05-002107 Marcus Douglas Hester vs. Department Of Financial Services, Office Of Financial Regulation Status: Closed Recommended Order on Friday, November 4, 2005.

Summary: The evidence did not show that Petitioner had rehabilitated himself sufficient for licensure since the evidence showed a long-time history of avoiding discovery of true facts of his past.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARCUS DOUGLAS HESTER, )

)

Petitioner, )

)

vs. ) Case No. 05-2107

)

DEPARTMENT OF FINANCIAL )

SERVICES, OFFICE OF FINANCIAL )

REGULATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was

held in this case before Diane Cleavinger, Administrative Law

Judge of the Division of Administrative Hearings, on August 3,

2005, in Tallahassee, Florida.

APPEARANCES

For Petitioner: C. Scott Hester, Esquire

13843 Longs Landing Road, East

Jacksonville, Florida 32225

For Respondent: Robert H. Schott, Esquire

Gregg Morton, Esquire

Department of Financial Services

Office of Financial Regulation

200 East Gaines Street, Suite 526

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue in this case is whether the Petitioner’s

application for licensure as a mortgage broker should be

approved.

PRELIMINARY STATEMENT

On or about April 18, 2005, Respondent, the Office of

Financial Regulation (Office), issued a denial letter denying

Petitioner, Dr. Marcus Douglas Hester’s application for

licensure as a mortgage broker in the State of Florida, based on

Sections 494.0041(1)(f) and 494.0041(2)(c) ( material

misstatement on an application ), (g), (i), and (q), Florida

Statutes.

Petitioner disputed the Office’s denial and filed a timely

request for a formal administrative hearing. Respondent

referred the matter to the Division of Administrative Hearings.

Prior to the hearing, Respondent moved to amend the Denial

Letter to include additional grounds for denial under Section

494.0041(2)(d), Florida Statutes, which deals with the

disbursement of funds from the Real Estate Recovery Fund, and

for further misstatements made by Petitioner. The motion was

granted.

At the hearing, Petitioner testified on his own behalf and

presented the testimony of one witness. Additionally,

Petitioner offered 22 exhibits into evidence. Respondent

presented the testimony of one witness and offered 25 exhibits

in evidence, including Respondent’s Exhibits numbered 21, 22 and

24, consisting of the depositions of Leonard Schoenfeld,

Johannes Fruhwirt, and Petitioner.

After the hearing, Petitioner filed a Proposed Recommended

Order on September 12, 2005. Respondent filed a Proposed

Recommended Order on September 9, 2005.

FINDINGS OF FACT

1. Petitioner resides in Riverwoods, Illinois. He has

four children, and is married to Sharon Wheat-Hester.

2. Petitioner received his undergraduate degree from Wake

Forest University in North Carolina. Petitioner also received a

master’s degree and doctorate degree in theology from Share-A-

Prayer and Word Theological School in Whitewater, Wisconsin.

3. Petitioner is currently employed as the director of a

ministry called Marketplace Movement Network. The ministry

provides advice to businesses on Chritian business ethics. In

that regard, Petitioner has published one book on the subject of

Christian ethics in business.

4. Petitioner is also the President and shareholder of

Hester International, Inc., a Florida Corporation that since

1995, provides mortgage brokerage services in the State of

Illinois and several other states. The corporation’s principal

office is located in Illinois. The business has an established

client list and referral list. Additionally, Petitioner is

currently licensed as a mortgage broker in the Illinois,

California, North Carolina and Hawaii. He has not had any

disciplinary action taken against him in those states.

5. On January 25, 1996, prior to the present license

application at issue here, Petitioner sought licensure as a

mortgage broker in Florida with the Florida Department of

Banking and Finance, Respondent’s predecessor agency.

6. On the 1996 application Petitioner answered “no” to a

question that asked whether he had ever had a license revoked.

7. Petitioner’s 1996 application was denied for a material

misrepresentation or omission. Petitioner did not challenge the

1996 denial.

8. On February 16, 2004, also prior to the present

application, Petitioner again applied for a mortgage broker

license. On this application, question number six asked:

Have you had a license, or the equivalent,

to practice any profession or occupation

denied, revoked, suspended, or otherwise

acted against which involved fraud,

dishonest dealing, or any other act of moral

turpitude? Yes__ No__

A “Yes” answer to question six required the

applicant to attach details, provide a copy of allegations, and

also supply documentation of the final disposition of the case.

