07-004701PL Department Of Financial Services vs. George Marshall Smith Status: Closed Recommended Order on Thursday, May 8, 2008.

Summary: Respondent sold unregistered securities, a violation of law.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF )

FINANCIAL SERVICES, )

)

Petitioner, )

) Case No. 07-4701PL

vs. )

)

GEORGE MARSHALL SMITH, )

)

Respondent. )

)

RECOMMENDED ORDER

Notice was provided and on February 20 and 21, 2008, a

formal hearing was held in this case. Authority for conducting

the hearing is set forth in Sections 120.569 and 120.57(1),

Florida Statutes (2007). The hearing was conducted in the

Ingraham Building Conference Room, 317 South Ingraham Avenue,

Tavares, Florida. The hearing was held before Charles C. Adams,

Administrative Law Judge.

APPEARANCES

For Petitioner: Robert Allen Fox, Esquire

Department of Financial Services

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399-0333

For Respondent: H. Richard Bisbee, Esquire

H. Richard Bisbee, P.A.

1882 Capital Circle, Northeast, Suite 206

Tallahassee, Florida 32308

STATEMENT OF THE ISSUE

Should discipline be imposed by Petitioner against

Respondent's license as a life including variable annuity agent

(2-14), life agent (2-16), and health agent (2-40), held

pursuant to Chapter 626, Florida Statutes?

PRELIMINARY STATEMENT

By an Administrative Complaint in Case No. 89790-07-AG,

dated August 22, 2007, Petitioner accused Respondent in three

separate counts of violations of Subsections 626.611(7), (8),

Statutes; violations in relation to Chapter 626, Part X,

according to Subsection 626.9927(1), Florida Statutes, and

associated with Sections 626.9521 and 626.9541, Florida

Statutes, and violations of Subsections 626.99275(1)(b) and

626.99277(6), Florida Statutes.

Unlike Counts I and II, Count III made no reference to

Alleged violations were in relation to the 2002 and 2003

Florida Statutes, depending on the count within the

Administrative Complaint.

Based upon these allegations, Respondent was advised that

Petitioner intended to take action imposing penalties in

accordance with Sections 626.611, 626.621, 626.681, 626.691,

626.692 and 626.9521, Florida Statutes.

The substance of the Administrative Complaint was in

relation to the alleged sales made by Respondent pertaining to

"viatical settlement purchase agreements," according to the

Administrative Complaint, securities as defined in Section

517.021(20)(q), Florida Statutes.

Respondent was provided with a form to be executed electing

the manner of proceeding when addressing the Administrative

Complaint. He chose to dispute one or more of the factual

allegations in the Administrative Complaint, as contemplated by

Section 120.57(1), Florida Statutes. This election of

proceeding was executed on September 11, 2007. In keeping with

instructions found in the form and in accordance with Florida

Administrative Code Rule 28-106.201, Respondent filed a separate

petition for formal hearing. On September 13, 2007, in the

course of that petition for administrative hearing, Respondent

"admitted" allegations within the Administrative Complaint found

at paragraphs 1 through 4, 20, 31 and 42. This indicated that

Respondent did not contest those facts. Otherwise Respondent

disagreed with the factual allegations found in the

Administrative Complaint.

On October 11, 2007, the case was referred to the Division

of Administrative Hearings (DOAH) to conduct a formal hearing

pursuant to Sections 120.56(9) and 120.57(1), Florida Statutes

(2007). It was assigned as DOAH Case No. 07-4701PL. It was

originally noticed to be heard on January 23 and 24, 2008, in

Tavares, Florida.

On November 28, 2007, Respondent filed a motion to compel

discovery. On December 3, 2007, Petitioner filed a response to

the motion to compel.

On December 6, 2007, Petitioner filed a motion for official

recognition.

On December 10, 2007, an order was entered addressing the

Respondent's motion to compel discovery.

On December 13, 2007, Respondent filed a response to

Petitioner's motion for official recognition. On December 7,

2007, an order was entered addressing that request for official

recognition.

On December 17, 2007, Respondent filed a motion to continue

the final hearing.

On December 21, 2007, Respondent filed a motion for

official recognition.

On December 28, 2007, Petitioner filed a response to

Respondent's motion for official recognition.

On January 7, 2008, an order was entered concerning

Respondent's motion for official recognition.

On January 10, 2008, Respondent amended his motion to

continue the final hearing. On that same date Petitioner filed

a motion to limit the scope of the hearing and a motion to amend

its Administrative Complaint. On that date Petitioner filed

another motion for official recognition.

On January 11, 2008, an order was entered granting a

continuance and rescheduling the hearing to be heard on

February 20 and 21, 2008, in Tavares, Florida, and the hearing

proceeded on those dates.

On January 16, 2008, Respondent filed a response to

Petitioner's motion to limit the scope of the hearing.

On January 17, 2008, Respondent filed a response to the

motion to amend the Administrative Complaint.

On January 25, 2008, an order was entered addressing

Petitioner's motion to limit the scope of the hearing.

On January 25, an order was entered on Petitioner's more

recent motion for official recognition.

On January 28, 2008, an order was entered granting

Petitioner's motion to amend the Administrative Complaint.

On February 7, 2008, Respondent filed a second motion for

official recognition and a motion to stay or abate the

proceedings and to continue the final hearing.

On February 12, 2008, Petitioner filed a response to

Respondent's more recent motion for official recognition.

On February 13, 2008, Petitioner filed a response to

Respondent's motion for continuance.

On February 14, 2008, Respondent filed a third motion for

official recognition.

On February 15, 2008, an order was entered concerning

Respondent's second motion for official recognition. On that

same date an order was entered denying Respondent's motion to

stay or abate and to continue the hearing date.

On February 20, 2008, when the hearing commenced, official

recognition was extended in relation to Respondent's third

motion for official recognition, as reflected in the hearing

transcript.

At hearing Petitioner presented the testimony of Daniel

Colozzo, Wanda Colozzo, George Andrade, Douglas Murray and

Veronica Murray. Petitioner's Exhibits numbered 1, 2a, 2b, 4a,

4b, 5 through 14, 16 through 23, 23a, 24, 24a, 25, 25a, 26, 27,

27a, 28, 29, 32 through 39, 39a, 40, 40a, 41 and 41a were

admitted as evidence. Petitioner's Exhibit numbered 42 was

denied admission. Ruling was reserved on the admission of

Petitioner's Exhibits numbered 52 through 56. Having considered

argument by counsel, Petitioner's Exhibit numbered 52 is

admitted. Petitioner's Exhibits numbered 53 through 56 are

denied admission. All exhibits admitted and denied are included

with the record.

