07-001901PL Department Of Financial Services vs. Felton Eugene Turner Status: Closed Recommended Order on Wednesday, September 26, 2007.

Summary: Respondent sold annuities illegally.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF ) )

FINANCIAL SERVICES, )

)

Petitioner, ) Case No. 07-1901PL

)

vs. )

)

FENTON EUGENE TURNER, )

)

Respondent. )

RECOMMENDED ORDER

Notice was provided and on July 19, 2007, a formal hearing

was held in this case. The hearing commenced at 9:00 a.m.

Authority for conducting the hearing is set forth in Sections

120.569 and 120.57(1), Florida Statutes (2007). The hearing

took place at the offices of the Division of Administrative

Hearings, the DeSoto Building, 1230 Apalachee Parkway,

Tallahassee, Florida. The hearing was held before Charles C.

Adams, Administrative Law Judge.

APPEARANCES

For Petitioner: James A. Bossart, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399-0333

For Respondent: Felton Eugene Turner, pro se

8464 Vickers Road

Hahira, Georgia 31632

STATEMENT OF THE ISSUE

Should Petitioner impose discipline against Respondent's

insurance agent's license for violation of various provisions

within Chapters 624 and 626, Florida Statutes (2004)?

PRELIMINARY STATEMENT

On January 31, 2007, in Case No. 83179-07-AG, before the

Department of Financial Services, an Administrative Complaint

was filed against Respondent within three separate counts

involving three separate customers. Respondent was accused of

violating Sections 624.11(1), 626.611(7), 626.611(8),

626.621(2), 626.621(6), 626.901(1) and 626.9541(1)(a)1., Florida

Statutes (2004).

The Administrative Complaint provided Respondent an

explanation of his rights in addressing the Administrative

Complaint. To facilitate that choice, Respondent was provided a

form referred to as an "Election of Proceeding." He executed

the form by choosing the third option, in which he disputed one

or more of the factual allegations within the Administrative

Complaint and requested a hearing pursuant to Section 120.57(1),

Florida Statutes, to be held before the Division of

Administrative Hearings (DOAH).

On April 30, 2007, consistent with Respondent's request,

Petitioner forwarded the case to DOAH to assign an

administrative law judge to conduct a hearing. The assignment

was made by Robert S. Cohen, Director and Chief Judge of DOAH in

reference to DOAH Case No. 07-1901PL. The assignment was to the

present administrative law judge.

Notice was provided and the hearing took place on July 19,

2007.

Prior to the hearing Petitioner moved to amend the

Administrative Complaint. That motion was unopposed. On

June 12, 2007, an order was entered granting the motion to

amend. The case proceeded on the Amended Administrative

Complaint. The Amended Administrative Complaint added Count IV

alleging a violation of Sections 624.11(1), 626.611(7),

626.611(8), 626.621(2) and 626.901(1), Florida Statutes (2004).

The Amended Administrative Complaint incorporated the original

Counts I through III as well, and addressed the possibility of

the imposition of punishment or penalties consistent with the

expectations of the provisions of Sections 626.611, 626.621,

626.681, 626.691, and 626.9521, Florida Statutes (2004).

At hearing Petitioner called Patti Turpine as its witness.

Petitioner's Exhibits numbered 1 through 7 were admitted.

Petitioner's Exhibits numbered 2 through 4 are the depositions

of the witnesses S.T., G.H., and J.H.C., respectively.

At hearing Respondent testified in his own behalf and

called Marlene Renaud to testify. Respondent's Exhibits

numbered 1 through 23, 112 through 115, 118 and 119 were

admitted.

Upon agreement of the parties the deposition of Earl

Saulter was taken post-hearing, and was filed August 10, 2007.

It has been considered together with the hearing testimony and

exhibits presented at hearing.

On August 21, 2007, the hearing transcript was filed.

Petitioner filed a proposed recommended order that was

considered in preparing the Recommended Order. Respondent did

not file any form of post-hearing submission.

FINDINGS OF FACT

License

1. On April 2, 1997, Respondent was licensed in Florida as

a non-resident life and health agent (Type class 8-18).

Respondent continues to have active appointments in Florida for

American Heritage Life Insurance Company.

Money Tree

2. Money Tree Lending Group, Inc. (Money Tree) was

licensed by the Department of Financial Services, Office of

Financial Regulation as a mortgage lending company. Its license

type was CL. The license number was Reg. License I.D.:

L100000236977.

3. Money Tree was the subject of court action in State of

Florida, ex. rel., the Department of Financial Services of the

State of Florida, Relator, vs. The Money Tree Lending Group,

Inc., a Florida corporation, Respondent , in the Circuit Court of

the Second Judicial Circuit in and for Leon County, Florida,

Case No. 2005 CA 1103. In that matter, on May 11, 2005, the

circuit court judge entered an order to seize Respondent's

property. Under the court order, the Relator took possession

and control of "property, books, documents, accounts, including

bank accounts, and other records . . . " of Money Tree. Beyond

that date Money Tree was not allowed to transact business,

except with the Relator's written consent under terms in the

court order.

4. On June 23, 2005, the circuit court judge in Case

No. 2005 CA 1103 entered an "Order Appointing the Florida

Department of Financial Services Receiver of the Money Tree

Lending Group, Inc., for Purposes of Liquidation, Injunction and

Notice of Automatic Stay." As the order contemplates,

Petitioner was granted authority to "take immediate possession

of all the property, assets, and estate, and all property of

every kind whatsoever and wherever located belonging to

Respondent . . . ", referring to Money Tree. The Relator was

further allowed to liquidate the assets of Money Tree.

