25(1)(e), the usual action is an eight - year suspension to

revocation.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that

1. The Florida Real Estate Commission issue a final order

finding Respondent guilty of violating Subsections 475.25(1)(a)

and (e) and Section 475.5015, as charged in the Administrative

Complaint; and

2. Impose a fine of $1,000 and suspend Respondent's

l icense for a period of two years and require Respondent to make

restitution to his former clients and complete a 45 - hour

salesperson's post - licensure course, as prescribed by the

Florida Real Estate Commission.

DONE AND ENTERED this 22nd day of August, 20 03, in

Tallahassee, Leon County, Florida.

S

DANIEL M. KILBRIDE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNC OM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 22nd day of August, 2003.

COPIES FURNISHED :

Christopher J. De Costa, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32801 - 1772

Brian John Wilkes

55 Pacific Close

Southampton, England SO143TY

Nancy P. Campiglia, Acting Director

Division of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street

Suite 802, North

Orlando, Florida 32801

Hardy L. Roberts, III, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

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.