At hearing Respondent testified in his own behalf.

Respondent's Exhibits numbered 1 through 7 were admitted.

As the transcript reflects, Respondent was allowed to

preserve constitutional arguments and arguments concerning

Petitioner's alleged "non-rule policies" through proffers in the

record. Those subjects were not deemed appropriate for

consideration on this occasion for reasons explained in the

hearing transcript.

On March 25, 2008, the hearing transcript was filed. On

April 4, 2008, the parties filed their respective Proposed

Recommended Orders which have been considered in preparing the

Recommended Order.

FINDINGS OF FACT

Respondent's Licenses and Background

1. Pursuant to Chapter 626, Florida Statutes, Respondent

is currently licensed in this states as a resident life

including variable annuity agent (2-14), life agent (2-16), and

health agent (2-40).

2. At all times pertinent to the dates and occurrences

referred to herein, Respondent was licensed in this state as a

resident life including variable annuity agent (2-14), life

agent (2-16) and health agent (2-40).

3. Pursuant to Chapter 626, Florida Statutes, the Florida

Department of Financial Services has jurisdiction over

Respondent's insurance licenses and appointments.

4. Respondent's formal education includes a bachelors in

business management and a masters in science and health service

administration.

5. Over time Respondent has worked in the financial

services industry.

6. At present Respondent is a supervisor or principal of

Capitol City Bank Investments.

Securities Registration

7. Respondent also has registration by the Office of

Financial Regulation pursuant to Chapter 517, Florida Statutes,

the "Florida Securities and Investor Protection Act." His

registration is CRD No. 2016997, current as of January 9, 2008.

He served as an "associated person" of a "dealer" as early as

November 14, 2002. He acted in that capacity for Now Trade,

Corp., from the date in November through March 22, 2004.

Mutual Benefits Corporation (MBC)

8. The State of Florida, the Department of Insurance (now

the Office of Insurance Regulation of the Financial Services

Commission, "the Office") licensed MBC as a viatical settlement

provider on May 13, 1997, in accordance with Chapter 626, Part

X, Florida Statutes, the "Viatical Settlement Act."

9. The Office took action against MBC in Case No. 77358-

04-CO, in accordance with Chapter 626, Part X, Florida Statutes.

On March 29, 2005, a Consent Order was entered by the Office.

In an agreement between the Office and MBC by and through a

court appointed receiver for MBC, the Office revoked MBC's

license as a "viatical settlement provider" pursuant to the

terms and conditions within the Consent Order.

10. The Consent Order in Case No: 77358-04-CO, before the

State of Florida, Department of Financial Services, Office of

Insurance Regulation, in the matter of: Mutual Benefits

Corporation in pertinent part stated:

THIS CAUSE came on for consideration as the

result of an agreement between MUTUAL

BENEFITS CORPORATION (hereinafter referred

to as 'MBC'), by and through its duly court-

appointed Receiver, Roberto Martinez

('Receiver'), and the OFFICE OF INSURANCE

REGULATION (hereinafter referred as the

('OFFICE'). . . . the OFFICE hereby finds as

follows:

1. The OFFICE has jurisdiction over the

subject matter of, and parties to, this

proceeding.

2. MBC was granted a license by the

Department of Insurance (now the Office of

Insurance Regulation) on May 13, 1997, to

act as a viatical settlement provider

pursuant to the provisions of Chapter 626,

Part X, Florida Statutes.

3. The OFFICE conducted an examination of

the business and affairs of MBC and

thereafter issued, on May 3, 2004, an

Emergency Cease and Desist Order suspending

the license of MBC, effective immediately

upon service of the order upon MBC.

4. The Securities Exchange Commission of

the United States has instituted an action

in United States District Court for the

Southern District of Florida, City Action

Number 04-60573 (hereinafter 'the SEC

Action'), and secured, on an ex parte basis,

an Order Appointing Receiver dated May 4,

2004, which order granted the Receiver full

and exclusive power, duty, and authority to

administer and manage the business affairs,

funds, assets, choses in action and any

other property of MBC and several entities

alleged to be related to it and to take

whatever actions are necessary for the

protection of investors.

5. The United States District Court for the

Southern District of Florida (hereinafter

'the Court'), has held further hearings,

including an evidentiary hearing on the

application of the SEC to enter a

preliminary injunction against MBC. On

November 10, 2004, Magistrate Garber

recommended that the Motion for Preliminary

Injunction be granted. On February 14,

2005, the Court adopted that recommendation.

6. Therefore, the OFFICE and MBC hereby

agree and consent to the following terms and

conditions:

* * *

(b) MBC and the OFFICE agree that MBC's

viatical provider license shall be revoked

by issuance of this Consent Order.

* * *

(d) In the event that the Receivership in

the SEC Action is dissolved and any

restraining order issued by the U.S.

District Court of the Southern District of

Florida is modified to allow MBC to conduct

its viatical settlement business or upon the

Court issuing any other order allowing MBC

to conduct its viatical settlement business,

MBC would be free to apply for a license

from the state of Florida.

* * *

The receiver is now responsible for activities involving

viatical settlement purchase agreements or contracts, to include

those associated with the viatical settlement purchasers in this

case, not concluded by the agreement(s) to return on the

investment(s) described in the viatical settlement purchase

agreements or contract(s).

MBC and Respondent

11. Prior to the entry of the Consent Order involving MBC,

Respondent, as an employee of First Liberty Group LLC (First

Liberty), had sold interests in life insurance policies offered

by viators, under terms set forth in a "viatical settlement

purchase agreement" offered by MBC as the viatical settlement

provider, all within the purview of Chapter 626, Part X, Florida

Statutes, the "Viatical Settlement Act." (In addition,

Respondent as an employee of First Liberty offered for sell

financial products, e.g. annuities and certificates of deposit

(CDs).) The relevant time period in relation to employment with

First Liberty was the years 2002 and 2003, as more specifically

explained in findings of fact that follow.