9. In response to question number six, Petitioner appeared

“yes.” On the second page of the application, Petitioner

explained his answer to question number six, stating that he had

had a real estate license ten years ago and that he had been

involved with a dispute for $2,500 and lost the case. The

explanation further stated that Petitioner was moving to

Illinois at the time, so he voluntarily surrendered his license.

10. On April 1, 2004, without investigating the facts to

refresh his memory, Petitioner provided the requested signed

letter of explanation. Subsequently, he withdrew his February

application because he did not have time to deal with the ongoing

questions the agency had regarding his application.

11. Around July 13, 2004, after discussing the February

2004 application with Respondent, Petitioner submitted a revised

Application for Licensure as a Mortgage Broker in the State of

Florida. In response to question six, Petitioner marked “no”

based on his memory that his real estate agent’s license had

been “voluntarily surrendered.” Petitioner also submitted

character reference letters. Additionally, Petitioner discussed

with Respondent any proof of rehabilitation since the “voluntary

surrender” of his real estate license.

12. On page two of the July application, Petitioner wrote

that his “only blemish” was a voluntary surrender of a real

estate license in 1992. Petitioner stated, “[t]his was ‘ not ’ an

act of moral turpitude or fraud.”

13. In a deficiency letter dated July 28, 2004, the Office

requested additional information from the Petitioner, including

a signed statement explaining his side of the occurrence. On

September 30, 2004, the Office received the same statement the

Petitioner had previously forwarded to the Office for his

February 2004 application . Petitioner again did not avail

himself of the opportunity to discover the true facts surrounding

the claimed surrender of his license.

14. In the second paragraph of this explanatory letter

Petitioner stated that the disciplinary action that led to

surrender of his real estate license arose out of a transaction

involving one of his customers who rented property to a third-

party renter. Petitioner stated that the rental transaction

between his customer and the third-party renter occurred in the

lobby of Petitioner’s office without his knowledge or help.

15. According to Petitioner’s, somewhat confusing,

explanatory letter, the customer did not have the right to rent

the house, but collected $2,500 from the renter and then left

the state. Later, Petitioner discovered that the customer had

closed in escrow and gained temporary occupancy of the home,

thereby enabling the customer to ostensibly rent the home.

16. Petitioner further explained that the renter sued him

for the $2,500 and prevailed because the transaction took place

in Petitioner’s lobby. Petitioner stated he lost the case

because his attorney, Scott Hester (also his brother), was

unavailable to make the closing argument and Petitioner had to

do his own summation. In fact, Petitioner’s brother never

represented Petitioner in the renter’s case because he did not

have time to undertake the case. Petitioner did not supply the

names of the people referenced in the letter because he did not

remember them. As will be seen, at the time of the explanatory

letter, Petitioner’s memory of the facts surrounding his license

surrender is, at best, faulty.

17. On April 19, 2005, the Office issued its Denial

Letter, denying Petitioner’s application for licensure as a

mortgage broker. As grounds for denial under Section

stated in relevant part:

The Office’s background investigation and

information you provided revealed the

following:

(a) You answered Question #6 on your

application as “no”, when it asks if you

have had a license, or the equivalent, to

practice any profession or occupation

denied, revoked, suspended, or otherwise

acted against which involved fraud,

dishonest dealing, or any other act of moral

turpitude.

(b) On or about May 7, 1996, the Florida

Department of Banking and Finance, Division

of Finance, denied your application for a

license as a mortgage broker for making a

material misstatement of fact on their

application.

(c) On or about December 8, 1992, after the

State of Florida, Department of Professional

Regulation, Division of Real Estate

conducted an investigation, you surrendered

your license with that agency and entered

into a written agreement stating that you

agreed to have your license revoked.

Accordingly, the Real Estate Commission did

revoke your license in their meeting of

January 19, 1993 effective December 8, 1992.

(d) The Investigative Report attached to

the Final Order to revoke reveals that you

were sued for dishonest conduct and

subsequently, on March 25, 1992, ordered to

pay Johannes Fruhwirt $7,800 plus post-

judgment interest. This order was by the

County Court of Broward County as a result

of a Final Judgment, Case #9103333 CC53 and

a Writ of Execution. The investigation

revealed that Hester left the State of

Florida without leaving word of his

whereabouts. Apparently, that judgment was

never satisfied.

(e) On May 14, 1991 you promised to pay

$3000 to Leonard Schoenfeld when closing

occurred on a home Mr. Schoenfeld was

purchasing. Closing occurred shortly

afterward, and you have never made that

payment.

