03-001721 Department Of Business And Professional Regulation, Division Of Real Estate vs. Mallory Kauderer And New Riviera Realty, Inc. Status: Closed Recommended Order on Friday, November 21, 2003.

Summary: Pet. failed to prove violation of 475.42(1), 475.42(1)(i) or Rule 61J2-14.012(1); Counts I-II and IV-VIII should be dismissed. Rule 61J2-14.012(2), therefore 475.42(1)(e) were violated; Resp.to pay a fine of $100 and attend a program in escrow management.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 03 - 1721

)

MALLORY KAUDERER and NEW )

RIVIERA REALTY, INC., )

)

Respondents. )

__________________ _______________)

RECOMMENDED ORDER

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

on September 12, 2003, by video teleconference, with the parties

appearing in Miami, Florida, before Patricia Hart Malono, a

duly - designated Administrative Law Judge of the Division of

Administrative Hearings, who presided in Tallahassee, Florida.

APPEARANCES

For Petitioner: Alpheus C. Parsons, Esquire

Department of Business and

Professional Regulation

Hurston Building, North Tower, Suite N801

400 West Robinson Street

Orlando, Florida 32801

For Respondent: Arnaldo Velez, Esquire

35 Almeria Avenue

Coral Gables, Florida 33134

STATEMENT OF THE ISSUE

Whether the Respondents committed the violations alleged in

the Administrative Complaint dated February 19, 2003, and, if

so, the penalty that should be imposed.

PRELIMINARY STATEMENT

In an eight - cou nt Administrative Complaint dated

February 19, 2003, the Department of Business and Professional

Regulation, Division of Real Estate ("Division"), charged

Mallory Kauderer and New Riviera Realty, Inc. ("New Riviera

Realty"), with violations of Section 475. 25(1)(e), Florida

Statutes (2000). 1 Specifically, the Division charged

Mr. Kauderer and New Riviera Realty, in separate but identical

counts, with having operated as brokers without holding current

broker licenses, in violation of Section 475.42(1)(a), Fl orida

Statutes, and of Section 475.25(1)(e); with having obstructed or

hindered the enforcement of Chapter 475, Florida Statutes, or

the performance of the lawful duty of a person acting under the

authority of Chapter 475, in violation of Section 475.42(1) (i),

Florida Statutes, and of 475.25(1)(e); with having failed to

prepare written monthly escrow reconciliation statements, in

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

(3) and Section 475.25(1)(e); and with having failed to preserve

and make available to the Division all books, records, and

supporting documents and to keep an accurate account of all

trust fund transactions, in violation of Florida Administrative

Code Rule 61J2 - 14.012(1) and Section 475.25(1)(e).

The Administrative Co mplaint includes the following factual

allegations to support these charges:

6. From on or about December 14, 1999

through July 18, 2000, Respondents' real

estate licenses were involuntarily inactive.

7. On or about April 14, 2001, Respondents

conducted a real estate transaction. A copy

of the contract is attached hereto and

incorporated herein as Administrative

Complaint Exhibit 1. [ 2 ]

8. On or about April 30, 2001, Petitioner

attempted an audit of Respondents' records

and gave Respondents additional time to

prepare for a re - audit.

9. On or about September 11, 2001,

Petitioner attempted a re - audit, which

revealed Respondents did not perform the

required monthly escrow account

reconciliations. A copy of the audit is

attached hereto and incorporated h erein as

Administrative Complaint Exhibit 2. [ 3 ]

10. On or about September 11, 2001, Subject

failed or refused to provide broker records

to Petitioner's investigator.

Mr. Kauderer and New Riviera Realty timely disputed certain of

the material facts conta ined in the Administrative Complaint and

requested an administrative hearing. The Division forwarded the

matter to the Division of Administrative Hearings for assignment

of an administrative law judge.

Pursuant to notice, the final hearing was held on

Se ptember 12, 2003. At the hearing, the Division presented the

testimony of John Esposito, and Petitioner's Exhibits 1 through

9 were offered and received into evidence. Mr. Kauderer

testified in his own behalf, but did not offer any exhibits into

evidence .

The one - volume transcript of the proceedings was filed with

the Division of Administrative Hearings on September 17, 2003,

and the parties timely filed proposed findings of fact and

conclusions of law, which have been considered in the

preparation of thi s Recommended Order.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the

final hearing and on the entire record of this proceeding, the

following findings of fact are made:

1. The Division is the government licensing and regulato ry

agency with the responsibility and duty to investigate and

prosecute persons holding licenses and registrations as real

estate brokers and real estate broker corporations. See

§ 475.021, Fla. Stat. The Florida Real Estate Commission has

the authority to impose discipline on persons licensed pursuant

to Chapter 475, Part I, Florida Statutes. See § 475.25, Fla.