Viatical Settlement Purchase Agreement and Other Information

12. Pertinent features within all viatical settlement

purchase agreements entered into between purchasers in this case

and MBC, as presented by Respondent in his capacity as agent are

as follows:

VIATICAL SETTLEMENT PURCHASE AGREEMENT

No modifications to this Contract may be

made without the written consent of Mutual

Benefits Corp.

. . . the Viatical Settlement Purchaser

(is), hereinafter referred to as

'Purchaser', upon the following terms and

conditions. This Agreement covers the

purchase of an interest in the death benefit

of a life insurance policy or policies

insuring the life of persons who are either

terminally ill or have an estimated life

expectancy of 72 months or less.

* * *

. . . the Purchaser acknowledges that the

economic benefit derived from the

transaction(s) contemplated by this

Agreement will result solely from the

maturity of the life insurance policy(ies)

upon the death of the insured(s), and will

not be derived from the efforts of any

person or entity employed by or associated

with Mutual Benefits Corp. . . . ,

* * *

1) The Purchaser hereby agrees to deposit

the sum of $______ with American Express Tax

and Business Services, Inc., the Escrow

Agent, for the purpose of acquiring the

death benefit of a life insurance

policy(ies) which will be allocated as set

forth herein.

2) The only benefit the Purchaser will

receive pursuant to this Agreement will be

payment of the agreed portion of the death

benefit upon the maturity of the life

insurance policy(ies).

3) Policies are priced at a discount of the

death benefit which depends on the projected

life expectancy of each insured. Mutual

Benefits Corp. makes no representation or

warranty as to the specific date when a

policy will mature. The return realized by

the Purchaser does not represent an annual

return. An annual return cannot be

determined until the policy(ies) in which

the Purchaser obtains an interest matures.

4) Mutual Benefits Corp. shall assist

Purchaser in the purchase of the death

benefit of life insurance policies of

individuals which comply with the following

criteria:

* * *

c) All life expectancies of insureds will

be determined by either an independent

reviewing physician or a medical review

company taking into account the insured's

age, current medical history, and, where

applicable, insurance industry actuarial

guidelines.

d) Prior to closing, Purchases will receive

from Mutual Benefits Corp. information

regarding specific policy(ies) that may be

purchased in accordance with the terms of

this Agreement to assist the Purchaser in

evaluating whether the policy satisfies

his/her requirements.

* * *

9) . . . and also acknowledges that once

the policy closes the funds committed are

not liquid and the funds are not available

until the policy matures. Purchaser hereby

also acknowledges that the life

expectancy(ies) provided by the reviewing

physicians are only estimates. Mutual

Benefits Corp. does not make any warranties

regarding the accuracy of these estimates.

Purchaser further acknowledges that the

policy may mature before or after the

projected life expectancy. Purchaser also

represents that he/she is able to bear the

risk of the purchase of a policy(ies) for an

indeterminate period and will only commit

himself/herself to a purchase which bears a

reasonable relationship to his/her net

worth.

* * *

22) . . . Viatical Services, Inc.'s

agreement to pay any unpaid premiums limited

to the exhaustion of the funds in its

premium reserve account.

* * *

23) f) This Agreement is voidable by the

Purchaser at any time within (3) days after

the disclosers mandated by Florida Statutes

§ 626.99236 are received by the Purchaser.

* * *

25) Type of Death Benefit(s) to be

Purchased Life

Estimated Life Dollar Amount Fixed Return on Dollar

Expectancy of Purchase Amount of Purchase

12 Months __________ 12% fixed return on purchase price

18 Months __________ 21% fixed return on purchase price

24 Months __________ 28% fixed return on purchase price

36 Months __________ 42% fixed return on purchase price

48 Months __________ 50% fixed return on purchase price

60 Months __________ 60% fixed return on purchase price

72 Months __________ 72% fixed return on purchase price

Other __________ 60% fixed return on purchase price

Total amount $__________ to be allocated amongst

the above estimated expectancies.

* * *

X. DISCLOSURE TO VIATICAL SETTLEMENT

PURCHASERS

Any person considering purchasing any

portion of the death benefit of one or more

insurance policies should be aware of the

following:

33) The returns available on viatical

settlement contracts facilitated by Mutual

Benefits Corp. directly tied to the

projected life expectancy of the insured.

34) The fixed return that a Purchaser may

receive under the Viatical Settlement

depends upon the price paid for the policy

as a discount from its death benefits fixed

return is determined by the projected life

expectancy of the insured as set forth

below.

Projected Life Fixed Return on Dollar

Expectancy Amount of Purchase

A. 12 Months 12% fixed return on purchase price

B. 18 Months 21% fixed return on purchase price

C. 24 Months 28% fixed return on purchase price

D. 36 Months 42% fixed return on purchase price

E. 48 Months 50% fixed return on purchase price

F. 60 Months 60% fixed return on purchase price

G. 72 Months 72% fixed return on purchase price

The above returns are fixed and not annualized

returns.

* * *

35) . . . Viatical Services, Inc.'s

agreement to pay any unpaid premiums limited

to the exhaustion of the funds in its

premium reserve account. In the event the

trust and Viatical Services, Inc.'s

respective premium reserve accounts are

exhausted, the Purchaser may be responsible

for a payment of his/her pro rata share of

any unpaid premium. In the event the

Purchaser is required to pay premiums, such

payments will reduce the fixed refund

referenced above.

* * *

39) The life expectancy on any particular

insured and the rate of return on a viatical

settlement contract are only estimates and

cannot be guaranteed.

40) The purchase of the death benefit of

one or more life insurance policies should

not be considered a liquid purchase. While

every attempt is made to determine the

insured's life expectancy at the time of

purchase, it is impossible to predict the

exact time of the insured's demise. As a

result, the Purchaser's funds will not be

available until after the death of the

insured. It is entirely possible that the

insured could outlive his/her life

expectancy, which would delay payment of the

death benefits under the Viatical Settlement

Purchase Agreement.