5. Patti Turpin is employed by Petitioner in its Division

of Rehabilitation and Liquidation. She served as a receiver for

Money Tree under authority in Circuit Court Case No. 2005 CA

1103.

6. Ms. Turpin also is aware that Money Tree was never

issued a certificate of authority from Petitioner authorizing

the sale of insurance or annuities.

7. As of the hearing date, Money Tree was still in

liquidation and Petitioner was preparing to offer additional

distribution of monies recovered from Money Tree. In advance of

the liquidation, Petitioner has paid out monies to annuitants

who purchased annuities from Money Tree. Money recovered on

behalf of Money Tree amounts to approximately $850,000.00, with

the expectation that 80 percent of monies paid for the original

investments in annuities be returned to the annuitants. The

possibility exists that an additional five percent would be

returned to the annuitants.

8. Respondent was affiliated with Money Tree in a manner

that will be explained. Ms. Turpine, as receiver in association

for Money Tree, has not received any return of money from

Respondent pertaining to his affiliation with Money Tree.

Respondent earned approximately $130,000.00 in commissions for

selling annuities for Money Tree. The level of his involvement

is reflected in Petitioner's Exhibit numbered seven, which shows

approximately 90 sales of annuities through Respondent's

association with Money Tree, the amount invested by customers

and the rate of return.

Affiliation

9. On March 2, 2005, Petitioner wrote Respondent care of

his company First Capital Financial Incorporated (First

Capital), asking that a response be made to Petitioner's

Division of Consumer Services. The basis of the inquiry was

pertaining to an investigation of Money Tree. The inquiry

stated:

It has been brought to our attention that

you are selling an investment for a three

year term. The product resembles an annuity

but appears not to be. We are further

advised that you are selling this product

while operating out of The First Capital

Financial Incorporated in Winter Haven, FL.

Your licensing record suggests you hold a

non-resident license that lists your

permanent address as Hahira, GA. We ask

that you provide our office with complete

documentation of this product offered by the

Money Tree. This should include a

definition of what it is, under what

regulatory authority it falls and how you

are able to offer it in Polk County, FL

while a resident of Hahira, GA.

So that we may properly respond to this

request, please furnish us with a complete

report of your position on the matter,

including any documentation that supports

your position. Please reference Service

Request number 1-100931056 on all reports

and attachments. Your complete reply, to

Daniel G. Amend, must be received by

March 17, 2005.

10. On March 3, 2005, a fax was sent from Jerry Patterson

an employee with Petitioner, in which he asked Respondent to

"Please provide the Florida License Company Code Number of the

Money Tree Lending Group, Inc., or the annuity company they use.

As you know they must be licensed in the State of Florida." In

turn Phil Sampiere, president of Money Tree, told Respondent to

send information to the Petitioner that had been prepared by

Mr. Philip A. Sampiere, Jr. Respondent dispatched that

information to Petitioner. The information prepared by

Mr. Sampiere is reflected in Respondent's Exhibit Numbered 11.

The document is on a letterhead by the Money Tree and in the

body its states:

Fees. When you buy a fixed immediate

annuity, you will pay no loads or management

fees. That's generally true for many kinds

of "fixed" annuities. But if you buy a

"variable" annuity, however, you will pay

what's known as a "mortality and expense"

fee plus an investment management fee to

cover the cost of managing the underlying

investments. You may also pay an annual

account maintenance fee.

THE EXEMPTIONS LISTED BELOW ARE SELF-

EXECUTING AND DO NOT REQUIRE ANY FILING

WITH THE DEPARTMENT

EXEMPT SECURITIES

517.051 Exempt Securities.-

The exemptions provided herein from the

registration requirements of s. 517.07 are

self-executing and do not require any filing

with the department prior to claiming such

exemption. Any person who claims

entitlement to any of these exemptions bears

the burden of proving such entitlement in

any proceeding brought under this chapter.

The registration provisions of s. 517.07 do

not apply to any of the following

securities:

(10) Any insurance or endowment policy or

annuity contract or optional annuity

contract or self-insurance agreement issued

by a corporation, insurance company,

reciprocal insurer, or risk retention group

subject to the supervision of the insurance

commissioner, or any agency or officer

performing like functions, of any state or

territory of the United States or District

of Columbia.

The Money Tree Lending Group, Inc., is

supervised by the State of Florida

Department of Financial Services and

believes it is correct in claiming this

exemption according to Florida state law.

If you need further explanation please

contact Philip Sampiere at the corporate

office 941-764-6767 at extension 204.

The Money Tree Lending Group, Inc.

Philip A. Sampiere, Jr.

President

11. Mr. Sampiere had also faxed Respondent a copy of

Section 517.051, Florida Statutes (2004), with emphasis placed

on Subsection (10), to Petitioner to answer its inquiry

concerning the sale of annuities through Money Tree. Respondent

was aware of Section 517.051, Florida Statutes (2004), and its

language.

12. Respondent was also aware of information of the

Petitioner in its Office of Financial Regulation concerning the

Money Tree license type CL, ID L1000005023697.

13. A Randy Menne had also provided Respondent with the

language of Section 517.051, Florida Statutes (2004), and

licensing information from the Department of Financial Services,

Office of Financial Regulation pertaining to Money Tree and its

license type CL.

14. In responding to Petitioner concerning Respondent's

Georgia residence, and his affiliation with Money Tree, on

March 16, 2005, Respondent wrote Petitioner. In that

correspondence he said:

Dear Sir:

I have lived in Georgia for over 47

years. Because I live less than 20 miles

from the Florida State line I have held a

Florida non-resident license for many years.