Stat.

2. Mr. Kauderer is, and was at all times material to this

proceeding, a licensed Florida real estate broker, having been

issued license n umber 592835 in accordance with Chapter 475,

Part I. The last license issued to Mr. Kauderer was as an

active broker at New Riviera Realty, Inc., 500 - 15th Street #1,

Miami Beach, Florida 33139.

3. New Riviera Realty is, and was at all times material to

this proceeding, a corporation registered as a Florida real

estate broker, having been issued registration number 1011414 in

accordance with Chapter 475. The last registration issued was

at the address of 500 - 15th Street #1, Miami Beach, Florida

33139.

4 . From April 1 through December 12, 1999, Mr. Kauderer's

real estate broker's license was involuntarily inactive due to

non - renewal; from December 13, 1999, through July 9, 2000, upon

the late renewal of his broker's license, Mr. Kauderer was an

inactive broker. Since July 10, 2000, Mr. Kauderer's real

estate broker's license has been active, and he has been

designated as qualifying broker and officer of New Riviera

Realty.

5. From January 1, 1999, through March 31, 1999, New

Riviera Realty was an active real estate broker corporation;

from April 1, 1999, through April 1, 2000, New Riviera Realty's

registration was involuntarily inactive due to non - renewal; on

April 2, 2000, New Riviera Realty's registration was cancelled

due to continued non - renewal and no qualified broker. New

Riviera Realty has been an active real estate broker corporation

since July 10, 2000, with Mr. Kauderer acting as the active

corporate broker/officer.

6. Mr. Kauderer's primary business is property

development, and he owns and op erates a number of businesses in

addition to New Riviera Realty.

7. Mr. Kauderer, as the qualifying broker, opened a

corporate escrow account in the name of New Riviera Realty on or

about February 1, 2000, with a deposit of $200.00.

8. On April 30, 2001, John Esposito, an investigator for

the Division, arrived unannounced at the offices of New Riviera

Realty to investigate a complaint that is not the subject of

this proceeding. Mr. Esposito also intended to conduct an audit

of New Riviera Realty's escrow account at the April 30, 2001.

9. After questioning Mr. Kauderer about matters unrelated

to this proceeding, Mr. Esposito told Mr. Kauderer that he

needed to look at all of the New Riviera Realty files in which

money was being held for disbursement to th ird parties,

including the contracts for the sale and purchase of property.

Mr. Esposito also asked for bank statements, checks, deposit

slips, and reconciliation statements for New Riviera Realty's

escrow account for the previous six months.

10. Mr. Kau derer did not provide Mr. Esposito with any

documents, files, or records on April 30, 2001. Rather,

Mr. Kauderer advised Mr. Esposito that all of New Riviera

Realty's records were kept by Mr. Kauderer's accountant and that

he would need to obtain the reco rds for Mr. Esposito's review at

a later time.

11. During Mr. Esposito's April 30, 2001, visit to

Mr. Kauderer's office, Mr. Kauderer told Mr. Esposito that he

had closed the New Riviera Realty escrow account on April 17,

2001, because New Riviera Realty' s real estate broker

corporation registration was inactive, and he advised

Mr. Esposito that he did not intend to re - open the escrow

account.

12. Mr. Kauderer also told Mr. Esposito on April 30, 2001,

that he had not prepared reconciliation statements for the New

Riviera Realty account. 4

13. Mr. Esposito told Mr. Kauderer that Mr. Kauderer

should obtain the records from his accountant and that he,

Mr. Esposito, would return within 30 days "to address all

issues." Mr. Esposito then questioned Mr. Kauderer about his

other businesses.

14. At some point after the April 30, 2001, visit,

Mr. Kauderer asked for an extension of time to gather the

relevant documents, and Mr. Esposito granted the request.

15. Mr. Esposito and Mr. Kauderer spoke several times on

t he telephone subsequent to April 30, 2001, and Mr. Esposito

reiterated during this time that he wanted Mr. Kauderer to

produce all files in which New Riviera Realty, as a real estate

broker corporation, was holding money in escrow for distribution

to third parties; bank statements for the escrow account;

deposit slips; and reconciliation statements. Mr. Esposito

originally requested these materials for the six months prior to

April 30, 2001, but he later told Mr. Kauderer to provide these

documents for the 12 months prior to April 30, 2001.

16. Mr. Kauderer obtained the documents that were in the

possession of his accountant, and he sent documents to

Mr. Esposito by facsimile transmittal on both August 10 and 13,

2001; Mr. Kauderer included in these docume nts bank statements

for the escrow account for year 2000 and for the period

extending from December 31, 2000, through April 17, 2001, as

well as a debit memo dated April 17, 2001, showing the closing

transaction on the New Riviera Realty escrow account. T he

transaction reflected on the debit memo was the deduction of

$35.61 from the account, which was the balance of the account at

the time it was closed.