13. In the transactions in dispute, in the time MBC

received funds from the purchaser for purposes of acquiring the

death benefit of the life insurance policy or policies, it would

acknowledge receipt of those funds. In writings MBC would send

information to the purchaser, described as the client,

concerning a specific life insurance policy matching the request

made in the purchase agreement. The viator was identified by a

number. The estimated life expectancy of the viator was

identified. The amount of funds provided toward the purchase

was identified. The amount to be paid in relation to the death

benefits was identified. Other information was included

referred to as "policy detail." That policy detail provided

investor information such as the original policy face value,

number of investors involved with the policy, the policy number

of the insurance policy, the insurance company name, the nature

of the plan of the insurance and whether there was a current

premium payment obligation, together with an estimated date upon

which the investor premium payment obligation, referring to the

purchaser's obligation to meet the payments would begin. Some

information about the insured was provided concerning HIV status

and the last date of contact with the viator/insured.

14. The contact letter concerning the commitment to

purchase the interest in a life settlement or viatical

settlement, so described by MBC, also set out a opportunity to

decline to participate in the purchase where it said:

The policy described in the attached

disclosure form satisfies the selection

criteria that you provided to us. We will

deem you to accept this placement UNLESS we

receive signed, written notice of your

disapproval within five (5) business days

after you receive this letter.

15. Beyond the date upon which the purchaser received an

MBC letter reference "commitment to purchase an interest in a

life settlement or viatical settlement," MBC would send the

purchaser additional correspondence referring to the viator

number as an insured case file restating the amount of purchase,

and enclosing an executed assignment of ownership from the life

insurance company over to a new owner and designating a

beneficiary in accordance with the purchase agreement. This

letter would enclose a certificate of insurance and the review

medical and physician's report related to the policy with

specific information about the insured being redacted as to

patient name, date of birth and social security number.

16. Petitioner's Exhibit numbered 20 is an example of a

receipt for funds. Petitioner's Exhibit numbered 24 includes a

letter of "commitment to purchase an interest in a Life

settlement or viatical settlement," together with a policy

detail sheet and the follow-up letter, indicating assignment of

ownership of the insurance policy, a certificate of insurance

and the review medical and physician's report, among other

matters.

17. During 2002 and 2003 none of the MBC viatical

settlement purchase agreements (contracts) or agreements in this

case were registered as securities in accordance with Chapter

517, Florida Statutes.

Respondent's Sales Practices

18. First Liberty was an entity separate and apart from

MBC. First Liberty employed Respondent at its offices in

Summerfield, Florida.

19. In promoting its investment products, First Liberty

advertised CDs; it did not advertise viatical sales products.

The sale of viatical settlement purchase agreements constituted

roughly 30 percent of the business conducted by Respondent as a

First Liberty employee. Annuities were sold at First Liberty as

an additional investment product.

20. Contract documents associated with MBC viatical sale

purchase agreements were prepared by MBC to be utilized by

Respondent.

21. When meeting with the customers, Respondent utilized a

graph that was designed to portray the experience in investment

returns from the MBC viaticals based upon First Liberty's

experience with the product.

22. First Liberty had an in-house attorney whom Respondent

relied upon in conducting business. That individual did not

indicate that MBC viaticals should not be sold or that the

viaticals were securities requiring registration. Respondent's

impression of MBC was that MBC provided good service and acted

promptly in dealing with its purchasers.

23. Respondent proceeded with a personal belief that the

viaticals were insurance products to be regulated as insurance

products with the "Florida Department of Insurance." In his

belief, this was borne out by an approval affixed from the

Florida Department of Insurance to a viatical settlement

purchase agreement that Respondent entered into with MBC in the

amount of $9,707.00. Respondent's Exhibit numbered 6.

Respondent also sold an MBC viatical settlement purchase

agreement to his father Fredrick M. Smith in the amount of

$20,000.00. Respondent's Exhibit numbered 7. The purchases

made by Respondent and his father are now controlled in the

receivership associated with MBC. Concerning the MBC contracts

entered into by Respondent and his father controlled by the MBC

receiver, the receiver is responsible for paying premiums for

the viator over a finite period during the viator's life

expectancy established by the contract. At the expiration of

that period, Respondent and his father would be responsible for

paying premiums. This is a similar process when compared to

other MBC viatical contracts subject to the receiver's control.

The Murrays

24. Douglas B. Murray was born on March 28, 1934. He

retired from work in 1994 from a position as a heating and

plumbing sales representative for Sears.

25. He became acquainted with Respondent in late summer or

early fall 2002. On August 29, 2002, in response to

Mr. Murray's inquiry, Respondent wrote him to invite his

business with First Liberty.

26. Subsequently Mr. Murray went to Respondent's office in

Summerfield with his wife, Veronica Murray. Ms. Murray was in

her early 60s at the time. In 2002 she had retired from her job

as a secretary.

27. Mr. Murray had lost money in the stock market. With

the money he had left from that venture, he decided to reinvest

to supplement his income with interest that might be available

from $100,000 he held. At the time CDs were returning a low

percentage, 2 1/2 to 3 percent. This amount of return was not

satisfactory to Mr. Murray.

28. In their discussions, Respondent mentioned other

possible investments but explained that the return on the

investments for other opportunities would not bring about 5 to 7

percent that Mr. Murray was accustomed to. Ultimately, this led

to the viatical settlement purchases with returns in excess of 7

percent.

29. After discussing other possibilities for investment,

Respondent had mentioned viaticals as a possible investment.

The investment strategy under consideration was the purchase of

a short term annuity for a period of three years amounting to

$30,000, with an additional $70,000 being placed in viaticals.

30. The arrangement made by Respondent with the Murrays

was to purchase the annuity which paid an income for its period

pending the maturity of the viaticals, which was dependent upon

the viator's demise.

31. The period contemplated for return on the viaticals

purchased by Mr. Murray was three years.

32. Respondent explained to the Murrays that the viaticals

were in association with people who were very ill and who had to

sell their rights to insurance policies to provide income to the

insured to pay for medical expenses or to meet other needs.

33. On September 17, 2002, Mr. Murray made application for

an annuity through the Lafayette Life Insurance Company, paying

$29,550 toward that purchase. In addition Mr. Murray through

the Murray Family Trust entered into a viatical settlement

purchase agreement. On September 17, 2002, the amount of the

viatical purchase was $70,450 paid by check into an escrow

account on September 19, 2002. This supported the purchase of

five separate viatical transactions. One of the viaticals has

paid off in the manner contemplated by the agreement. Four

others have not paid. Mr. Murray is paying premiums on those

policies.

