03-002443 Kay Mcginn vs. Florida Elections Commission Status: Closed Recommended Order on Tuesday, January 13, 2004.

Summary: Respondent, Florida Elections Commission, failed to demonstrate that telephones used by Petitioner had a fair market value which required reporting as an "in kind" contribution.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KAY MCGINN, )

)

Petitioner, )

)

vs. ) Case No. 03 - 2443

)

FLORIDA ELECTIONS COMMISSION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, t he Division of Administrative

Hearings, by its duly - designated Administrative Law Judge,

Jeff B. Clark, held a final administrative hearing in this case

on September 5, 2003, in Pompano Beach, Florida.

APPEARANCES

For Petitioner: Stuart R. Michelson, Esq uire

Law Office of Stuart R. Michelson

200 Southeast 13th Street

Fort Lauderdale, Florida 33316

For Respondent: Eric M. Lipman, Esquire

Florida Elections Commission

Collins Building, Suite 224

107 West Gaines Street

Tallahassee, Florida 32399 - 1050

STATEMENT OF THE ISSUE

Whether Petitioner, Kay McGinn, willfully violated

Subsection 106.07(5), Florida S tatutes (2001), when she

certified the correctness of a campaign treasurer's report that

was incorrect, false, or incomplete because it failed to

disclose an in - kind contribution by Frank Furman for the use of

telephones used by Petitioner and her campaign volunteers in

offices that Mr. Furman owned.

PRELIMINARY STATEMENT

On May 30, 2003, Respondent, Florida Elections Commission,

entered an Order of Probable Cause finding "that there is

probable cause to charge the Respondent [Petitioner herein] with:

One count of violating Section 106.07(5), Florida Statutes,

prohibiting a candidate from certifying the correctness of a

campaign treasurer's report that is incorrect, false, or

incomplete."

In the Statement of Findings, which is incorporated by

reference in t he Order of Probable Cause, it is alleged:

4. Complainant alleged Respondent failed

to report the in - kind value of telephones

used in a campaign phone bank. Complainant

stated Respondent failed to list the name of

the person who made the in - kind contri bution

and the value of the contribution.

5. Specifically, Complainant alleged Frank

H. Furman contributed the use of his office

phones for approximately four weeks prior to

the election day of March 12, 2002.

Respondent and her campaign workers utili zed

Mr. Furman's telephones to promote

Respondent's re - election.

* * *

12. Commission staff obtained Mr. Furman's

actual telephone bills for the months of

January, February and March of 2002. The

cost for basic service for Mr. Furman

averaged $1,482.18 for those months. The

average daily rate was $49.41. The average

hourly rate(with the assumption that a day

consists of eight business hours) is $6.18.

Respondent utilized Mr. Furman's phones on

eight occasions for two hours on each

occasion for a total of 16 hours. Sixteen

hours at the hourly rate of $6.18 comes to a

total of $98.88 as a value of the in - kind

contribution given by Furman to Respondent's

campaign.

On June 25, 2003, Petitioner, Kay McGinn, responded to the

Order of Probable Ca use, by a Request for Formal Hearing Before

the Division of Administrative Hearings, denying that her actions

were willful, or reckless, asserting that the use of

Mr. Furman's telephones had no value, that she had relied on

Mr. Furman's assessment that t he use of his phones had no value,

and that Respondent's finding was inconsistent with common

practice and common sense.

On July 1, 2003, the case was forwarded to the Division of

Administrative Hearings. On July 2, 2003, an Initial Order was

sent to both parties. On July 15, 2003, the case was scheduled

for final hearing on September 5, 2003, in Pompano Beach,

Florida.

The case was presented as scheduled on September 5, 2003.

Petitioner testified on her own behalf and presented two

witnesses: Lonnie Ma ier, who was qualified as an expert witness

on phone services and marketing and sales of call centers and

phone banks, and Russell Klenet, who was qualified as an expert

witness on the use of telecommunications in political campaigns.