(f) On or about July 17, 1995, the State of

Illinois received an Application Form to

Operate as a Residential Mortgage Licensee

in the name of Hester International, Inc. on

which you were listed as 50% owner. You

signed the “Verification” portion of that

form and your signature was notarized on

June 20, 1995 indicating that you verified

as being true all data entered onto that

form. However, you responded “N/A” to Part

III, Question #10 which asks that you list

all licenses which you or your firm have

applied for and been denied and/or any and

all licenses issued to you or your firm

which were subsequently suspended or

revoked. You therefore failed to disclose

the revocation of your license with the

Florida Division of Real Estate that

occurred in 1992.

(g) On the same application filed with the

State of Illinois, in response to Part III,

question 19(m), you did not disclose that a

judgment had been entered against you on

grounds of fraud, misrepresentation, or

deceit.

(h) The renewal for Hester International

Inc., with the State of Illinois, states

under the section labeled, “Averment of

License” in item “s” that the licensee will

advise the Commissioner in writing of any

changes to the information submitted on the

most recent application for license within

30 days of said change. The State of

Illinois reports that you never disclosed

the denial of a mortgage broker license in

1996 with the State of Florida

.

(i) On November 18, 2004 in an electronic

filing for corporation reinstatement for

Hester International, Inc., you certified

that as Registered Agent you maintained an

office at 6278 N. Federal Highway, Suite

#305 in Ft. Lauderdale, Florida. In fact,

that address is a mail drop leased to one

Carl Thames, CPA. The signage required by

Section 48.091(2), Florida Statutes, does

not appear, and you and Hester

International, Inc. are unknown at this

location.

18. In pre-hearing interrogatories, the Office asked

Petitioner to provide more information about the transaction

involving the transaction that had led to the revocation of his

real estate license, including the identity of those

individuals. Even though the importance of accuracy was

apparent since Petitioner was now in litigation, Petitioner,

again, without investigating the facts and relying solely on his

improving memory answered the interrogatories posed to him.

19 . In his answers, Petitioner identified the “customer”

who had collected the money as Leonard Schoenfeld and the

“renter” as Johannes Fruhwirt .

20. Petitioner went on, in his answers, to describe the

transaction with Mr. Schoenfeld and Mr. Fruhwirt. This

description is similar to the explanation offered in the

explanatory letters supplied for his earlier applications.

21. In his response to Requests for Admissions, Petitioner

denied that in May of 1991 he acted as a real estate broker in

the auction of a home located at 14884 Equestrian Way in

Wellington, Palm Beach County, Florida, and that he had been

unable to deliver a mortgage at an agreed interest rate.

Petitioner also denied that he had agreed to pay $3,000 for

closing costs as deferred interest payments.

22. Despite these denials, Petitioner admitted that he had

signed an agreement to pay $3,000 to Mr. Schoenfeld. Petitioner

explained these denials by claiming that these funds were never

due because the agreement to pay $3,000 was contingent on

closing. Since the real estate deal never closed, the $3,000

was never due.

23. At his July 15, 2005, deposition, Petitioner

essentially reaffirmed the inaccurate account of events in his

interrogatory answers. At the deposition, Petitioner was asked

to review documents related to the Schoenfeld transaction.

Those documents included: (1) a copy of the May 14, 1991,

agreement wherein he agreed to pay Mr. Schoenfeld $3,000, (2) a

handwritten letter wherein he agreed to pay Mr. Schoenfeld the

money that he owed him, and (3) a warranty deed on property

purchased by Mr. Schoenfeld. When he was shown the May 14,

1991, agreement, Respondent testified that he did not know why

he would have agreed to pay Mr. Schoenfeld $3,000. Even when he

was shown the deed on the property and even though he had

notarized the signatures on that deed, Petitioner maintained

that the deal never closed and he never owed the $3000.

At hearing, Petitioner’s various and growing explanations during

discovery significantly differ from his testimony. Petitioner

testified that throughout his various explanations he had

confused and combined several individuals into one transaction.

Even though he knew that the true facts of these transactions

were important to consideration of his application and in

answering discovery in this case, Petitioner did not make any

real attempt to refresh his memory of these transactions until

shortly before the hearing. In fact, the Schoenfeld and

Fruhwirt transactions involved different real estate deals and

had nothing to do with each other.