34. Mr. Murray will continue to meet the premium payments

on the four viaticals until he exhausts approximately $19,000

available to meet those premium payments. The viatical that did

pay returned approximately $19,750, which he is applying to meet

the premium obligations for the four remaining viaticals.

35. Mr. Murray did not expect to have to pay premiums. On

this subject, Respondent provided examples where people had

received the return on their investment in the viaticals.

36. Mr. Murray acknowledges that the agreement

contemplated that in the event that the viatical settlement

purchase agreement premium reserve accounts were exhausted, that

the Murrays might be responsible for meeting the costs of

premiums.

37. Mr. Murray did not read the viatical settlement

purchase agreement entered into carefully, even though he was

not familiar with this form of investment. He relied upon

Respondent and trusted his judgment.

38. The respective pages within the viatical settlement

purchase agreement for the Murray Family Trust were initialed by

the Murrays, husband and wife, and signed by those purchasers.

As the pages were being initialed by the Murrays, Respondent

made explanations of the points set forth on those pages.

39. In the discussion Respondent mentioned that the

Murrays could receive copies of physicians' reports concerning

the health circumstance for the insured persons, the viators.

Respondent told the Murrays that none of the policies under

consideration related to HIV patients. The explanation was that

the persons were elderly, approaching the end of life.

40. Mr. Murray understood that he could rescind his choice

to proceed with the viatical purchases but chose not to having

confidence that the investment was sound.

The Andrades

41. George F. Andrade was born on June 21, 1940. His wife

Elizabeth A. Andrade was born on July 8, 1942.

42. Mr. Andrade had been employed as a commercial

fisherman and commercial truck driver. He retired in 2002.

43. Mr. Andrade purchased viatical settlements in his own

name and a viatical settlement in both his name and his wife's

name. Mrs. Andrade also purchased a viatical settlement. All

purchases were from MBC with Respondent acting as agent.

44. The Andrades were interested in supplementing their

income. They saw an advertisement in the newspaper for CDs

offered by First Liberty. They went to the office where

Respondent was employed. The Andrades discussed the possible

purchase of CDs with Respondent.

45. Among other investment prospects discussed was a

viatical settlement agreement. The Andrades had prior

experience with viatical agreements but had declined to complete

the transaction from another provider whom they dealt with

before the meeting with Respondent. Notwithstanding their

impression concerning the earlier viatical agreement, Respondent

persuaded the Andrades that the viatical agreements he offered

were a good investment. In this discussion, he told the

Andrades that he had invested in viatical agreements.

46. When Respondent mentioned that he had entered into a

viatical settlement purchase agreement, he also mentioned that

in his experience the viatical agreements paid off on time and

indicated that the frequency of times in which the viatical

agreements met the expected timeline for maturity was "pretty

high."

47. During their discussions Respondent suggested that the

Andrades might wish to contact the Better Business Bureau

concerning the practices of MBC. They did and found no cause

for alarm.

48. Ultimately, the Andrades purchased eight viatical

agreements from Respondent offered by MBC.

49. On March 18, 2003, George and Elizabeth Andrade

entered into a viatical settlement purchase agreement for which

they paid $33,500. On that date there were two separate

viatical settlement purchase agreements entered into by

Mr. Andrade alone in an amount of $21,214.66 and $15,696.11

respectively.

50. On April 7, 2003, Mrs. Andrade entered into a viatical

settlement purchase agreement in the amount of $21,172.87.

51. Of the eight viatical agreements received pursuant to

their purchases, none have provided a return on the investments.

In response to six of those viatical agreements, the Andrades

have forfeited their rights and lost the investment because they

did not feel that they could afford to meet the premium payments

due.

52. When executing the viatical settlement purchase

agreements, the Andrades did not read those documents. They

simply initialed the pages placing their trust in Respondent's

explanations concerning the agreements.

53. In his discussion, Respondent reminded the Andrades

that if the insured lived longer than the maturity date on the

viatical agreement, that the Andrades would be responsible for

paying the premiums.

54. The Andrades also purchased an annuity from Respondent

as a supplement to their monthly income needs. The annuity that

was purchased was for $30,000.

55. The Andrades staggered the due dates for the viatical

agreement purchases over two years, three years and four years.

The expectation in the investment planning was that the annuity

and the viatical agreements be assembled in a manner that the

Andrades would receive income over a period of time.

56. They intended to travel with the money derived from

the viatical purchase agreements.

57. Respondent told the Andrades that they could accept or

decline the viatical agreements based upon the medical history

provided related to the insured. The Andrades did not review

any of the medical information related to the insureds. They

were aware that there was a rescission period associated with

the viatical agreements that was supported by the medical

information.

58. The Andrades understood that the estimates on life

expectancy for the insureds were not guarantees.

The Colozzos

59. Daniel Colozzo and Wanda Colozzo are husband and wife.

Mr. Colozzo was born on August 11, 1940. Mrs. Colozzo was born

on March 2, 1942.

60. Mr. Colozzo had been a construction worker for about

38 years. Mr. Colozzo has been retired since 1996.

Mrs. Colozzo had a retail fabric business before selling the

business in 2003.

61. Mr. Colozzo saw a written advertisement related to CDs

associated with First Liberty. Based upon that information he

went to Respondent's office to discuss investments.

62. Once there he noticed an item, which Mr. Colozzo

describes as a flag, explaining viaticals with a percentage

return based upon the year that the viatical matured. Wanda

Colozzo, Mr. Colozzo's wife was with him at the time.

63. The Colozzos discussed the purchase of CDs. They did

not find this desirable. Respondent mentioned the prospect of

purchasing annuities. The annuities were also discussed.

Mrs. Colozzo was interested in a return on investments of

approximately $2,000 a month and the annuities did not fit their

needs.

64. As an alternative, in discussing viaticals, Respondent

explained that they were life insurance policies that people had

and the Colozzos would be buying a portion of the policy. In

the beginning Mr. Colozzo was not interested because he did not

wish to wait for someone to die to get a return on his

investment. Respondent replied that the Colozzos would be

helping someone because the persons who were insured could use

the money to survive, to live on. At this meeting no decision

was made to purchase viaticals. The Colozzos met several times

with Respondent before deciding to buy viaticals.

65. On June 9, 2003, Daniel and Wanda Colozzo entered into

a viatical settlement purchase agreement with MBC in the amount

of $60,000, with Respondent acting as the sales agent. The

amount was paid by check written by Mrs. Colozzo to an escrow

agent and a receipt was provided for the funds.