For the last several years I was a State

Manager or District Manager for several

major insurance companies, over-seeing

Georgia and Florida. In my earlier years,

when I obtained my non-resident license I

was told that if I had a permanent address

in Georgia that I only qualified for a non-

residence license for Florida.

During this last year I have traveled

to Winter Haven Florida, where I have family

and decided to sell annuities a few days a

week in that county. I drive down and spend

a few nights and go back to my home in

Georgia. I have attached documents showing

that I do live in Hahira Georgia. If I have

misunderstood Florida's non-resident license

procedures, please call me, and I will do

whatever is necessary to correct the

problem.

To answer your question about the Money

Tree Lending Group, Inc., I am only a sales

rep with that company. I signed on with

them a few months ago, and I feel I am not

qualified to answer your questions regarding

the product issued by The Money Tree Lending

Group, Inc. without their consent.

I have contacted the owner of The Money

Tree Lending Group, Inc., Philip Sampiere of

Port Charlotte Florida on this matter.

Because I was in Georgia the last week and

1/2 I only received your letter on March 14,

2005. In order to send something to you

before the deadline, Mr. Sampiere faxed me

these 3 pages and told me to please tell you

that if this does not answer your questions

and concerns to please contact him so that

he may better explain, in detail, and let

you speak with his contacts within your

department.

Philip A. Sampiere, Jr.

3400 Tamiami Trail Suite 203

Port Charlotte, FL 33952

Phone: [phone] Fax: [phone]

E-mail: [e-mail]

If I can be of any help, or you need further

information, please call or send me a fax.

Sincerely,

F. Gene Turner

15. After Respondent wrote Petitioner, Mr. Sampiere wrote

Respondent on March 30, 2005, concerning this subject. In that

letter Mr. Sampiere stated:

Gene,

I wanted to let you know that I have

contacted the State of Florida regarding the

letter they sent you about our annuity

products.

As far as your License and status with

the State we hope you are addressing this

issue. But with regards to supplying

additional information about our products I

wanted to let you know that we are and have

fully opened our book records, etc to the

State for them to review. To date they have

not been able to issue a letter claiming any

violation of any rules or exemption we are

governed to follow.

Our attorney has been in touch with the

State head legal advisor how [sic] could not

give him a reason or rule that we are in

violation of this was about mid day Wed the

30th of March 2005.

So until we are given the rules we are

in violation of or a letter demanding we

stop selling our products. We will continue

to accept application [sic] from the public

and thru our third party annuity sales

force.

16. Respondent became aware of correspondence dated May 5,

2005, from Gary Klein, Esquire, attorney for Money Tree

addressed to Mr. Sampiere. In pertinent part Mr. Klein in his

advice to the client Mr. Sampiere said "In issuing an annuity

contracts [sic], I am of the opinion that your Company meets the

exemption under Florida Statute 517.051(10), as it is written.

Your Company is a Florida Corporation, is issuing annuities and

is regulated by the bank regulator." Later Mr. Klein states

" . . . I believe your annuity sales are legal under the

controlling law of the State."

17. On May 9, 2005, Mr. Klein wrote to Ronald K. Lovejoy,

Special Investigator, Bureau of Investigation of the Petitioner,

questioning the regulatory activities of Petitioner in relation

to Money Tree sales agents and the sale of annuity products.

Respondent became aware of this correspondence.

18. On August 10, 2005, Respondent wrote Petitioner on the

subject of the sales of annuities of Money Tree. In that

correspondence he stated:

August 10, 2005

Re. CS# 8591CA#15628

To the Department of Financial Services:

I am writing this letter in hopes that you

will in some way be able to understand that

I did everything in my power and everything

I knew how to make sure The Money Tree

Lending Group was a known, reputable company

in good standing with the State of Florida.

I first learned about The Money Tree Lending

Group around the first of June 2004 when

Randy Menne, the manager of another company

I represent called me and told me about an

advertisement in the newspaper for a short

term annuity. He agreed to check the

company out thoroughly and get back with me

about his findings. Two weeks later Randy

called to inform me that he and his agents

were going to start marketing the product

because "everything was good with the

company and they checked out okay". That

same week I drove two hours to meet with

Randy and his agents so that we could go

over all paper work, I was interested to see

what he had done to investigate this

company. Randy showed me several documents

stating that the Money Tree was a legitimate

company.

After leaving Randy's office I still felt

hesitant about the company and the product,

so Randy said he would have the President of

the company call me and discuss my concerns.

This really impressed me, I had never had

the president of a company call me

personally before. After speaking with the

president I was convinced that the company

was truly exempt from certain requirements.

After reviewing all documentation and

speaking with the president I decided to

call the State of Florida Department of

Financial Services and ask to speak with

someone who understood the "exemption rule".

I spoke with Earl Saulter for a very lengthy

amount of time and he answered all of my

questions in great detail, and just as I

hoped, he confirmed that the type of annuity

was exempt. At this point everything seemed

to be good and I was eager to start

marketing this product. I started selling

this product in October 2004.

On April 29, 2005, Mr. Ron Lovejoy came into

my office. I was not in at the time,

however, my secretary called me and I spoke

with Mr. Lovejoy over the phone for quite

some time to find out what was going on. I

was dumbfounded to learn of the situation.

Mr. Lovejoy asked that I not contact my

manager nor Money Tree at this time. I

cooperated and opened my office up for a

full investigation.

Mr. Lovejoy revisited my office on May 4,

2005, he stated that he believed Money Tree

had moved their money somewhere and that no

one knew where it was. At this time I

managed to find a new check in one of my

client's files which allowed the state to

find new routing numbers.