24. The Schoenfeld transaction occurred in 1991 and

involved the sale of real property located at 14884 Equestrian

Way in Wellington, Florida. Mr. Schoenfeld was Petitioner’s

customer. As part of the transaction, Petitioner guaranteed he

could get a mortgage at a certain rate. After failing to get

Mr. Schoenfeld a mortgage at a certain rate, Petitioner agreed

to pay Mr. Schoenfeld $3,000 upon closing.

25. When Petitioner failed to pay Mr. Schoenfeld the

$3,000 on closing, he asked Mr. Schoenfeld if he could make

payments of $200 a month. In a letter to Mr.Schoenfeld,

Petitioner confirmed that he would pay Mr. Schoenfeld the amount

that was owed. Petitioner made two payments and then stopped

making payments.

26. In a letter dated July 1, 1991, Mr. Schoenfeld

complained about his dealings with Petitioner to the Division of

Real Estate. A few days before Mr. Schoenfeld’s deposition on

July 25, 2005, Petitioner paid Mr. Schoenfeld $2,600.

Mr. Schoenfeld accepted the payment since the money was still

owed to him. However, the payment had been delayed for 14 years

and did not include interest for those years. Petitioner

testified that he made the payment because, once he remembered

the details of the transaction, he felt morally obligated to pay

Mr. Schoenfeld what he had promised. However, fulfillment of

this obligation also occurred with this litigation pending and

after denials that any money was due Mr. Schoenfeld. In short,

Petitioner did not pay Mr. Schoenfeld the money that was due him

for 14 years until Petitioner was forced to acknowledge the true

facts of the Schoenfeld transaction in this litigation.

27. The Fruhwirt transaction involved a man named Mark

Ritter who was a client of Petitioner. Mr. Fruhwirt met with

Mark Ritter at a house he wanted to rent. Eventually,

Mr. Ritter sent him to Petitioner to complete a lease agreement.

Mr. Ritter did not know about leases and said Petitioner was a

friend whose real estate office could set up the lease contract.

28. Mr. Fruhwirt met Petitioner at his real estate office.

Since it was lunchtime, they went to a nearby Burger King to

finalize the lease. While at Burger King, Mr. Fruhwirt paid

Petitioner $2,850 on the lease.

29. Petitioner’s testified that he did not receive any

money from Mr. Fruhwirt and did not accompany Mr. Fruhwirt to

Burger King. Petitioner testified that Mr. Ritter and

Mr. Fruhwirt met in his lobby and both went to Burger King to

finalize the lease arrangement. However, given Petitioner’s

past faulty memory, Petitioner’s testimony is not credible.

30. At some point, Mr. Fruhwirt moved into the house.

Subsequently, Mr. Fruhwirt received a letter from an attorney

representing the real owner demanding that he vacate the

premises. Mr. Fruhwirt then discovered that Mr. Ritter was not

the owner and had to hire an attorney to sort out his continued

occupancy of the property. Eventually Mr. Fruwhirt bought this

property.

31. Mr. Fruhwirt sued Petitioner and the real estate

office for the recovery of the $2,850 he had paid to rent the

house. Petitioner was found liable, but the real estate office

was found not liable because the transaction happened off its

premises at Burger King.

32. On March 25, 1992, the Broward County Court entered a

judgment of $7,800 against Petitioner, finding that Petitioner

had “breached his duty to disclose that Mark Ritter was not the

owner of the involved property.” After Mr. Fruhwirt obtained

the judgment, Petitioner declared bankruptcy.

33. Mr. Fruhwirt pursued an adversary action in

Petitioner’s bankruptcy proceedings. Subsequently, the

Bankruptcy Court cited “11 U.S.C. 523 A(2) and 11 U.S.C. 523

A(4)” and refused to discharge the judgment debt.

34. The Bankruptcy Court’s Order refusing to discharge the

debt clearly conflicts with Dr. Hester’s repeated implications

and statements that this debt was discharged in bankruptcy.

35. Unable to collect from Petitioner, Mr. Fruhwirt filed

with the Florida Real Estate Recovery Fund. The fund paid

$2,850 to Mr. Fruhwirt and suspended Petitioner’s license.

Mr. Fruhwirt used the money to defray some of his legal

expenses. To date, Petitioner has not paid Mr. Fruhwirt any

money on the judgment.

36. The Fruwhirt transaction led to the revocation of

Petitioner’s real estate license and, on January 19, 1993, the

Florida Real Estate Commission entered a final order revoking

Petitioner’s real estate license.