66. When Mr. Colozzo asked Respondent whether the viatical

purchase was a matter about which tax would be owed on the

return of investment, Respondent replied that it could be or

could not be. Respondent stated that it was not a security, so

it was not registered.

67. The nature of the viatical settlement purchase

agreement included one viatical agreement for 36 months at

$15,000; one viatical agreement for 48 months for $15,000; one

viatical agreement at 60 months for $15,000 and one viatical

agreement for 72 months at $15,000.

68. On June 9, 2003, a fifth viatical was purchased in the

amount of $10,000, as evidenced by a check written by

Mrs. Colozzo to the escrow agent. The details of that viatical

agreement are not known.

69. On June 27, 2003, the Colozzos purchased a viatical

for $15,000, terms unknown.

70. Commencing on July 15, 2003, the Colozzos were

provided assignment of ownership in the viaticals purchased on

June 9, 2003, with medical information related to the life

insurance policy holder, information concerning the estimated

life-expectancy, the amount of funds made on the purchase and

the statement of payment under the death benefit related to the

viatical agreement.

71. On September 9, 2003, the Colozzos returned to

Respondent's office and purchased two three-year viaticals from

Respondent at $75,000 each.

72. Separate checks were written to the escrow agent for

each of the $75,000 purchases made on September 9, 2003.

73. As before, MBC made assignment of ownership in the

life insurance policies related to the viatical agreements

entered into on September 9, 2003. That notification included

assignment, statement of amount to be paid upon under the death

benefits, and medical information and was provided commencing

with notification on November 6, 2003.

74. All together the Colozzos purchased eight viaticals

worth $235,000.

75. On the occasions when the Colozzos met with Respondent

and entered into the viatical settlement purchase agreements,

the Colozzos looked them over and Respondent explained what was

contained page-by-page. Each page was initialed by the

Colozzos. The Colozzos did not carefully read those pages.

76. When MBC provided information to the Colozzos

concerning the viatical agreements, they were aware of their

right to rescind the purchases and declined. Under the terms of

the viatical settlement purchase agreements initially entered

into, there was a clause allowing rescission. When Respondent

explained the nature of the viatical settlement purchase

agreements, he told the Colozzos that if the expected life

expectancy was exceeded that MBC normally granted another year,

which would have been a grace period, after which the Colozzos

would be responsible for paying premiums.

77. When describing the life insurance policies pertaining

to viators, Respondent told the Colozzos that the life insurance

policies were from major companies and were safe because they

were life insurance policies.

78. Mr. Colozzo had his accountant in New York review the

viatical agreements. That individual indicated that he did not

know much about viaticals but did not find anything wrong with

them. The accountant in New York told the Colozzos that he had

79. Of the eight viaticals purchased two have matured and

returned money on the investment. The ones that matured were

$15,000 viatical agreements. The Colozzos have forfeited their

rights in three viaticals totaling $165,000 and continue to hold

the remaining viaticals.

80. In their discussions Respondent told the Colozzos that

he himself owned viaticals.

CONCLUSIONS OF LAW

81. 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).

82. Petitioner licensed Respondent through license number

D034447, as a life including variable annuity agent (2-14), life

agent (2-16), and health agent (2-40). At present he holds the

license under those license details.

83. Beginning November 14, 2002, through the present,

Respondent has been an "associated person" registered pursuant

to Chapter 517, Florida Statutes, the "Florida Securities and

Investor Protection."

84. Pursuant to Chapter 2003-261, Laws of Florida,

pertaining to Chapter 517, Florida Statutes, regulatory

functions formerly provided the Department of Banking and

Finance were replaced by the Financial Services Commission and

the Office Financial Regulation of the Commission. Similarly,

under provisions found within Chapter 2003-261, Laws of Florida,

regulatory activities in accordance with Chapters 624 and 626,

Florida Statutes, passed from the Department of Insurance to the

Department of Financial Services, Financial Services Commission

and Office of Insurance Regulation of the Financial Services

Commission.

85. Petitioner in an Administrative Complaint, Case No.

89790-07-AG has charged Respondent with violations pertaining to

Chapter 626, Florida Statutes (2002 and 2003), associated with

his license. Those violations referred to in the Administrative

Complaint relate to Respondent's alleged activities for MBC

involving "viatical settlement purchase agreements," he offered

for sale and sold to several married couples. According to the

Administrative Complaint, as amended, those persons were D.M.

and V.M. (the Murrays), G.A. and E.A. (the Andrades), and D.C.

and W.C. (the Colozzos). The alleged transactions related to

those families are described in Counts I through III

respectively. The alleged violations resulting from the

transactions are found within those counts.

86. In Counts I and II Respondent is charged in paragraphs

(a) through (j) with the following violations. Count III makes

no reference to violations found in (g) and (j) to Counts I and

III. The Administrative Complaint as to all violations states:

IT IS THEREFORE CHARGED that you, GEORGE

MARSHALL SMITH, have violated or are

accountable under the following provisions

of the Florida Insurance Code and Rules of

the Chief Financial Officer which constitute

grounds for the suspension or revocation of

your license(s) and eligibility for

licensure:

(a) Demonstrated lack of fitness or

trustworthiness to engage in the business of

insurance. [Section 626.611(7), Florida

Statutes];

(b) Demonstrated lack of reasonably

adequate knowledge and technical competence

to engage in the transactions authorized by

the license or appointment. [Section

626.611(8), Florida Statutes];

(c) Fraudulent or dishonest practices in

the conduct of business under the license or

appointment. [Section 626.611(9), Florida

Statutes];

(d) Sale of an unregistered security that

was required to be registered, pursuant to

chapter 517. [Section 626.611(16), Florida

Statutes];

(e) 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 permit.

[Section 626.621(2), Florida Statutes];

(f) In the conduct of business under the

license or permit, engaging in unfair

methods of competition or in unfair or

deceptive acts or practices, as prohibited

under part X of this chapter, or having

otherwise shown himself to be a source of

loss to the public. [Section 626.621(6),

Florida Statutes];

(g) Knowingly:

a. Filing with any supervisory or

other public official,

b. Making, publishing, disseminating,

circulating,

c. Delivering to any person,

d. Placing before the public,

e. Causing, directly or indirectly,

to be made, published, disseminated,

circulated, delivered to any person,

or placed before the public, any false

material statement;

[Section 626.9541(1)(e), Florida Statutes];

(h) A violation of [Chapter 626.991 et.

seq. ] is an unfair trade practice under ss.