Petitioner offered t wo exhibits which were received into evidence

and marked Petitioner's Exhibits 1 and 2. Respondent called

Petitioner in its case and presented four additional witnesses:

Daniel Faust, Mary Chambers, Frank Furman, and Norman Ostrau, who

was qualified as an expert witness in Florida election law.

Respondent offered four exhibits which were received into

evidence and marked Respondent's Exhibits 1 through 4.

The parties jointly stipulated to extend the time for filing

proposed recommended orders until Decemb er 15, 2003. The two -

volume Transcript of Proceedings was filed with the Division of

Administrative Hearings on October 1, 2003. Both parties timely

filed Proposed Recommended Orders.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the

final hearing, the following findings of fact are made:

1. Petitioner is the Mayor of Pompano Beach, Florida. She

ran unsuccessfully for Pompano Beach City Commission in 1996.

Her campaigns for the same office in 1998, 2000, and 2002 were

succes sful. The alleged offense took place during the 2002

election campaign.

2. Petitioner is an intelligent, conscientious public

servant. She is familiar with the Florida election law and is

sensitive to her obligation to follow the law and diligent in

her attempt to do so.

3. During the 2002 campaign, Frank Furman, a long - time

Pompano Beach business man who enjoys an excellent reputation,

offered the use of his business offices to Petitioner for

campaign activities. Petitioner chose to use Furman's offic e on

six to eight occasions to make campaign - related local telephone

calls. Typically, Petitioner and five or six volunteers would

spend about one hour in the early evening calling Pompano Beach

voters encouraging them to vote for Petitioner.

4. Mindful of the election law requiring the reporting of

"in - kind" contributions, Petitioner asked Mr. Furman the value

of the use of his telephones for reporting purposes. Furman

advised Petitioner that the use of his telephones had "no

value."

5. In reporting "i n - kind" contributions, Petitioner's

practice was to ask the contributor to provide an invoice

reflecting the "fair market value" of the "in - kind"

contribution. Armed with the invoice, she would then report the

"in - kind" contribution.

6. "Fair market valu e" is an economic concept used most

frequently in reported Florida cases when referring to the value

of real property taken in condemnation actions or in determining

restitution in criminal cases. Numerous definitions are found.

Typically, the definition s involve "a willing buyer and a

willing seller, fully informed as to the value of the object of

the transaction, neither being under any compulsion to buy or

sell."

7. Respondent's Statement of Findings, which was analyzed

by Petitioner's expert witness, offers an amortized cost to

Mr. Furman for use by Petitioner and her volunteers of the

telephones. This amortized cost is apparently advanced as

evidence of "fair market value" or "attributable monetary

value." Mr. Furman pays a fixed - rate of slightly less than

$1,500.00 per month for the use of 32 to 33 telephone lines.

This means that each line costs approximately $46.87 per month.

Assuming 30 days per month, the daily cost per line is $1.56.

Assuming 24 - hour days, the hourly cost per line is $0.06 5.

Further assuming that six volunteers used one telephone for one

hour on eight different days, the result is 48 hours of line

use. The resulting amortized use cost, given the known use by

Petitioner and her campaign volunteers, is $3.12. Amortized use

cost is not fair market value.

8. Neither an "attributable monetary value" nor a "fair

market value" of Petitioner's use of Mr. Furman's telephones was

established. To the contrary, it was established that there was

no "market" for access to six to eigh t telephones for one hour,

one night per week. While it is assumed that Petitioner would

benefit from telephone calls made by her supporters, whether

made from their individual homes or from some group setting, the

evidence failed to established that Peti tioner's use of

Mr. Furman's telephones had any "attributable monetary value" or

"fair market value."

9. Given that the use of the telephones by Petitioner was

during non - working hours when the telephones would normally be

idle, it is not surprising that Mr. Furman advised Petitioner

that there was no cost associated with the use of his

telephones. His monthly telephone bill would be the same

whether Petitioner used his telephones or not. Nor is

Petitioner to be faulted for relying on the contributor's

assessment of the value of the "in - kind" contribution of the use

of the telephones.