17. At or about the time he sent the documents to

Mr. Esposito by facsimile transmittal, Mr. Kauderer notified

Mr. Esposito that he had prepared an envelope for Mr. Esposito

that Mr. Esposito could pick up at Mr. Kauderer's office. The

envelope contained documents that Mr. Esposito had requested for

the audit, including reconciled copies of the bank state ments

Mr. Kauderer had provided Mr. Esposito by facsimile transmittal.

Mr. Kauderer left the envelope with a member of his office

staff, with instructions to give the envelope to Mr. Esposito

whenever he came by the office.

18. Mr. Esposito showed up at Mr. Kauderer's office

without an appointment at around 9:00 a.m. on September 11,

2001. When he arrived, Mr. Esposito learned for the first time

of the attacks on the World Trade Center and the Pentagon.

19. Mr. Kauderer had an appointment at 10:00 a.m. outside

the office. Before leaving for his appointment, Mr. Kauderer

spoke with Mr. Esposito and told Mr. Esposito that one of his

staff had an envelope with the materials that Mr. Esposito had

requested for the New Riviera Realty audit.

20. Mr. Esposito spent approximately two hours at

Mr. Kauderer's office on September 11, 2001. He recalls that,

during the time he spent at Mr. Kauderer's office on

September 11, 2001, he reviewed two real estate contracts and

two cancelled $10,000.00 checks that Mr. Kau derer made available

to him that day.

21. One contract was a Contract for Sale and Purchase

dated February 7, 2000, that represents an offer by Regents Park

Property, Inc., to purchase real property from Carmen Contero

for $200,000.00.

22. Mr. Kauderer i s the owner of Regents Park Property,

Inc., and he prepared and signed the contract in his capacity as

the president of the corporate buyer.

23. The contract specifies an initial deposit of

$20,000.00, which Mr. Kauderer included because he thought such

a deposit would assure Ms. Contero that the offer was a bona

fide offer to purchase the property.

24. In addition to signing the contract as the President

of Regents Park Property, Inc., Mr. Kauderer signed the contract

as the "escrow agent" and included t he name of New Riviera

Realty under his signature. By signing as the "escrow agent,"

Mr. Kauderer affirmed that, on February 7, 2000, he received a

deposit on the contract of $20,000.00, which was to be deposited

in New Riviera Realty's escrow account.

25 . The bank account of Regents Park Property, Inc., was

maintained at the Ocean Park Bank in Miami Beach, Florida. New

Riviera Realty's escrow account was maintained at the same bank.

On or about February 7, 2000, Mr. Kauderer caused $20,000.00 to

be tra nsferred from the account of Regents Park Property, Inc.,

to the escrow account of New Riviera Realty.

26. Paragraphs 34 and 35 of the Contract for Sale and

Purchase, which are headed "Brokerage Fee" and "Brokers,"

respectively, were crossed out. Neither Mr. Kauderer nor New

Riviera Realty was to get a commission for the sale of the

property to Regents Park Property, Inc. On the part of the form

entitled Transaction Broker Notice, Mr. Kauderer disclosed on

the Transaction Broker Notice attached to the co ntract that "The

President of Regents Park Property, Inc., is a licensed real

estate broker."

27. The property that is the subject of the contract was

the house that Mr. Kauderer was renting and in which he resided

at the time. Mr. Kauderer prepared the contract because he had

been told by Ms. Contero's daughter that Ms. Contero might want

to sell the house and move in with her daughter. Mr. Kauderer

spoke informally with Ms. Contero before he presented the

contract to her, and she told him that her daug hter was

incorrect, that she did not want to sell the house. As a

result, Mr. Kauderer did not present the contract to

Ms. Contero.

28. Because Mr. Kauderer did not present the contract to

Ms. Contero, he returned the $20,000.00 deposit to Regents Park

P roperty, Inc. Mr. Kauderer wrote two $10,000.00 checks, one

dated March 18, 2000, and one dated March 23, 2000, drawn on the

New Riviera Realty escrow account.

29. The second contract that Mr. Esposito reviewed on

September 11, 2001, was a Contract for P urchase and Sale dated

February 28, 2000, that reflects an offer by Robert Gonzalez -

Sanchez to purchase a condominium unit from 1606 Jefferson

Associates, Inc., identified in the contract as the

Seller/Developer. The contract provided for a $1,000.00 depo sit

to be held by the Royal Title & Escrow Company, Inc.