626.9521 and 626.9541, Florida Statutes, and

is subject to the penalties provided in the

insurance code. Part X of this chapter

applies to a licensee under this act or a

transaction subject to this act as if a

viatical settlement contract and a viatical

settlement purchase agreement were an

insurance policy. [Section 626.9927(1),

Florida Statutes];

(i) (1) It is unlawful for any person:

(b) In the solicitation of a viatical

settlement purchase agreement:

1. To employ any device, scheme, or

artifice to defraud:

2. To obtain money or property by

means of an untrue statement of a

material fact or by any omission to

state a material fact necessary in

order to make the statements made, in

light of the circumstances under which

they were made, not misleading; or

3. To engage in any transaction,

practice or course of business which

operates or would operate as a fraud

or deceit upon a person.

[Section 626.99275(1)(b), Florida Statutes];

(j) A person may not represent that an

investment in a viatical settlement purchase

agreement is 'guaranteed,' that the

principal is 'safe,' or that the investment

is free of risk. [Section 626.99277(6),

Florida Statutes];

87. The above-cited allegations are set forth in the

original Administrative Complaint. The Administrative Complaint

related to the alleged substantive violations was refined by the

Amendment to the Administrative Complaint, to indicate that

Count I was in association with Florida Statutes (2002) and

Counts II and III were in association with Florida Statutes

(2003).

88. This is a disciplinary case. Therefore, Petitioner

has the burden of proving the allegations in the Administrative

Complaint by clear and convincing evidence. See § 120.57(1)(j),

Fla. Stat. (2007); see also 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); and Pou v. Department of Insurance and

Treasurer , 707 So. 2d 941 (Fla. 3rd DCA 1998). 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).

89. Given the penal nature of this case statutory

provisions that form the basis for the Administrative Complaint

have been strictly construed. Ambiguities favor the Respondent.

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

and Lester v. Department of Professional Occupational

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

(Fla. 1st DCA 1977).

90. With the exception of allegations in association with

Section 626.611(16), Florida Statutes (2002 and 2003), found

within Counts I through III, involving "sale of an unregistered

security that was required to be registered, pursuant to Chapter

517," Petitioner has abandoned the other allegations in the

Administrative Complaint. This realization extends from the

conclusions of law suggested through the Proposed Recommended

Order filed by Petitioner's counsel. Respondent takes no issue

with Petitioner's position in his Proposed Recommended Order,

with the exception of allegations made pursuant to Section

626.611(16), Florida Statutes (2002 and 2003), that he does not

concede. Setting aside for the moment any discussion concerning

any allegations that Respondent violated Section 626.611(16),

Florida Statutes (2002 and 2003), other statutory violations

alleged in the Administrative Complaint, as amended, have not

been proven and should be dismissed.

91. Discussion of any violation of Section 626.611(16),

Florida Statutes (2002 and 2003), is made recognizing that at

times relevant to the case Respondent was as associated person

within the definition set forth in Section 517.021, Florida

Statutes (2002 and 2003), in addition to being an insurance

agent as defined in Section 626.015, Florida Statutes (2002 and

2003).

92. The transactions involving the Murrays, the Andrades,

and the Colozzos, in which the Respondent offered for sale and

sold MBC investment products under viatical settlement purchase

agreements were not transactions registered in accordance with

Chapter 517, Florida Statutes (2002 and 2003).

93. It must be decided whether the transactions

constituted unregistered securities that were required to be

registered pursuant to Chapter 517, Florida Statutes (2002 and

2003), and whether Respondent is accountable for lack of

registration in the event that the transactions constituted

securities that should have been registered.

94. Subsection 517.021(20)(q), Florida Statutes (2002 and

2003), forms the basis for considering the dispute, where it

states:

'Security' includes any of the following:

* * *

(q) An investment contract.

Were the transactions at issue "investment contracts"?

95. If the transactions were "investment contracts," they

were required to be registered. To do otherwise would be an

unlawful activity in the offer for sale or the sale of an

"investment contract." It would violate the requirement for

registration found at Section 517.07(1) and (2), Florida

Statutes (2002 and 2003), which states:

(1) It is unlawful and a violation of this

chapter for any person to sell or offer to

sell a security within this state unless the

security is exempt under s. 517.051, is sold

in a transaction exempt under s. 517.061, is

a federal covered security, or is registered

pursuant to this chapter.

(2) No securities that are required to be

registered under this chapter shall be sold

or offered for sale within this state unless

such securities have been registered

pursuant to this chapter and unless prior to

each sale the purchaser is furnished with a

prospectus meeting the requirements of rules

adopted by the commission.

96. The transactions in question did not correspond with

any form of exemption recognized in Sections 517.051 and

517.061, Florida Statutes (2002 and 2003). Therefore if the

unregistered transactions were securities, more specifically

investment contracts, they are addressed in Section 626.611(16),

Florida Statutes (2002 and 2003).

97. The transactions entered into by the Murrays, the

Andrades, and the Colozzos, in which Respondent offered for sale

and sold interests in the death benefits of life insurance

policies for MBC pursuant to viatical settlement purchase

agreements involved securities as defined in Section

517.021(20)(q), Florida Statutes (2002 and 2003), as investment

contracts. See United Housing Foundation, Inc. v. Forman , 421

U.S. 837, 95 S.Ct. 2051, 44 L.Ed. 2d 621 (1975); Securities and

Exchange Commission v. W. J. Howey, Co. , 328 U.S. 293, 66 S.Ct.

1100, 90 L.Ed. 1244 (1946); Securities and Exchange Commission

v. Mutual Benefits Corp., Joel Steinger, a/k/a Joel Steiner, et

al. , 408 F.3d 737 (11th Cir. 2005); Farag v. National Data Bank

Subscriptions, Inc. , 448 So. 2d 1098 (Fla. 2nd DCA 1984); Adams

v. State , 443 So. 2d 1003 (Fla. 2nd DCA 1983); Nelson v. State ,

441 So. 2d 659 (Fla. 4th DCA 1983); Rudd v. State , 386 So. 2d

1216 (Fla. 5th DCA 1980); Artistic Door Corp. v. Rheney , 384

So. 2d 179 (Fla. 4th DCA 1980); Le Chateau Royal Corp. v.