37. Despite Petitioner’s testimony that he never received

a copy of the documents, the certificate of service for the

final order indicates it was sent to Petitioner at 1101 Hidden

Cove, Salem, SC 29676, which was the address where Petitioner

was living at that time. Again, Petitioner’s testimony is not

credible.

38. The Final Order referenced a December 8, 1992,

agreement in which Petitioner agreed that his license would be

revoked. In the December 8, 1992 agreement, entitled “Affidavit

for the Voluntary Surrender of License, Registration,

Certificate/Permit for Revocation,” signed by Petitioner, he

agreed to the revocation of his license and to not apply for a

new real estate license for ten years from the effective date of

revocation. In particular, the December 8, 1992 agreement

stated, “[t]he effective date of the revocation shall be upon

signing this document.”

39. Notwithstanding the clear language revoking the

license, at the hearing, Petitioner maintained that because he

had voluntarily surrendered his license, he did not believe his

license had been revoked. In referring to the agreement he had

signed, he testified that the agreement said, “that my license

will be inactive, not revoked” and denied ever seeing the other

documents revoking his license. This testimony is simply not

credible and demonstrates Petitioner’s propensity to see or

remember things in a way that is more flattering to him,

irrespective of reality. The affidavit signed by Petitioner

clearly stated that Petitioner’s license would be and was revoked

upon signing.

40. In 1995, Hester International applied to operate as a

residential mortgage licensee in Illinois .

41. The application identified Petitioner as the vice

president and Sharon Hester as the president .

42. Page one of the application indicated the application

had to be executed “by two officers or all directors if the

applicant/licensee is a corporation.” The application was

signed by Petitioner and his wife . Petitioner did not disclose

to Illinois that a judgment had been entered against him in

Florida or that his real estate license had been revoked or

suspended.

43. Question 10 in Part III of the Application asked:

“LIST ALL LICENSES WHICH YOU OR YOUR FIRM HAVE APPLIED FOR AND

BEEN DENIED AND/OR ANY AND ALL LICENSES ISSUED TO YOU OR YOUR

FIRM WHICH WERE SUBSEQUENTLY SUSPENDED OR REVOKED.” Petitioner

responded “N/A.” ( Id. ).

44. Question 19(m) in Part III of the Application asked:

UNDER PENALTY OF PERJURY, I(WE) STATE THAT ALL OF THE

FOREGOING IS TRUE AND CORRECT TO THE BEST OF MY (OUR)

KNOWLEDGE AND FURTHER STATE THAT AS THE

APPLICANT/LICENSEE:

. . .

(m) Has not committed a crime against the

law of this State, any other state or the

United States, involving moral turpitude,

fraudulent or dishonest dealing, and that no

final judgment has been entered against it

in a civil action upon grounds of fraud,

misrepresentation or deceit which has not

previously been reported to the

Commissioner.

45. The evidence did not demonstrate that the emphasized

clauses in question 10 or the “I(WE)” in 19(m) direct such

questions to individuals signing the application. One

reasonable interpretation of the language is that the questions

are directed to the business entity applying for the license.

In short, the I(WE) language is simply language in a form meant

to cover multiple types of business entities ranging from sale

proprietorships to corporations. Therefore, Petitioner was not

required by Illinois to disclose matters which involved him

personally. To date, Illinois has not filed any disciplinary

action against Petitioner or Hester International. Thus, the

failure to disclose personal judgments or license actions to

Illinois in a corporate application for licensure does not

support a finding of dishonesty or denial of Respondent’s

application at issue here.

46. At some point, Hester International’s corporate status

had to be reinstated in Florida. Petitioner reinstated the

company’s corporate status in November of 2004. Petitioner filed

as registered agent at 6278 North Federal Highway #305, Fort

Lauderdale, Florida. Petitioner had not lived at this address

for some 15 years, but had lived there for seven years with his

girlfriend. The evidence showed that Petitioner simply forgot

to change the registered agent’s address and was not acting

dishonestly. Once he discovered his mistake, Petitioner amended

his filing to reflect the appropriate address. Again, these

facts do not form a basis to deny Petitioner’s license

application.

47. Finally, Petitioner testified that until Spring 2005,

he and his wife were 50/50 owners of Hester International, Inc.,

as reflected on the application and license renewals in

Illinois. In September 2004, Ms. Hester submitted Hester

International, Inc.’s application for Florida licensure as a

mortgage broker business. The Hester International business

application was submitted after the Office had denied

Petitioner’s license application in 1996 and was scrutinizing

his July 2004 application.