30. The contract was signed by Mr. Gonzalez - Sanchez as

Buyer and by Mr. Kauderer as the President of 1606 Jefferson

Associates, Inc. A form Disclosure Notice to Purchaser

Concerning Closing Costs a nd Employment of Sales Representative

was attached to the contract, which was signed by Mr. Kauderer,

as President of 1606 Jefferson Associates, Inc., and by

Mr. Gonzalez - Sanchez and was dated March 3, 2000. Two other

addenda were attached to the Purchase and Sale Agreement, both

were signed by Mr. Gonzalez - Sanchez and by Mr. Kauderer, as

President of 1606 Jefferson Associates, Inc., and were dated

March 3, 2000. New Riviera Realty was not mentioned in the

contract and had nothing to do with the transacti on.

31. Mr. Kauderer closed New Riviera Realty's escrow

account on April 17, 2001, because the $200.00 with which he had

opened the account had been exhausted by fees. The only

activity that took place in the New Riviera Realty escrow

account, with the e xception of the assessment of monthly fees by

the bank, was the transfer of $20,000.00 from the account of

Regents Park Property, Inc., to the escrow account and the two

checks Mr. Kauderer wrote on the account returning the

$20,000.00 deposit to Regents P ark Property, Inc.

Summary

32. The evidence presented by the Division is not

sufficient to establish with the requisite degree of certainty

that either Mr. Kauderer or New Riviera Realty operated as a

broker without holding a current broker's license. T he Division

offered into evidence only two documents purporting to evidence

real estate transactions in which Mr. Kauderer and New Riviera

Realty operated as real estate brokers. One document was a

partially executed form Contract for Sales and Purchase t hat was

dated February 7, 2000; Mr. Kauderer signed the document in his

capacity as president of the purported Buyer, not in his

capacity as a real estate broker. This document was never

presented to the Seller, and, even if it had been, it is clear

on th e face of the document that neither Mr. Kauderer nor New

Riviera Realty was expecting a broker's fee or acting as a

broker in the transaction. Mr. Kauderer was acting as the

Buyer, and New Riviera Realty was acting solely as escrow agent

for the $20,000.0 0 deposit.

33. The document dated February 28, 2000, is a fully

executed contract for the sale and purchase of a condominium

apartment. Mr. Kauderer signed this document as the president

of 1606 Jefferson Associates, Inc., the Seller/Developer. New

Rivi era Realty was not mentioned anywhere in the document, and

Mr. Kauderer was not required to be licensed as a real estate

broker or salesperson to act on behalf of the Seller/Developer

as its president.

34. The evidence presented by the Division is not

suf ficient to establish with the requisite degree of certainty

that either Mr. Kauderer or New Riviera Realty obstructed or

hindered Mr. Esposito in carrying out the audit of New Riviera

Realty's escrow account. Although Mr. Kauderer did not have the

documen ts Mr. Esposito required at his office on April 30, 2001,

when Mr. Esposito arrived unannounced to conduct his audit,

Mr. Kauderer agreed to obtain the documents from his accountant

and provide them to Mr. Esposito, and Mr. Kauderer timely

provided bank st atements and deposit slips to Mr. Esposito for

the New Riviera Realty escrow account for the years 2000 and

2001 in facsimile transmittals in August 2001. These documents

were also made available for Mr. Esposito inspection on

September 11, 2001, at Mr. K auderer's office, together with two

contracts and the two checks drawn on New Riviera Realty's

escrow account.

35. The evidence presented by the Division is not

sufficient to establish with the requisite degree of certainty

that either Mr. Kauderer or New Riviera Realty failed to

preserve or make available to Mr. Esposito all of the records

and documents relating to New Riviera Realty's escrow account.

The activity in the escrow account was limited to the deposit

and subsequent withdrawal of the $20,000.0 0 that Mr. Kauderer

deposited in anticipation of presenting an offer to purchase

Ms. Contero's property in his capacity as President of Regents

Park Property, Inc. The signature card showing that the escrow

account was opened on or about February 1, 2000, bank statements

for 2000 and 2001, deposit slips, cancelled checks relating to

the account, and the debit memo establishing that the escrow

account was closed on April 17, 2001, were made available to

Mr. Esposito.

36. The evidence presented by the Divis ion is sufficient

to establish that Mr. Kauderer failed to keep monthly

reconciliation statements for the New Riviera Realty escrow

account.

CONCLUSIONS OF LAW

37. The Division of Administrative Hearings has

jurisdiction over the subject matter of this p roceeding and of

the parties thereto pursuant to Sections 120.569 and 120.57(1),

Florida Statutes (2003).

38. In its Administrative Complaint, the Division seeks to

impose penalties against Mr. Kauderer and New Riviera Realty

that include suspension or re vocation of Mr. Kauderer's license

and New Riviera Realty's registration and/or the imposition of

an administrative fine. Therefore, the Division has the burden

of proving by clear and convincing evidence that Mr. Kauderer

and New Riviera Realty committed the violations alleged in the

Administrative Complaint. See Department of Banking and

Finance, Division of Securities and Investor Protection v.