10. The real value to Petitioner's campaign was the use of

Mr. Furman's office as a meeting place. As a practical matter,

each volunteer could have taken a list of the te lephone numbers

of Pompano Beach voters to their respective homes and made the

telephone calls from their homes.

11. This was not a professional "phone bank," sometimes

used in political campaigns where trained callers use scripted

messages designed to el icit voter preferences and where the

candidates receives "feed - back" on salient issues. A "fair

market value" can be easily established for such services as

they are common in the market place.

12. The evidence suggests that campaign volunteers making

te lephone calls to registered voters from their homes or from

someone's office is a common practice in political campaigns in

Florida. It is also suggested that this common practice is not

reported as a campaign contribution.

CONCLUSIONS OF LAW

10. The Div ision of Administrative Hearings has

jurisdiction over the parties and the subject matter in this

case. §§ 106.25(5), 120.57(1), and 120.569, Fla. Stat. (2003).

11. Respondent in its Order of Probable Cause asserts

"that there is probable cause to charge the Respondent

[Petitioner herein] with: One count of violating Section

106.07(5), Florida Statutes, prohibiting a candidate from

certifying the correctness of a campaign treasurer's report that

is incorrect, false, or incomplete."

12. Subsection 106.07 (5), Florida Statutes (2001), reads

as follows:

(5) The candidate and his or her campaign

treasurer, in the case of a candidate, or

the political committee chair and campaign

treasurer of the committee, in the case of a

political committee, shall certi fy as to the

correctness of each report; and each person

so certifying shall bear the responsibility

for the accuracy and veracity of each

report. Any campaign treasurer, candidate,

or political committee chair who willfully

certifies the correctness of a ny report

while knowing that such report is incorrect,

false, or incomplete commits a misdemeanor

of the first degree, punishable as provided

in s. 775.082 or s. 775.083.

13. Subsection 106.011(3)(a), Florida Statutes (2001),

reads as follows:

(3) "Contribution" means:

(a) A gift, subscription, conveyance,

deposit, loan, payment, or distribution of

money or anything of value, including

contri butions in kind having an attributable

monetary value in any form, made for the

purpose of influencing the results of an

election.

14. Section 106.055, Florida Statutes (2001), reads as

follows:

Valuation of in - kind contributions. -- Any

person who makes an in - kind contribution

shall, at the time of making such

contribution, place a value on such

contribution, which valuation shall be the

fair market value of such contribution.

15. Subsection 106.25(3), Florida Statutes (2001), reads

as follows:

(3) For the purposes of commission

jurisdiction, a violation shall mean the

willful performance of an act prohibited by

this chapter or chapter 104 or the willful

failure to perform an act required by this

chapter or chapter 104.

16. Section 106.37, Flo rida Statutes (2001), reads as

follows:

A person willfully violates a provision of

this chapter if the person commits an act

while knowing that, or showing reckless

disregard for whether, the act is prohibited

under this chapter, or does not commit an

ac t while knowing that, or showing reckless

disregard for whether, the act is required

under this chapter. A person knows that an

act is prohibited or required if the person

is aware of the provision of this chapter

which prohibits or requires the act,

unde rstands the meaning of that provision,

and performs the act that is prohibited or

fails to perform the act that is required.

A person shows reckless disregard for

whether an act is prohibited or required

under this chapter if the person wholly

disregards the law without making any

reasonable effort to determine whether the

act would constitute a violation of this

chapter.

17. Subsection 106.265(1), Florida Statutes (2001), reads

as follows:

(1) The commission is authorized upon the

finding of a viola tion of this chapter or

chapter 104 to impose civil penalties in the

form of fines not to exceed $1,000 per

count. In determining the amount of such

civil penalties, the commission shall

consider, among other mitigating and

aggravating circumstances:

( a) The gravity of the act or omission;

(b) Any previous history of similar acts

or omissions;

(c) The appropriateness of such penalty

to the financial resources of the person,

political committee, committee of continuous

existence, or political party; and

(d) Whether the person, political

committee, committee of continuous

existence, or political party has shown good

faith in attempting to comply with the

provisions of this chapter or chapter 104.