I can assure you that if I had knowledge of

any wrong doing from the Money Tree, I would

have never sold this product. Furthermore,

when I first realized that there could be a

potential problem with the Money Tree, I

immediately stopped marketing this product

on my own. I do feel that I used all of the

resources available to me in making the

decision to sell the annuity that The Money

Tree offered, for example: speaking with a

representative from the Department of

Financial Services, the president of the

Money Tree, and other agents who were

currently marketing this product; as well as

written documents including information on

The State of Florida website, and an active

status letter from the State Florida Dept.

of Financial Services and a letter from a

Florida State Attorney. All of these

documents stated that The Money Tree was in

good standing with The State of Florida. I

have enclosed all of this documentation and

I feel that it is pertinent information that

confirms the actions I took to check out The

Money Tree are as I have stated in this

letter.

In closing I would like to add that I am an

honest person trying to run an honest

company who respects the State of Florida.

I would never jeopardize the well-being of

my family or my business. If I can help in

any way to resolve this matter please let me

know.

Sincerely,

Gene Turner

19. Concerning a possible conversation Respondent had with

Mr. Saulter, at hearing Respondent said that Mr. Saulter told

Respondent about Money Tree "that they were exempt from the

securities, that I could sell them from this company, they were

in good standing." This is in reference to the sale of

annuities. Then Respondent said that he was not sure whether

Mr. Slater used the words "securities" or that Mr. Saulter used

the word "insurance" in the conversation. Respondent also

stated at hearing that Mr. Saulter told him that Money Tree was

" . . . a good, legitimate company, no actions taken against

them, no disciplinary action and their status was active." The

conversation, if it took place, had nothing to do with Money

Tree being licensed as a mortgage broker or mortgage lender when

Respondent spoke to Mr. Saulter. Respondent in his testimony

said that Mr. Saulter told Respondent ". . . I could sell the

annuities . . . ." This is understood to mean sell the

annuities offered by Money Tree.

20. As established in his post-hearing deposition,

Mr. Saulter works for the Petitioner in its Division of

Securities. He reviews securities offerings. He addresses

questions related to exemptions recognized in Section 517.051,

Florida Statutes. He had those responsibilities at times

relevant to this inquiry. Mr. Saulter's duties do not include

the regulation of annuities or insurance products pertaining to

license requirements to participate in those activities. He

would not be authorized to answer questions concerning the

opportunity to sell annuities. The securities exemption from

registering securities as reflected in Chapter 517, Florida

Statutes, is unrelated to the provisions within the Florida

Insurance Code found in Chapters 624 through 628, Florida

Statutes. In Mr. Saulter's experience he is not involved with

the Florida Insurance Code. Before taking the deposition,

Mr. Saulter had never heard the name Money Tree Lending Group.

He does not remember speaking to Respondent. He does not

remember speaking to Mr. Sampiere.

21. Having considered the testimony of Respondent at

hearing and remarks set forth in his August 10, 2005

correspondence concerning his alleged conversations with

Mr. Saulter and the deposition testimony from Mr. Saulter,

either no conversation took place or the conversation did not

transpire as represented by Respondent.

Transactions

J.C.T., Jr. and S.J.T.

22. The Ts, husband and wife, reside in Avon Park,

Florida. Mr. T. was born on April 10, 1935; Mrs. T. was born

April 6, 1936. They are retired. Mr. T. is a retired farmer,

and, and Ms. T. retired from her profession as an interior

decorator.

23. The Ts had received an inheritance from Mr. T's father

of $374,000.00. They were interested in investing some of the

money. The Ts saw an advertisement in a newspaper related to

the purchase of certificates of deposit (CDs). The

advertisement was in association with First Capital,

Respondent's company. The Ts were considering purchasing a CD

from a bank and perceived the opportunity from First Capital as

an alternative for purchasing the CD.

24. The Ts met with Respondent in his office in Winter

Haven, Florida. Respondent asked the Ts what they were

interested in by way of an investment. They explained that they

were interested in immediately accessing the money that was

invested, should they need the money. In particular they were

concerned about the ability to address the financial needs of

their 46-year-old son, who suffers with rheumatoid arthritis.

They also were interested in being able to assist another son,

who farms for a living and has cash-flow problems at times in

putting out his crop.

25. Instead of purchasing a CD from Respondent, the Ts

bought three Money Tree annuities from him. Respondent told the

Ts that Money Tree was a new company. Respondent told the Ts

that the annuities were a good product, although they were not

insured. In particular Respondent told the Ts that the

annuities were not FDIC insured. He commented that they were

"solid." Respondent explained the annuities return on

investment, as contrasted with the amount of return on the CD he

offered. The Ts determined that the annuities were a better

choice of investment.

26. Respondent in discussing the annuities purchased made

no mention of the prospect that the Ts might lose money in the

investment. Had they known that was a possibility, the Ts would

have been concerned.

27. The Fixed Annuity Disclosure Statements associated

with the purchases made it clear that the annuities offered by

Money Tree were not a bank deposit, and were not FDIC insured or

insured by any federal government agency.

28. Altogether the Ts bought $200,000.00 worth of

annuities; two in increments of $50,000.00 and one for

$100,000.00.

29. The annuities were purchased utilizing application

forms from Money Tree as executed by the Ts and Respondent by

providing their signature on February 7, 2005.

30. The first of the fixed annuities was for $50,000.00,

at four percent return for 18 months, as reflected in the Fixed

Annuity Disclosure Statement and Fixed Interest and Term Annuity

Contract.

31. The second $50,000.00 annuity was for four and one-

half percent return for a period of 24 moths. It also involved

a Fixed Annuity Disclosure Statement and Fixed Interest and Term

Annuity Contract. Finally, the $100,000.00 annuity, as

reflected in the Fixed Annuity Disclosure Statement was for five

and a quarter percent return at 36 months. It had the

associated Fixed Interest and Term Annuity Contract as part of

the transaction.