Osborne Stern and Co. , 670 So. 2d 932 (Fla. 1996); and Ferris v.

Turlington , 510 So. 2d 292 (Fla. 1987). Cle ar and convincing

evidence is the proper standard in license revocation

proceedings because they are penal in nature and implicate

significant property rights. See Osbourne Stern , 670 So. 2d

at 935.

39. In Evans Packing Co. v. Department of Agriculture a nd

Consumer Services , 550 So. 2d 112, 116, n. 5 (Fla. 1st DCA

1989), the court defined clear and convincing evidence as

follows:

[C]lear and convincing evidence

requires that the evidence must be found to

be credible; the facts to which the

witnesses testify must be distinctly

remembered; the evidence must be precise and

explicit and the witnesses must be lacking

in confusion as to the facts in issue. The

evidence must be of such weight that it

produces in the mind of the trier of fact

the firm belief of conviction, without

hesitancy, as to the truth of the

allegations sought to be established.

Slomowitz v. Walker , 429 So. 2d 797, 800

(Fla. 4th DCA 1983).

40. Judge Sharp, in her dissenting opinion in Walker v.

Florida Department of Business and Prof essional Regulation , 705

So. 2d 652, 655 (Fla. 5th DCA 1998)(Sharp, J., dissenting),

reviewed recent pronouncements on clear and convincing evidence:

Clear and convincing evidence requires more

proof than preponderance of evidence, but

less than beyond a r easonable doubt. In re

Inquiry Concerning a Judge re Graziano ,

696 So. 2d 744 (Fla. 1997). It is an

intermediate level of proof that entails

both qualitative and quantative [sic]

elements. In re Adoption of Baby E.A.W. ,

658 So. 2d 961, 967 (Fla. 1995 ), cert.

denied , 516 U.S. 1051, 116 S. Ct. 719, 133

L. Ed. 2d 672 (1996). The sum total of

evidence must be sufficient to convince the

trier of fact without any hesitancy. Id.

It must produce in the mind of the trier of

fact a firm belief or conviction as to the

truth of the allegations sought to be

established. Inquiry Concerning Davie , 645

So. 2d 398, 404 (Fla. 1994).

41. In Counts I through VIII of the Administrative

Complaint, Mr. Kauderer and New Riviera Realty are charged with

having violated Se ction 475.25(1)(e), Florida Statutes, 5 which

provides:

(1) The commission may deny an application

for licensure, registration, or permit, or

renewal thereof; may place a licensee,

registrant, or permittee on probation; 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 count or separate

offense; and may issue a reprimand, and any

or all of the foregoing, if it find s that

the licensee, registrant, permittee, or

applicant:

* * *

(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.

Counts I and V of the Administrative Complaint.

42. In Counts I and V of the Administrative Complaint, the

Division has charged that Mr. Kauderer and New Riviera Realty

are guilty of having violated Section 475.42(1)(a), Florida

Statutes, and, therefore, Section 475.25(1)(e), Florida

Statut es. Section 475.42(1)(a) provides in pertinent part that

"[a] person may not operate as a broker or sales associate

without being the holder of a valid and current active license

therefor."

43. A broker is defined in Section 475.01(1)(a), Florida

Statute s, as follows:

(a) "Broker" means a person who, for

another, and for a compensation or valuable

consideration directly or indirectly paid or

promised, expressly or impliedly, or with an

intent to collect or receive a compensation

or valuable consideration therefor,

appraises, auctions, sells, exchanges, buys,

rents, or offers, attempts or agrees to

appraise, auction, or negotiate the sale,

exchange, purchase, or rental of business

enterprises or business opportunities or any

real property or any interest i n or

concerning the same, including mineral

rights or leases, or who advertises or holds

out to the public by any oral or printed

solicitation or representation that she or

he is engaged in the business of appraising,

auctioning, buying, selling, exchangin g,

leasing, or renting business enterprises or

business opportunities or real property of

others or interests therein, including

mineral rights, or who takes any part in the

procuring of sellers, purchasers, lessors,

or lessees of business enterprises or

b usiness opportunities or the real property

of another, or leases, or interest therein,

including mineral rights, or who directs or

assists in the procuring of prospects or in

the negotiation or closing of any

transaction which does, or is calculated to,

re sult in a sale, exchange, or leasing

thereof, and who receives, expects, or is

promised any compensation or valuable

consideration, directly or indirectly

therefor; and all persons who advertise

rental property information or lists.