Pantaleo , 370 So. 2d 1155 (Fla. 4th DCA 1979); and Edwards v.

Trulis , 212 So. 2d 893 (Fla. 1st DCA 1968).

98. Regulatory opportunities envisioned by Chapter 626,

Part X, Florida Statutes (2002 and 2003), the "Viatical

Settlement Act," do not preempt the regulator from proceeding in

accordance with Chapter 517, Florida Statutes (2002 and 2003),

the "Florida Securities and Investor Protection Act", in

relation to viatical settlement purchase agreements that were

unregistered and not exempt from registration. Kligfeld v.

Office of Financial Regulation , 876 So. 2d 36 (Fla. 4th DCA

2004). Consequently, unregistered securities required for

registration pursuant to Chapter 517, Florida Statutes (2002 and

2003), that are sold can be examined in accordance with Section

626.611(16), Florida Statutes (2002 and 2003).

99. Chapter 2005-237, Laws of Florida, was an act relating

to viatical settlements. It made amendments to both Chapters

517 and 626, Florida Statutes. July 1, 2005, was the effective

date for the amendments. The amendments do not apply to the

present case, not being in place when the alleged violations

occurred.

100. As a result of the amendments Section 517.021(21)(q),

Florida Statutes (2005) made reference to "an investment

contract" as constituting a security. Section 517.021(21)(w),

Florida Statutes (2005), referred to "a viatical settlement

investment" as a security.

101. Left undisturbed was Section 626.611(16), Florida

Statutes (2005) in its reference to "sale of an unregistered

security that was required to be registered, pursuant to chapter

517."

102. Chapter 2005-237, Laws of Florida, added Section

626.611(17), Florida Statutes (2005), which states:

(17) In transactions related to viatical

settlement contracts as defined in s.

626.9911 :

(a) Commission of a fraudulent or dishonest

act.

(b) No longer meeting the requirements for

initial licensure.

(c) Having received a fee, commission, or

other valuable consideration for his or her

services with respect to viatical

settlements that involved unlicensed

viatical settlement providers or persons who

offered or attempted to negotiate on behalf

of another person a viatical settlement

contract as defined in s. 626.9911 and who

were not licensed life agents.

(d) Dealing in bad faith with viators.

103. The more explicit references to "viatical settlement

investment" and "viatical settlement contracts" found in the

aforementioned provisions at Chapters 517 and 626, Florida

Statutes (2005), does not lead to the conclusion that Section

626.611(16), Florida Statutes (2002 and 2003), was unenforceable

in relation to viatical settlement agreements, to include the

transactions in the present case, when considering the proper

construction of statutory language found in the preexisting

statute that has application to this case. The more explicit

treatment of viatical contracts or agreements under the present

statutes, Chapter 517 and 626, Florida Statutes, does not mean

that in the past no consideration was given to viatical sales

agreements or contracts in accordance with Chapters 517 and 626,

Florida Statutes (2002 and 2003).

104. Notwithstanding any lack of intent on his part,

Respondent has violated Section 626.611(16), Florida Statutes

(2002 and 2003), resulting in a violation of Section 626.621(2),

Florida Statutes (2002 and 2003). Respondent is accountable by

virtue of his sale of unregistered securities required for

registration pursuant to Chapter 517, Florida Statutes (2002 and

2003), in relation to the viatical settlement purchase

agreements entered into by the Murrays, the Andrades, and the

Colozzos, whatever his motives. See State v. Houghtaling , 181

So. 2d 636 (Fla. 1965); Beshore v. Department of Financial

Services , 928 So. 2d 411 (Fla. 1st DCA 2006) and Huff v. State ,

646 So. 2d 742 (Fla. 2nd DCA 1994).

Penalties

105. In determining the appropriate punishment for the

violations, resort is made to Section 626.611 and 626.621,

Florida Statutes (2002 and 2003), together Florida

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

231.160. Recognizing that violations have been proven under

Counts I through III to the Administrative Complaint, totaling

36 months, 12 months for each count, as the common expectation

and that this results in revocation in accordance with Florida

Administrative Code Rule 69B-231.040(3)(d), derived from Florida

Administrative Code Rule 69B-231.080(16), the ultimate

determination for punishment is made upon a review of criteria

set forth in Florida Administrative Code Rule 69B-231.160,

relating to aggravating/mitigating circumstances. Respondent's

actions in the transactions were not willful. The Murrays, the

Andrades, and the Colozzos suffered substantial financial

injury. The age and capacity of the Murrays, the Andrades, and

the Colozzos were not a contributing factor. Restitution has

not been made. Respondent had no ill motives in dealing with

his customers. The amount of compensation received for his

participation in the offer for sale and sale of the viaticals is

not known. Respondent himself entered into a similar

transaction involving the viaticals. The degree of cooperation

between Respondent and Petitioner is not known. But Respondent

was entitled to defend himself against the allegations without

compromise. Respondent bears personally responsibility for the

losses to his customers but not total responsibility. No

related criminal charges pertaining to Respondent exist.

Secondary violations were found in association with Section

626.621(2), Florida Statutes (2002 and 2003). No previous

disciplinary action was taken against Respondent. Concerning

transactions that took place after November 14, 2002, Respondent

could be expected to have greater insight into the nature of the

transactions, given his registration as an associated person

pursuant to Chapter 517, Florida Statutes.

RECOMMENDATION

Upon consideration of the findings of fact and the

conclusions of law, it is

RECOMMENDED:

That a final order be entered finding Respondent in

violation of Subsections 626.611(6) and 626.621(2), Florida

Statutes (2002 and 2003), in Counts I through III, dismissing

other alleged statutory violations within the Administrative

Complaint, as amended, and suspending Respondent's insurance

license for a period of six months.

DONE AND ENTERED this 8th day of May, 2008, 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 8th day of May, 2008.

COPIES FURNISHED :

Robert Allen Fox, Esquire

Department of Financial Services

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399-0333

H. Richard Bisbee, Esquire

H. Richard Bisbee, P.A.

1882 Capital Circle, Northeast, Suite 206

Tallahassee, Florida 32308

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.