48. In the application, Ms. Hester identified herself as

100 percent owner of the Hester International. Petitioner did

review this application, but he intentionally did not take part

in its filing. The purported change in ownership was not

adequately explained at hearing and appears to have been done in

order to forestall any problems with licensure of the

corporation due to Petitioner’s participation in the

corporation. While the change of ownership is troubling, given

Petitioner’s history, and also adds to the evidence that

Petitioner is less than forthright in his memory and past

business dealings, the change of ownership for the corporation’s

licensure application does not, by itself, support a denial of

Petitioner’s application.

49. On the other hand, too many inconsistencies exist

between Petitioner’s hearing testimony and his earlier accounts

to conclude that Respondent can be trusted to hold a mortgage

brokerage license. At worst, the evidence shows that Petitioner

is not truthful or acts with integrity. At best, the evidence

shows that Respondent has the ability to convince himself of

facts that do not quite fit the truth, but are more flattering

to him. Under either scenario, Petitioner’s appreciation of

honesty, truthfulness and integrity are suspect. Neither

Petitioner’s letters supporting his good character, nor his

success in his ministry demonstrates sufficient rehabilitation

to overcome what appears to be long-time evasive behavior.

Therefore, Petitioner’s application for licensure as a mortgage

broker should be denied.

CONCLUSIONS OF LAW

50. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter of this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2005).

51. The Office is the agency in the State of Florida

responsible for administration and enforcement of Chapter 494,

Florida Statutes, which includes determining the fitness of

applicants who seek to engage in the occupation of mortgage

brokering.

52. Section 494.0041(1)(f), Florida Statutes, authorizes

the Office to deny an application for a mortgage broker license

when an applicant has violated any provision of Section

494.0041(2), Florida Statutes.

53. Section 494.0041(2), Florida Statutes, states, in

relevant part:

Each of the following acts constitutes a

ground for which the disciplinary actions

specified in subsection (1) may be taken :

* * *

(c) material misstatement of fact on an

initial or renewal application.

(d) Disbursement, or an act which has

caused or will cause disbursement, to any

person in any amount from the Regulatory

Trust Fund, the Securities Guaranty Fund, or

the Florida Real Estate Recovery Fund,

regardless of any repayment or restitution

to the disbursed fund by the licensee or any

person acting on behalf of the licensee or

registrant.

* * *

(g) Failure to disburse funds in accordance

with agreements.

* * *

(i) Having a license, or the equivalent, to

practice any profession or occupation

revoked, suspended, or otherwise acted

against, including the denial of licensure

by a licensing authority of this state or

another state, territory, or country for

fraud, dishonest dealing, or any other act

of moral turpitude.

* * *

(q) Commission of fraud, misrepresentation,

concealment, dishonest dealing by trick,

scheme, or device, culpable negligence, or

breach of trust in any business transaction

in any state, nation, or territory; or

aiding, assisting, or conspiring with any

other person engaged in any such misconduct

and in furtherance thereof.

54. Petitioner is an applicant for an individual mortgage

broker’s license. Accordingly, as the party asserting the

affirmative of an issue before this administrative tribunal,

Petitioner carries the burden of proof to establish by a

preponderance of the evidence that the his application for

licensure should be granted. Dep’t of Transp. v. J.W.C. Company

Inc. , 396 So. 2d 778, 788 (Fla. 1st DCA 1981); Dep’t of Banking

and Fin. v. Osborne Stern Co. , 670 So. 2d 932, 933-34 (Fla.

1996); Pershing Indus., Inc. v. Dep’t of Banking and Fin. , 591

So. 2d 991, 994 (Fla. 1st DCA 1991).

55. “Honesty, truthfulness and integrity are attributes

which the legislature has determined are required for

individuals who deal with the public as mortgage brokers.”

Dep’t of Banking and Fin. v. Hughes , DOAH Case No. 94-5114, 1995

WL 1052790 at ¶ 36 (Fla. DOAH 1995)(Final Order); see also State

v. Beeler , 530 So. 2d 932, 934 (Fla. 1988) (commenting on the

legislative goal of protecting the public in enacting Chapter

494, Florida Statutes).

56. In that regard, Petitioner’s answer to question number

six on his July 2004 application was a material misstatement of

fact as contemplated by Section 494.0041(2)(c), Florida

Statutes.