32. All Fixed Annuity Disclosure Statements were signed by

the Ts and Respondent.

33. In these transactions involving the annuities,

Respondent was acting as the agent for Money Tree.

34. In separate installments, the Ts have recovered

$142,000.000 and approximately $20,000.00 of their purchase

price from the Money Tree receiver.

J.H.C.

35. Mrs. J.H.C., born June 7, 1934, lives in Lake Placid,

Florida. She retired from the real estate business she

conducted in Miami, Florida. Mrs. J.H.C. and her husband

Mr. R.L.C. saw ads in the newspapers. One of those ads referred

to 12-month CDs that were FDIC insured with a 3.70 annual

percentage rate of return. The ad referred to First Capital and

Respondent's business address in Winter Haven, Florida. A

second newspaper advertisement was similar in nature, with the

exception that it referred to a 3.84 annual percentage rate of

return.

36. The Cs went to Respondent's office in Winter Haven,

Florida. They discussed the CDs that had been advertised.

Mrs. C. wanted to roll-over monies from an individual retirement

account (IRA) to place in CDs. Respondent told her he could not

do that. He told her that he could put the money into an

annuity which would be very safe. At the time Mrs. C. had no

precise understanding of what an annuity was or how an annuity

functioned as an investment. She relied upon Respondent's

expertise in that connection.

37. On February 14, 2005, Mrs. C. purchased a $10,000.00

annuity from Respondent for an 18-month period, with a four

percent interest rate of return. The annuity was through Money

Tree. The purchase was made upon a Money Tree application form

for the fixed annuity. Mrs. C. made the payment for the annuity

to The Money Tree by a check in the amount of $10,000.00. The

check that was written by Mrs. C. in the memo section said that

it was in relation to "IRA Fixed Annuity." In completing the

transaction, a Fixed Annuity Disclosure Statement upon a form

provided by Money Tree was signed by both Mrs. C. and Respondent

and a Fixed Interest and Term Annuity Contract was entered into

related to the Money Tree annuity.

38. The Fixed Annuity Disclosure Statement made it clear

that the annuity offered by Money Tree was not a bank deposit,

was not FDIC insured or insured by any federal government

agency.

39. In addition, a form was executed related to First

Capital and signed by Respondent and Mrs. C., that referred to

the guaranteed rate of return, on what was described in the form

as a individual deferred annuity certificate. It explains

surrender charges, withdrawal privileges, the free look period,

and information about taxes.

40. The check in payment for the annuity was cashed and

the money taken out of Mrs. C's checking account.

41. Respondent did not tell Mrs. C. that she might lose

some part of her investment when entering into the annuity

contract. The possible loss of investment was an important

consideration to her.

42. Mrs. C. had $7,067.00 in one check and an additional

$1,000.00 in a second check returned to her from the Money Tree

receiver, pertaining to her $10,000.00 annuity purchase.

G.R.H. and M.E.H.

43. Mr. G.R.H. and Mrs. M.E.H., his wife, live in Sebring,

Florida. He was born January 31, 1935; she was born July 1,

1938. Mr. H. is a retired automobile assembly worker.

44. Mr. H. saw an advertisement in a newspaper which

offered a 12-month CD at 3.65 percent rate of return. It

referred to First Capital. It gave Respondent's business

address at Winter Haven, Florida. Mr. H. was impressed with the

fact that the CD advertised was at a higher rate of return than

he could receive at local banks where he lived. This

advertisement was made sometime in October of 2004.

45. Mr. H. called Respondent's office.

46. The Hs drove to meet with Respondent in his Winter

Haven office. Once there, Respondent in discussing the CD

advertisement asked Mr. H. if he had access to email. The

answer was no. Respondent then told Mr. H. that he could not

get the CD in the advertisement because it was not a CD offered

locally. Respondent told Mr. H. if Mr. H. had access to email,

there would not have been a problem with the purchase. This led

to a discussion of an annuity at a 3.75 percent rate of return

for an 18-month period as offered through Money Tree. An

annuity was purchased by the Hs in the amount of $25,000.00. It

was based upon the completion of the Money Tree Fixed Annuity

Application, as signed by the Hs and Respondent on October 7,

2004. A Fixed Annuity Disclosure Statement was also executed

and signed by the Hs and Respondent, indicating that the annuity

offered through Money Tree was not a bank deposit, not FDIC

insured and not insured by any other federal government agency.

A Fixed Interest and Term Annuity Contract was entered into in

the transaction. The Hs paid the $25,000.00 cost by a check

written by Mrs. H.

47. During the transaction Mr. H. told Respondent that he

did not really believe in annuities. In reply Respondent told

Mr. H. that he did not need to worry about it because in 18

months it would mature and be surrendered and the principal paid

for the annuity with the accrued interest would be returned.

Ultimately Mr. H. thought it was a safe investment to buy the

annuity given the short turn around in the maturity date.

48. The Money Tree receiver reimbursed the Hs in an amount

in excess of $20,000.00 for their purchase.

Other Customers

49. Respondent concedes the sale of Money Tree annuities

to 89 to 90 customers. In the transactions his explanation of

risk factors was left to the written information that was

provided, saying that the investment was not FDIC insured,

implying in his mind that there were some risks. No other

explanation was made concerning risks for making an investment

in the annuities.

50. For verification of his standing with Money Tree,

Respondent relied on explanations provided to him by

Mr. Sampiere and Mr. Menne; a review of the underlying

information, as Respondent described the process involved with

the annuities; a conversation Respondent said that he had with a

State of Florida employee and a review of information on a web-

cite concerning Money Tree. Respondent believed Money Tree was

is good-standing with the State of Florida and was not the

subject of ongoing disciplinary action.