A broker renders a pro fessional service and

is a professional within the meaning of

s. 95.11(4)(a). Where the term "appraise"

or "appraising" appears in the definition of

the term "broker," it specifically excludes

those appraisal services which must be

performed only by a st ate - licensed or state -

certified appraiser, and those appraisal

services which may be performed by a

registered trainee appraiser as defined in

part II. The term "broker" also includes

any person who is a general partner,

officer, or director of a partners hip or

corporation which acts as a broker. The

term "broker" also includes any person or

entity who undertakes to list or sell one or

more timeshare periods per year in one or

more timeshare plans on behalf of any number

of persons, except as provided in

ss. 475.011 and 721.20.

44. Section 475.01(3), Florida Statutes, provides as

follows:

Wherever the word "operate" or "operating"

as a broker, broker - salesperson, or

salesperson appears in this chapter; in any

order, rule, or regulation of the

commissi on; in any pleading, indictment, or

information under this chapter; in any court

action or proceeding; or in any order or

judgment of a court, it shall be deemed to

mean the commission of one or more acts

described in this chapter as constituting or

defini ng a broker, broker - salesperson, or

salesperson, not including, however, any of

the exceptions stated therein. A single such

act is sufficient to bring a person within

the meaning of this chapter, and each act,

if prohibited herein, constitutes a separate

offense.

45. Based on the findings of fact herein, the Division has

failed to prove by clear and convincing evidence that either

Mr. Kauderer or New Riviera Realty operated as real estate

brokers with respect to the document dated February 7, 2000.

The real estate contract prepared by Mr. Kauderer was never

presented to Ms. Contera as an offer; Mr. Kauderer was not

acting "for another" when acting for Regents Park Property,

Inc.; and neither Mr. Kauderer nor New Riviera Realty expected

to receive any dir ect or indirect compensation as real estate

brokers had Regents Park Property, Inc., ultimately purchased

the property identified in the contract prepared by

Mr. Kauderer.

46. Section 475.011(2), Florida Statutes, provides for an

exemption from the requi rements of Chapter 475, Part I, Florida

Statutes, for

[a]ny individual, corporation, partnership,

trust, joint venture, or other entity which

sells, exchanges, or leases its own real

property; however, this exemption shall not

be available if and to the ex tent that an

agent, employee, or independent contractor

paid a commission or other compensation

strictly on a transactional basis is

employed to make sales, exchanges, or leases

to or with customers in the ordinary course

of an owner's business of selling,

exchanging, or leasing real property to the

public.

47. Based on the findings of fact herein, the Division has

also failed to prove by clear and convincing evidence that

Mr. Kauderer or New Riviera Realty operated as real estate

brokers with respect to the real estate contract dated

February 28, 2000. New Riviera Realty was not involved in any

way in the transaction, and Mr. Kauderer was acting as the

president of the Seller/Developer in the sale of a condominium

apartment owned by the Seller/Developer. Pursuant to

Section 475.011(2), Mr. Kauderer was, therefore, exempted from

the real estate broker licensure requirements when acting in

that capacity.

48. Because the Division has failed to carry its burden of

proving that either Mr. Kauderer or New Riv iera Realty operated

as brokers in violation of Section 475.42(1)(a), the Division

has failed to prove by clear and convincing evidence that

Mr. Kauderer and New Riviera Realty were guilty of violating

Section 475.25(1)(e) as alleged in Counts I and V of t he

Administrative Complaint. 6

Counts II and VI and Counts IV and VIII.

49. In Counts II and VI of the Administrative Complaint,

the Division has charged that Mr. Kauderer and New Riviera

Realty are guilty of having violated Section 475.42(1)(i),

Florida Statutes, and, therefore, Section 475.25(1)(e), Florida

Statutes. Section 475.42(1)(i) provides in pertinent part: "A

person may not obstruct or hinder in any manner the enforcement

of this chapter or the performance of any lawful duty by any

person acti ng under the authority of this chapter . . . ."

50. In Counts IV and VIII of the Administrative Complaint,

the Division has charged that Mr. Kauderer and New Riviera

Realty are guilty of having violated Florida Administrative Code

Rule 61J2 - 14.012(1) and, therefore, Section 475.25(1)(e),

Florida Statutes. Rule 61J2 - 14.012(1) provides that

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

depository 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 whe rein 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.

51. The charges in Counts II and IV and Counts IV and VII I

apparently relate to the factual allegation in paragraph 8 of

the Administrative Complaint that "[o]n or about April 30, 2001,

Petitioner attempted an audit of Respondents' records and gave

Respondents additional time to prepare for a re - audit," and to

t he factual allegation in paragraph 10 of the Administrative

Complaint that "[o]n or about September 11, 2001, Subject failed

or refused to provide broker records to Petitioner's

investigator."