57. Even if Petitioner believed that his real estate

license had not been revoked or suspended, his answer to

question six was still a material misstatement because it asked

if the applicant had ever had a license “otherwise acted

against.” Voluntarily surrendering a license in lieu of further

proceedings constitutes having a license “otherwise acted

against,” and therefore, Petitioner should have answered

affirmatively. See Emerald Coast Fin. v. Dep’t of Banking and

Fin. , DOAH Case Nos. 92-3393 & 92-4957, 1993 WL 943461 at ¶17

(Fla. DOAH 1993).

58. Moreover, the facts and circumstances surrounding the

revocation and suspension of Petitioner’s real estate license,

coupled with the judgments of both the Bankruptcy and County

courts, as well as Petitioner’s experience with the 1996 denial

of his application when he previously answered “no,” and his

mixed answer on the February 2004 application demonstrate that

the revocation and suspension involved “fraud, dishonest

dealing, or any other act of moral turpitude,” such that

Petitioner should have at a minimum ascertained the facts of his

license revocation so that he could give an accurate answer and

explanation to question number six. Petitioner’s stubborn

refusal to acknowledge his clearly faulty memory and reluctance

to ascertain the facts until forced to do so by the Respondent’s

denial of his application are not defenses to Petitioner’s

repeated failure to answer and explain the details of the

Fruhwirt and Schoenfeld transactions as well as his license

revocation. See generally Starr v. Dep’t of Bus. and Prof.

Reg. , 729 So. 2d 1006, 1007 (Fla.4th DCA 1999) (noting that

applicant should have answered question regarding criminal

history affirmatively and noting that the ALJ rejected the

applicant’s explanation that she thought question only applied

to felonies); Walker v. Dep’t of Bus. and Prof’l Reg. , 705 So.

2d 652, 654 (Fla. 5th DCA 1998) (concluding that circumstantial

evidence supported the conclusion that the license applicant

acted intentionally in obtaining license by means of fraud,

misrepresentation, or concealment); Sellars v. Real Estate

Comm’n , 380 So. 2d 1052, 1053-54 (Fla. 1st DCA 1979) (noting

that competent substantial evidence supported revocation of real

estate license for dishonest dealing where the real estate

broker had actual and constructive knowledge that title to

property being sold was not marketable). Therefore, Petitioner

has violated Section 494.0041 (2)(c) by submitting his

explanatory letters and Petitioner’s application should be

denied.

59. Additionally, Petitioner’s transaction involving

Mr. Schoenfeld demonstrates that Respondent failed “to disburse

funds in accordance with agreements” in violation of Section

494.0041(2)(d), Florida Statutes. The violation is sufficient

to deny Petitioner’s application.

60. The facts surrounding the revocation of Petitioner’s

Real Estate License are a violation of Section 494.0041(2)(i),

Florida Statutes. This violation is sufficient to deny

Petitioner’s application.

61. The facts surrounding Petitioner’s transaction with

Mr. Fruhwirt and the subsequent litigation demonstrate a

violation of Section 494.0041(2)(q), Florida Statutes.

62. In Section 11 U.S.C. 523 discharge in bankruptcy for

certain categories of debt is denied. In denying discharge of

Petitioner’s judgment debt to Johannes Fruhwirt, the Bankruptcy

Court cited Section 11 U.S.C. 523(a)2. and (a)4. The latter,

Subpart (a)4., denies discharge for a debt resulting from “fraud

or defalcation while acting in a fiduciary capacity,

embezzlement, or larceny.” The former, 523(a)2., has three

subparts, A, B and C. The third, C, concerns consumer debts for

luxury goods and clearly does not apply to Mr. Fruhwirt’s

litigation with the Petitioner. Subpart B refers to a false

written statement by a debtor describing his or her financial

condition, and similarly does not apply. That leaves

523(a)2.(A), which denies discharge for a debt

obtained by “false pretenses, a false representation, or actual

fraud,. . .”.

63. In prevailing in Bankruptcy Court, Mr. Fruhwirt had to

prove that his judgment debt fell within exceptions to

discharge. See In re Belfry , 862 F.2d 661, 662 (8th Cir. 1988)

(Exceptions to bankruptcy discharge of debt are to be narrowly

construed and the burden is on the creditor opposing discharge);

In re Black , 787 F.2d 503 (10th Cir. 1986) (same) abrogated on

other grounds by Grogan v. Garner , 498 U.S. 279 (1991). See

also Namvar v. Baker , 298 BR 815, 818-819 (Bankr. SD Fla. 2003).