18. The burden of proof, absent a statutory directive to

the contrary, is on the party asserting the affirmative of the

issue in the proceeding. Respondent has the burden of proof.

Department of Banking and Finance v. Osborne Stern and Company ,

670. So. 2d 932, 934 (Fla. 1996); Department of Tran sportation

v. J.W.C. Company, Inc. , 396 So. 2d 778 (Fla. 1st DCA 1981); and

Balino v. Department of Health and Rehabilitative Services , 348

So. 2d 349 (Fla. 1st DCA 1977).

19. The standard of proof imposed on Respondent is to

establish the essential eleme nts of a violation by clear and

convincing evidence. Diaz de la Portilla v. Florida Elections

Commission , 857 So. 2d 913 (Fla. 3rd DCA 2003). Respondent must

establish by clear and convincing evidence that Petitioner

willfully violated the particular sta tute alleged.

20. As noted by the Florida Supreme Court:

[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

testimony must be precise and exp licit 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 mind

of the trier of fact a firm belief or

conviction, without hesitancy, as to the

truth of the allegations sought to b e

established.

In re Davey , 645 So. 2d 398, 404 (Fla. 1994), quoting Slomowitz

v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983).

21. Respondent has failed to demonstrate that Petitioner's

use of Mr. Furman's telephone had any "attributable monetary

value" or "fair market value." To the contrary, the evidence

clearly showed that there was no "market" for such use.

22. Respondent failed to demonstrate that Petitioner's

reliance on Mr. Furman's assessment that the use of his

telephones had no value constituted a willful violation or

reckless disregard of her reporting responsibilities under the

election law. Section 106.055, Florida Statutes, is the only

statutory reference to the valuation of in - kind contributions.

This provision clearly indicates that the contributor making the

in - kind contribution shall place a value on the contribution,

which valuation shall be at the fair market value of the

contribution.

23. Whether Petitioner has an affirmative duty to

investigate the fair market value of an "in - kind" contribution,

rather than rely on the valuation provided by the contributor as

suggested by Section 106.055, Florida Statutes, need not be

addressed in this case, as the evidence is persuasive that

valuation provided by the contributor was appr opriate under the

circumstances presented.

24. Respondent failed to demonstrate that Petitioner's

failure to include the use of Mr. Furman's telephones on her

campaign treasurer's report was done with the knowledge that in

so doing she was creating an in correct, false or incomplete

report. To the contrary, the evidence indicates that Petitioner

made a good faith effort to ascertain the attributable monetary

value of the use of Mr. Furman's telephones, relied on his

valuation, and concluded that the use o f the telephones under

the circumstances did not require reporting.

RECOMMENDATION

Based upon the foregoing Findings of Facts and Conclusions

of Law, it is

RECOMMENDED that the Florida Elections Commission enter a

final order finding that Petitioner, Kay McGinn, did not violate

Subsection 106.07(5), Florida Statutes, as alleged, and

dismissing the Order of Probable Cause.

DONE AND ENTERED this 13th day of January, 2004, in

Tallahassee, Leon County, Florida.

S

JEFF B. CL ARK

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

Divisi on of Administrative Hearings

this 13th day of January, 2004.

COPIES FURNISHED :

Eric M. Lipman, Esquire

Florida Elections Commission

Collins Building, Suite 224

107 West Gaines Street

Tallahassee, Florida 32399 - 1050

Stuart R. Michelson, Esquire

Law Of fice of Stuart R. Michelson

200 Southeast 13th Street

Fort Lauderdale, Florida 33316

Barbara M. Linthicum, Executive Director

Florida Elections Commission

The Collins Building, Suite 224

Tallahassee, Florida 32399 - 1050

Patsy Rushing, Clerk

Florida Elec tions Commission

The Collins Building, Suite 224

Tallahassee, Florida 32399 - 1050

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 thi s Recommended Order should be filed with the agency that

will issue the Final Order in this case.