52. Based on the findings of fact herein, the Division has

fai led to prove by clear and convincing evidence that

Mr. Kauderer and New Riviera Realty did not provide to

Mr. Esposito all of the documents he requested for the audit of

the New Riviera Realty escrow account, and, concomitantly, the

Division has failed to prove by clear and convincing evidence

that Mr. Kauderer and New Riviera Realty obstructed or hindered

Mr. Esposito in his performing the audit of New Riviera Realty's

escrow account. 7

Counts III and VII.

53. In Counts III and VII of the Administrative C omplaint,

the Division has charged that Mr. Kauderer and New Riviera

Realty are guilty of having violated Florida Administrative Code

Rule 61J2 - 14.02(2)and (3), and, therefore, Section 475.25(1)(e),

Florida Statutes. Rule 61J2 - 14.02 provides in pertinent part:

(2) Once monthly, a broker shall cause to

be made a written statement comparing the

broker'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 receive d, pending

and being held by the broker at any point in

time. The minimum information to be

included in the monthly statement -

reconciliation shall be the date the

reconciliation was undertaken, the date used

to reconcile the balances, the name of the

ban k(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 trust

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 - reconci liation.

(3) Whenever the trust liability and the

bank balances do not agree, the

reconciliation 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

accoun t(s). Whenever a trust bank account

record reflects a service charge or fee for

a non - sufficient 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 a nd the corrective action taken.

54. Based on the findings of fact herein, the Division has

proven by clear and convincing evidence that Mr. Kauderer, as

the qualifying broker and officer of New Riviera Realty, failed

to prepare monthly reconciliation st atements for New Riviera

Realty's escrow account, in violation of Rule 61J2 - 14.012(2) and

of Section 475.25(1)(e), Florida Statutes. 8

Recommended penalty.

55. Florida Administrative Code Rule 61J2 - 24.001 sets

forth disciplinary guidelines providing a ran ge of penalties

that the Florida Real Estate Commission ("Commission") can

impose on licensees who are guilty of having violated

Chapter 475, Florida Statutes. Rule 61J2 - 24.001(3)(f) sets

forth the range of penalties specified for a violation of

Section 4 75.25(1)(e) as follows: "The usual action of the

Commission shall be to impose a penalty from an 8 year

suspension to revocation and an administrative fine of $1,000."

56. It appears, however, that the Commission is given

discretion in Rule 61J2 - 24.001(3 )(f) to deviate from the range

of penalties provided for a violation of Section 475.25(1)(e),

which is understandable because that section applies broadly to

a violation of "any of the provisions of this chapter or any

lawful order or rule made or issued u nder the provisions of this

chapter or chapter 455." As exemplified by the violation in

this case, some violations of Section 475.25(1)(e) are

relatively minor and do not warrant imposition of the penalties

set forth in Rule 61J2 - 24.001(3)(f).

57. Guidan ce as to the appropriate penalty that should be

applied in this case is found in Florida Administrative Code

Rule 61J2 - 24.002, which permits the Commission to issue a

citation imposing a fine and other conditions by citation for

those violations "for which there is no substantial threat to

the public health, safety, and welfare." Based on the findings

of fact herein, no funds of persons unaffiliated with

Mr. Kauderer were ever deposited in the escrow account and no

persons unaffiliated with Mr. Kauderer we re ever entitled to a

disbursement from the escrow account. Mr. Kauderer has,

therefore, proven by clear and convincing evidence that his

failure to prepare reconciliation statements during the time the

New Riviera Realty escrow account was open did not r esult in, or

threaten, any public harm.

58. The fine and conditions that the Commission may impose

for a violation of Rule 61J2 - 14.012(2) are set forth in

Rule 61J2 - 24.002(hh), (ii), and (jj), which specify different

administrative fines to be imposed whe n a licensee "fails to

properly reconcile an escrow account" and require that the

licensee complete the "4 hour Instructional Program for Broker

Management of Escrow Accounts within 6 months of the citation

becoming a final order." The amount of the fine to be imposed

depends on whether the account is in balance and, if it is not

in balance, the degree to which it is out of balance.

59. In this case, there is no proof that New Riviera

Realty's escrow account was ever out of balance. In accordance

with Ru le 61J2 - 24.002(hh), the appropriate administrative fine

to be levied against Mr. Kauderer in this case is, therefore,

$100.00.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Florida Real Estate Co mmission

enter a final order:

1. Dismissing Counts I, II, and IV of the Administrative

Complaint against Mr. Kauderer;

2. Dismissing Counts V, VI, VII, and VIII of the

Administrative Complaint against New Riviera Realty;

3. Imposing an administrative fi ne against Mr. Kauderer in

the amount of $100.00; and

4. Requiring Mr. Kauderer to complete the four - hour

Instructional Program for Broker Management of Escrow Accounts

within six months of the entry of the Commission's final order.

DONE AND ENTERED this 21st day of November, 2003, in

Tallahassee, Leon County, Florida.