64. In Veitch v. Dept. of Financial Services, Office of

Financial Regulation , DOAH Case No. 04-1590, 2004 WL 2610402 at

¶ 115, 116 (Fla. DOAH 2005)(Final Order), the petitioner had

stipulated to 523(a) violations in prior bankruptcy proceedings.

In that case, the ALJ declined to interpret the resulting

Judgment of Non-Dischargeability in a manner inconsistent with

that of the Bankruptcy Court. The ALJ found that the Judgment

of Non-Dischargeability constituted a civil judgment grounded on

“fraud, embezzlement, misrepresentation, or deceit” within the

meaning of Subsection 517.161(1)(k), Florida Statutes.

65. Similar to Veitch , the Bankruptcy Court’s citation of

523(a) violations constitutes a finding that Petitioner

committed a fraudulent or dishonest business act within the

meaning of Subsection 494.0041(2)(q) (quoted in full above).

66. By arguing that he had nothing to do with the

transaction between Mr. Fruhwirt and Mr. Ritter, Petitioner is

essentially trying to challenge the validity of the decisions

reached in Broward County Court, the Bankruptcy Court, and the

Florida Real Estate Commission and to relitigate these cases.

Petitioner cannot use the administrative forum to relitigate his

case with Mr. Fruhwirt or challenge the validity of

Mr. Fruhwirt’s judgment against the Petitioner. See Dep’t of

Bus. and Prof’l Reg. v. Jeffrey C. Johnson , DOAH Case No. 01-

0603PL, 2001 WL 471715 at ¶ 28 (Fla. DOAH 2001) (concluding that

license holder could not defend against a charge of failing to

satisfy a pari-mutuel racing-related "obligation" arising from

an unreversed civil judgment by challenging the correctness or

the validity of the judgment); Dep’t of Prof’l Reg. v. Burks,

DOAH Case No. 97-1434 , 1997 WL 1053280 at ¶ 61 (Fla. DOAH 1997)

(Recommended Order) (concluding that “[a] contractor may not

defend against a charge of failing to satisfy an unappealed

civil judgment . . . by challenging the correctness or the

validity of the judgment.”).

67. The 1996 denial of Petitioner’s Florida application to

be a mortgage broker was for making a material misstatement,

which falls under the language in Section 494.0041(2)(i),

Florida Statutes, covering “the denial of licensure by a

licensing authority of this state or another state, territory,

or country for fraud, dishonest dealing, or any other act of

moral turpitude.” Cf. Watts v. Dep’t of Banking and Fin., DOAH

Case No. 97-2270 , 1997 WL 1053357 at ¶ (CITE) (Fla. DOAH

1997)(Recommended Order) (concluding that the denial of

petitioner’s application for admission to the Florida Bar was

ground for denial of the mortgage broker license under the

provisions of § 494.0041(2)(i)).

68. More importantly, it is the repeated unwillingness of

the Petitioner to be forthcoming in the application process that

demonstrates Petitioner’s lack of appreciation for truthfulness,

honesty and integrity. The continuation of such behavior also

undermines any argument that he has been rehabilitated from the

events providing grounds for denial in this case. See Fonseca

v. Dep’t of Juvenile Just. , DOAH Case No. 99-3931, 2000 WL 564808

applicant’s dishonesty in the application process showed that he

was not rehabilitated); Goings v. State , DOAH Case No. 80-2062S,

1981 WL 180305 at ¶ 7 (Fla. DOAH 1981)(observing that,

“Petitioner has failed to demonstrate rehabilitation when he

continues to rely upon dishonesty when he deems it appropriate”);

see also Florida Bd. of Bar Examiners ex rel. John Doe , 770 So.2d

670 (Fla. 2000). Therefore, Petitioner’s application for

licensure as a mortgage broker should be denied.

RECOMMENDATION

Based upon the Findings of Fact and Conclusions of Law, it

is RECOMMENDED:

A Final Order be entered denying Petitioner’s application

for licensure as a mortgage broker.

DONE AND ENTERED this 4th day of November, 2005, in

Tallahassee, Leon County, Florida.

S

DIANE CLEAVINGER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 4th day of November, 2005.

COPIES FURNISHED :

C. Scott Hester, Esquire

13843 Longs Landing Road East

Jacksonville, Florida 32225

Robert H. Schott, Esquire

Gregg Morton, Esquire

Department of Financial Services

200 East Gaines Street

Fletcher Building, Suite 526

Tallahassee, Florida 32399-0376

Carlos G. Muniz, General Counsel

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0307

Honorable Tom Gallagher

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0300

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.