51. Once problems arose concerning the Money Tree

business, Respondent made himself available in his office or by

telephone for a period of several weeks to address his

customers' concerns.

CONCLUSIONS OF LAW

52. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter of this

proceeding in accordance with Sections 120.569 and 120.57(1),

Florida Statutes (2007).

53. Respondent is a licensed non-resident life and health

agent (Type class 8-18) in Florida. He was licensed by

Petitioner.

54. Petitioner had regulatory authority pursuant to the

"Florida Insurance Code" over insurance matters, to include the

activities of a non-resident life and health agent (Type class

8-18) at times relevant to this case. That authority is

extended through Chapters 624 and 626, Florida Statutes (2004),

by citations in the Amended Administrative Complaint.

55. In the general allegations set forth in the Amended

Administrative Complaint it is stated:

4. At all times material to the dates and

occurrences specific herein, the Money Tree

Lending Group, Inc., hereinafter Money Tree

Lending Group, transacted insurance or

operated as an insurance company in Florida.

5. At no time material to the dates and

occurrences herein did Money Tree Lending

Group posses certificates of authority from

the Department or the Office of Insurance

Regulation to engage in the business of

insurance or to operate as an insurance

company in Florida.

6. Money Tree Lending Group is not subject

to any exception to the licensure

requirement of the Florida Insurance Code in

order to lawfully engage in the business of

insurance or to operate as an insurance

company in Florida.

7. On May 11, 2005, the Circuit Court of

Leon County Florida, issued an Order to Show

Cause and Order to Seize Property, Case No.

2005 CA 1103, against Money Tree Lending

Group, prohibiting the company from further

engaging in an unauthorized insurance

business in this state and ordering the

seizure by the Department of all financial

assets held by the company.

8. At all times material to the dates and

occurrences herein, you, FELTON EUGENE

TURNER, did directly or indirectly represent

or aid Money Tree Lending Group, as

indicated in the numbered counts below, to

unlawfully transact insurance in the State

of Florida by the direct solicitation and

sale of annuities to Florida insurance

consumers.

56. Counts I through III refer to the transactions between

Respondent, and in turn, J.C.T., Jr. and S.J.T.; J.H.C. and

G.R.H. and M.E.H., related to Money Tree.

57. Count IV refers to Respondent's activities with Money

Tree, generally described, in the period of January 2005 through

April 2005, involving the other sales of annuities to unnamed

persons.

58. This is a disciplinary case, and for that reason

Petitioner bears the burden of proving the facts alleged.

That proof must be sufficient to sustain the allegations in the

Amended Administrative Complaint by clear and convincing

evidence. See Department of Banking and Finance Division of

Securities and Investor Protection v. Osborne Stern and Co. ,

670 So. 2d 932 (Fla. 1996); Ferris v. Turlington , 510 So. 2d 292

(Fla. 1987). The term clear and convincing evidence is

explained in the case In Re: Davey , 645 So. 2d 398 (Fla. 1994),

quoting with approval from Slomowitz v. Walker , 429 So. 2d 797

(Fla. 4th DCA 1983).

59. Given the penal nature of this case, provisions within

Chapters 624 and 626, Florida Statutes (2004), have been

strictly construed. Any ambiguity favors the Respondent. See

State v. Pattishall , 99 Fla. 296 and 126 So. 147 (Fla. 1930) and

Lester v. Department of Professional Occupational and

Regulations, State Board of Medical Examiners , 348 So. 2d 923

(Fla. 1st DCA 1977).

60. In deciding this case, it must be determined whether

Respondent was transacting insurance in selling annuities for

Money Tree. Section 624.10, Florida Statutes (2004), speaks to

the transaction of insurance where it states:

Transacting Insurance .-"Transact" with

respect to insurance includes any of the

following, in addition to other applicable

provisions of this code:

(1) Solicitation or inducement.

(2) Preliminary negotiations.

(3) Effectuation of a contract of

insurance.

(4) Transaction of matters subsequent to

effectuating of a contract of insurance and

arising out of it.

61. The term "insurance" is defined at Section 624.02,

Florida Statutes (2004), where it states:

'Insurance' defined - 'insurance' is a

contract whereby one undertakes to indemnify

another or pay or allow a specified amount

or a determinable benefit upon determinable

contingencies.

62. The term "insurer" is defined at Section 624.03,

Florida Statutes (2004), where it states:

'Insurer' defined . - 'Insurer' includes

every person engaged as indemnitor, surety,

or contractor in the business of entering

into contracts of insurance or of annuity.

63. The term "person" is defined at Section 624.04,

Florida Statutes (2004), where it states:

'Person' defined.- ' Person' includes an

individual, insurer, company, association,

organization, Lloyds, society, reciprocal

insurer or interinsurance exchange,

partnership, syndicate, business trust,

corporation, agent, general agent, broker,

service representative, adjuster, and every

legal entity.

64. Some insurance policies and other forms of agreements

or services are exempt from the Florida Insurance Code, as

described in Sections 624.123 through 624.129, Florida Statutes

(2004). Selling the Money Tree annuities does not fit within

those categories declared in the exemptions.

65. Subsection 624.401(1), Florida Statutes (2004), makes

it incumbent upon Money Tree and Respondent as its agent to not

transact insurance without a certificate of authority provided

to Money Tree by the Office of Insurance Regulation of the

Financial Services Commission, where it states:

(1) No person shall act as an insurer, and

no insurer or its agents, attorneys,

subscribers, or representatives shall

directly or indirectly transact insurance,

in this state except as authorized by a

subsisting certificate of authority issued

to the insurer by the office except as to

such transactions as are expressly otherwise

provided for in this code.