S

___________________________________

PATRICIA HART MALONO

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 Administrat ive Hearings

this 21st day of November, 2003.

ENDNOTES

1 / All references to the Florida Statutes herein shall be to the

2000 edition unless otherwise noted.

2 / Attached to the Administrative Complaint as Exhibit 1 are two

documents, one dated February 7, 2000, and one dated

February 28, 2000.

3 / Attached to the Administrative Complaint as Exhibit 2 is a

Division Office Inspection & Escrow/Trust Account Audit Form

dated April 30, 2001, in which it was noted that: "Broker to be

re - visited within 30 days to address all issues." Also included

as part of Exhibit 2 to the Administrative Complaint is a Debit

Memo issue d by Ocean Bank to New Riviera Realty and dated

April 17, 2001.

4 / A reconciliation statement is a written statement prepared by

a real estate broker to show the amount of money that has been

deposited into the brokerage's escrow account, the amount of

m oney that has been disbursed from the escrow account, and the

balance remaining in the escrow account at a specific point in

time.

5 / Counts I through IV relate solely to Mr. Kauderer and

Counts V through VIII relate solely to New Riviera Realty. The

co unts involving Mr. Kauderer and New Riviera Realty are,

however, identical, and each pair of counts will be treated as

one for purposes of discussion.

6 / Although the Division offered proof at the final hearing only

of purported real estate transactions evidenced by documents

dated February 7, 2000, and February 28, 2000, the

Administrative Complaint did not include factual allegations

relating to these documents. Rather, the only reference in the

Administrative Complaint to a real estate transaction was to one

that allegedly took place on April 14, 2001; the Division did

not, however, offer any proof at the final hearing to support

this factual allegation.

It is presumed that the allegation in paragraph 7 of the

Administrative Complaint is the resu lt of an oversight by the

Division because the documents dated February 7 and 28, 2000,

were attached as exhibits to the Administrative Complaint.

Because Mr. Kauderer and New Riviera Realty had notice that the

February 7 and 28, 2000, documents were at i ssue, the failure to

properly allege the factual basis for Counts I and V in the

Administrative Complaint did not prejudice their ability to

defend the charges. See Cottrill v. Department of Insurance ,

685 So. 2d 1371, 1372 (Fla. 1st DCA 1996)("Predicatin g

disciplinary action against a licensee on conduct never alleged

in an administrative complaint or some comparable pleading

violates the Administrative Procedure Act."); Werner v.

Department of Insurance , 689 So. 2d 1211, 1213 (Fla. 1st DCA

1997)("The rec ord affords not the slightest hint that Ms. Werner

was in any way embarrassed in the preparation of her defense to

the charges.")

7 / Mr. Esposito's testimony regarding his interactions with

Mr. Kauderer has been carefully considered, and Mr. Esposito's

t estimony that Mr. Kauderer failed to provide him with all

relevant documents relating to the New Riviera Realty escrow

account is rejected as unpersuasive and lacking in credibility.

Mr. Esposito's testimony regarding the documents he received

from Mr. Ka uderer is vague and contradictory, and he made

statements during his testimony that were inconsistent with the

exhibits presented by the Division. Mr. Esposito's testimony

evinces that his memory of the audit of New Riviera Realty's

escrow account is impr ecise and that he failed to understand the

explanations that Mr. Kauderer offered regarding the two

contracts for sale and purchase and the fact that New Riviera

Realty's escrow account had been used only once. In addition to

the lack of credibility of Mr . Esposito's testimony, it is noted

that the Division did not introduce into evidence all of the

documents sent to Mr. Esposito by facsimile transmittal in

August 2001; specifically, the Division introduced only one page

of a multi - page facsimile transmitt al from Mr. Kauderer to

Mr. Esposito on August 13, 2001. This further diminishes the

credibility of Mr. Esposito's testimony that Mr. Kauderer did

not provide him with any documents between April 30, 2001, and

September 11, 2001.

8 / Rule 61J2 - 14.012(3) merely describes the information that

must be included in the reconciliation statement when the trust

liability and the bank balances do not agree. Mr. Kauderer

could only violate this section of Rule 61J2 - 14.012 if he had

prepared reconciliation statemen ts and failed to include the

information specified in Rule 61J2 - 14.012(3) when warranted.

COPIES FURNISHED:

Alpheus C. Parsons, Esquire

Department of Business

and Professional Regulation

Hurston Building, North Tower, Suite N801

400 West Robinson Street

Orlando, Florida 32801

Arnaldo Velez, Esquire

35 Almeria Avenue

Coral Gables, Florida 33134

Nancy Campiglia, General Counsel

Department of Business

and Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

Jason Steele, Director

Division of Real Estate

Department of Business

and Professional Regulation

400 West Robinson Street, Suite 802 North

Orlando, Florida 32801

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.