66. There is no exception to this requirement for Money

Tree, as provided in other provisions of the Florida Insurance

Code. Money Tree needed a certificate of authority to transact

insurance and Respondent as its agent was not allowed to

transact insurance in its absence. Money Tree did not have a

certificate of authority to transact insurance, specifically in

relation to the sale of annuities.

67. Counts I through III refer to identical statutory

provisions constituting alleged violations. Count IV is similar

in its allegations, with the exception that it does not refer to

a violation of Sections 626.621(6) and 624.9541(1)(a)1., Florida

Statutes (2004).

68. Counts 1 through IV refer to a violation of Section

624.11(1), Florida Statutes (2004), which states:

(1) No person shall transact insurance in

this state, or relative to a subject of

insurance resident, located, or to be

performed in this state, without complying

with the applicable provisions of this code.

69. Clear and convincing evidence was provided to prove

that Respondent violated Section 624.11(1), Florida Statutes

(2004), in relation to Counts I through IV, as agent for Money

Tree. He proceeded to sell annuities without a certificate of

authority to transact that form of insurance. Respondent's

effort at defending his position by suggesting that Mr. Saulter,

as Petitioner's employee, condoned these actions is not

persuasive. It has not been found that Mr. Saulter gave

Respondent those assurances. Moreover, Respondent's reliance

upon Mr. Sampiere's attorney and the attorney's reading of the

"Florida Securities and Investor Protection Act" at Section

517.051(10), Florida Statutes (2004), as allowing Money Tree to

proceed to sell insurance in the form of annuities without a

certificate of authority is misplaced and an unreasonable

construction when considering the language of that provision.

Section 517.051(10), Florida Statutes (2004) states:

Exempt securities.- The exemptions provided

herein from the registration requirements of

s. 517.07 are self-executing and do not

require any filing with the office prior to

claiming such exemption. Any person who

claims entitlement to any of these

exemptions bears the burden of proving such

entitlement in any proceeding brought under

this chapter. The registration provisions

of s. 517.07 do not apply to any of the

following securities:

* * *

(10) Any insurance or endowment policy or

annuity contract or optional annuity

contract or self-insurance agreement issued

by a corporation, insurance company,

reciprocal insurer, or risk retention group

subject to the supervision of the insurance

regulator or bank regulator, or any agency

or officer performing like functions, of any

state or territory of the United States or

the District of Columbia.

70. Section 517.07, Florida Statutes (2004), describes in

detail the necessity for the registration of securities.

Section 517.051, Florida Statutes (2004), establishes exemptions

from those registration requirements, annuities among them.

Exclusion from the expectations set forth in Section 517.07,

Florida Statutes (2004), in the sale or offer to sale of a

security before it is registered is limited to that regulatory

environment. It is not intended to relieve Money Tree from

compliance with the Florida Insurance Code before transacting

insurance through annuity sales. Those annuities may not be

sold without a certificate of authority which was not obtained.

Respondent's participation in those sales is not forgiven by

resort to language set forth in Chapter 517, Florida Statutes

(2004), the "Florida Securities and Investor Protection Act."

71. Counts I through IV to the Amended Administrative

Complaint accuse Respondent of a violation of Section

626.611(7), Florida Statutes (2004), which states:

626.611 Grounds for compulsory refusal,

suspension, or revocation of agent's, title

agency's, adjuster's, customer

representative's, service representative's,

or managing general agent's license or

appointment.--The department shall deny an

application for, suspend, revoke, or refuse

to renew or continue the license or

appointment of any applicant, agent, title

agency, adjuster, customer representative,

service representative, or managing general

agent, and it shall suspend or revoke the

eligibility to hold a license or appointment

of any such person, if it finds that as to

the applicant, licensee, or appointee any

one or more of the following applicable

grounds exist:

* * *

(7) Demonstrated lack of fitness or

trustworthiness to engage in the business of

insurance.

72. Concerning Counts I through III, clear and convincing

evidence has been provided to demonstrate a lack of

trustworthiness on Respondent's part in the transactions

conducted with those customers violating Section 626.611(7),

Florida Statutes (2004). The manner and approach to selling the

annuities to the customers when realizing that their interest

was in purchasing a CD at a competitive rate, only to be

directed away from that choice to the purchase of the

unauthorized Money Tree annuity reflects adversely upon

Respondent's trustworthiness. The proof is insufficient to show

a violation in relation to those customers served as addressed

in Count IV to the Amended Administrative Complaint. Specific

information about those transactions was not provided. Without

it, no violation to Count IV in relation to Section 626.611(7),

Florida Statutes (2004) has been shown.

73. Counts I through IV in the Amended Administrative

Compliant refer to a violation of Section 626.611(8), Florida

Statutes (2004), which allows for discipline to be imposed where

there is a "demonstrated lack of reasonably adequate knowledge

and technical competence to engage in the transactions

authorized by the license or appointment." The proof is

insufficient to show a violation of this provision. The

provision addresses circumstances in relation to the exercise of

adequate knowledge and technical competence in those

transactions that are authorized by the license or appointment.

The transactions here are not within the license or appointment,

as being outside what would be allowed. Therefore the need for

adequate knowledge and technical competence does not enter into

the discussion. This provision has no relevance to the

underlying factual allegations. Section 626.611(8), Florida

Statutes (2004), has not been violated.

74. Counts I through III in the amended administrative

complaint refer to a violation of 626.621(6), Florida Statutes

(2004), which allows discipline:

626.621 Grounds for discretionary refusal,

suspension, or revocation of agent's,

adjuster's, customer representative's,

service representative's, or managing

general agent's license or appointment. --The

department may, in its discretion, deny an

application for, suspend, revoke, or refuse

to renew or continue the license or

appointment of any applicant, agent,

adjuster, customer representative, service

representative, or managing general agent,

and it may suspend or revoke the eligibility

to hold a license or appointment of any such

person, if it finds that as to the

applicant, licensee, or appointee any one or

more of the following applicable grounds

exist under circumstances for which such

denial, suspension, revocation, or refusal

is not mandatory under s . 626.611 :

* * *

(6) In the conduct of business under the

license or appointment, engaging in unfair

methods of competition or in unfair or

deceptive acts or practices, as prohibited

under part IX of this chapter, or having

otherwise shown himself or herself to be a

source of injury or loss to the public or

detrimental to the public interest.

75. Clear and convincing evidence was provided to show

that Respondent was a source of injury and loss to consumers who

purchased Money Tree annuities from him. Respondent has

violated Section 626.621(6), Florida Statutes.

76. Counts I through IV to the amended administrative

compliant refer to a violation of Section 626.901(1), Florida

Statutes (2004), which states:

(1) No person shall, from offices or by

personnel or facilities located in this

state, or in any other state or country,

directly or indirectly act as agent for, or

otherwise represent or aid on behalf of

another, any insurer not then authorized to

transact such insurance in this state in:

(a) The solicitation, negotiation,

procurement, or effectuation of insurance or

annuity contracts, or renewals thereof;

(b) The dissemination of information as to

coverage or rates;

(c) the forwarding of applications;

(d) The delivery of policies or contracts;

(e) The inspection of risks;

(f) The fixing of rates;

(g) The investigation or adjustment of

claims or losses; or

(h) The collection or forwarding of

premiums; or in any other manner represent

or assist such an insurer in the transaction

of insurance with respect to subjects of

insurance resident, located, or to be

performed in this state. If the property or

risk is located in any other state, then,

subject to the provisions of subsection (4),

insurance may only be written with or placed

in an insurer authorized to do such business

in such state or in an insurer with which a

licensed insurance broker of such state may

lawfully place such insurance.

77. Clear and convincing evidence was shown to prove that

Respondent violated Section 626.901, Florida Statutes (2004), in

aiding and assisting Money Tree, not authorized to transact

insurance in Florida, by the sell of annuities to the customers.

78. Counts I through IV to the amended administrative

compliant refer to Section 626.621(2), Florida Statutes (2004),

which subject Respondent to possible discipline for:

(2) Violation of any provision of this code

or of any other law applicable to the

business of insurance in the course of

dealing under the license or appointment.

79. Clear and convincing evidence has been provided to

show this violation, as previously described in relation to

other substantive violations of the Florida Insurance Code, in

the course of dealing with customers under Respondent's

insurance license in association with Money Tree.

80. Counts I through III to the amended administrative

compliant refer to Section 626.9541(1)(a)1., Florida Statutes

(2004), which states:

(1) UNFAIR METHODS OF COMPETITION AND

UNFAIR OR DECEPTIVE ACTS.-The following are

defined as unfair methods of competition and

unfair or deceptive acts or practices:

(a) Misrepresentations and false

advertising of insurance policies.-Knowingly

making, issuing, circulating, or causing to

made, issued, or circulated, any estimate,

illustration, circular, statement, sales

presentation, omission, or comparison which:

1. Misrepresents the benefits, advantages,

conditions, or terms of any insurance

policy.

81. Clear and convincing evidence was presented to prove

that Respondent misrepresented the nature of the annuities as to

the safety of the investment. Conduct in violation of Section

626.9541(1)(a)1., Florida Statutes (2004), constituted as a part

of the Florida Insurance Code, violated Section 626.621(2),

Florida Statutes (2004), all in relation to Counts I through

III.

82. In addition to the penalties set fort in Section

626.611 and 626.621, Florida Statutes (2004), the Amended

Administrative Complaint refers to penalties available in

accordance with Sections 626.681, 626.691 and 626.9521, Florida

Statutes (2004). Recognizing that some violations proven relate

to Section 626.611, Florida Statutes (2004), call for a mandatory

suspension, probation as envisioned by Section 626.691, Florida

Statutes (2004) is not permissible, whereas administrative fines

pursuant to Sections 626.681 and 626.9521, Florida Statutes

(2004), could be imposed.

83. To decide the appropriate penalty, Florida

Administrative Code Rules 69B-231.040, 69B-231.080, 69B-231.090

and 69B-231.160 have been utilized.

RECOMMENDATION

Upon consideration of the facts found and the conclusions

of law reached, it is

RECOMMENDED:

That a final order be entered finding Respondent in

violation of Sections 624.11(1), 626.611(7), 626.621(2) and (6),

626.901(1) and 626.9541(1)(a)1., Florida Statutes (2004), and

suspending Respondent's non-resident life and health agent (Type

class 8-18) license for a period of six months.

DONE AND ENTERED this 26th day of September, 2007, in

Tallahassee, Leon County, Florida.

S

___________________________________

CHARLES C. ADAMS

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 26th day of September, 2007.

COPIES FURNISHED :

James A. Bossart, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399-0333

Felton Eugene Turner

8464 Vickers Road

Hahira, Georgia 31632

Honorable Alex Sink

Chief Financial Officer

Department of Financial Services

The Capitol, Level 11

Tallahassee, Florida 32399-0300

Daniel Sumner, General Counsel

Department of Financial Services

The Capitol, Level 11

Tallahassee, Florida 32399-0307

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.