08-006498PL Department Of Financial Services vs. Leonard Louis Zanello Status: Closed Recommended Order on Tuesday, December 1, 2009.

Summary: Respondent violated Section 626.621(2), Florida Statutes, when he failed to file two decisions against him as required by Section 626.536. He also violated Section 626.611(8). Petitioner failed to prove the other alleged violations.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 08-6498PL

)

LEONARD LOUIS ZANELLO, )

)

Respondent. )

)

RECOMMENDED ORDER

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

before Larry J. Sartin, an Administrative Law Judge of the

Division of Administrative Hearings, on August 5, 2009, by video

teleconferencing between sites in Lauderdale Lakes and

Tallahassee, Florida.

APPEARANCES

For Petitioner: Robert Alan Fox, Senior Attorney

Division of Legal Services

Department of Financial Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399-0333

For Respondent: Leonard Louis Zanello, Sr., pro se

1074 Northwest 121st Lane

Coral Springs, Florida 33071

STATEMENT OF THE ISSUES

The issues in this case are whether Respondent, Leonard

Louis Zanello, committed the offenses alleged in an

Administrative Complaint issued by Petitioner, the Department of

Financial Services on October 16, 2008, and, if so, what penalty

should be imposed.

PRELIMINARY STATEMENT

On or about October 16, 2008, Petitioner issued a four-

count Administrative Complaint, Petitioner's Case No. 89727-07-

AG, alleging that Leonard Louis Zanello had violated certain

statutory provisions governing the conduct of Florida insurance

agents. Respondent filed an Election of Rights form with

Petitioner requesting a formal hearing to contest the

allegations of fact contained in the Administrative Complaint.

A copy of the Administrative Complaint and Respondent’s

Election of Rights form were filed by Petitioner with the

Division of Administrative Hearings on December 31, 2008. The

matter was designated DOAH Case No. 08-6498PL and was assigned

to the undersigned.

The final hearing was initially scheduled for March 27,

2009, by Notice of Hearing by Video Teleconference entered

January 14, 2009. The hearing was scheduled to be heard between

video sites in Miami and Tallahassee, Florida. On February 13,

2009, an Order was entered changing the sites for the video

hearing to Lauderdale Lakes and Tallahassee, Florida. Three

subsequent requests for continuance by Respondent, unopposed by

Petitioner, were granted. The hearing was ultimately set for,

and held on, August 5, 2009.

On June 29, 2009, an Order Granting Motion to Withdraw was

entered, allowing the withdrawal of Respondent’s legal

representative.

Although the final hearing had been scheduled to be

conducted by video teleconference between Lauderdale Lakes,

which is located in Respondent’s county of residence, and

Tallahassee, Respondent appeared at the Tallahassee, Florida

hearing location.

At the final hearing, Petitioner presented the testimony of

Anne Paul (by telephone), Donald Powers, Lorna Lauren,

Respondent, and Sandra Stephens. Petitioner also had admitted

Petitioner’s Exhibits numbered 1, 1a, 2 through 10, 17 through

27, 72, 75, and 78. Petitioner also proferred Exhibits 28-67,

70, 73, and 76. Respondent presented the testimony of Sandra

Perlstein and Chris McGuire, and testified on his own behalf.

Respondent had Respondent’s Exhibits 3, 5, 9, 15, 101, 103, 104,

106, 107, and 108 admitted. Respondent’s Exhibit 100 was

proferred.

The two-volume Transcript of the final hearing (one volume

containing the exhibits) was filed on September 3, 2009. By

Notice of Filing Transcript issued September 4, 2009, the

parties were informed that their proposed recommended orders

were due on or before September 23, 2009. On September 22,

2009, an Order Granting Extension of Time was entered. The

parties were given until November 2, 2009, to file proposed

recommended orders.

Petitioner filed a Proposed Recommended Order on

November 2, 2009. On November 3, 2009, Respondent filed

Respondent’s Prayer, Request, Answer and Motion to Hold Him

Harmless and/or Dismiss Case Without [sic] Prejudice. Both

post-hearing submittals have been fully considered in rendering

this Recommended Order.

All references to the Florida Statutes will be to the

codification applicable at the time the event at issue took

place unless otherwise noted.

FINDINGS OF FACT

A. The Parties .

1. Petitioner, the Department of Financial Services

(hereinafter referred to as the "Department"), is the agency of

the State of Florida charged with the responsibility for, among

other things, the investigation and prosecution of complaints

against individuals licensed to conduct insurance business in

Florida. Ch. 626, Fla. Stat.

2. Respondent Leonard Louis Zanello is currently and was

at the times relevant, licensed in Florida as a health agent

(02-40), and a life and health agent (02-18).

3. Mr. Zanello’s license number is A293282.

B. Count I: Failure to Submit Florida Office of Financial

Regulation Order to the Department .

4. On June 12, 2003, the Florida Office of Financial

Regulation (hereinafter referred to as the “OFR”), f/k/a the

Florida Office of Financial Institutions and Securities

Regulation, entered a Final Order against Mr. Zanello in a case

styled In Re Leonard Zanello , Administrative Proceeding No.

0663-I-3/02 (the OFR Order).

5. The OFR Order related to alleged violations by

Mr. Zanello of Florida securities laws.

6. No copy of the OFR Order was submitted to the

Department by Mr. Zanello within 30 days after it was entered as

required by Section 626.536, Florida Statutes. Nor has a copy

of the OFR Order ever been submitted by Mr. Zanello to the

Department.

7. Mr. Zanello’s claim that he provided a copy of the OFR

Order to Carl Morstadt, Esquire, an attorney at the time with

the OFR, was unconvincing and has not been credited. Some of

the reasons for rejecting Mr. Zanello’s testimony on this issue

have been more fully described in paragraphs 8(2) through (4) of

the Department’s Proposed Recommended Order. Those proposed

findings are incorporated into this Recommended Order by this

reference.

C. Count II: Failure to Submit Securities and Exchange

Commission Order to the Department .

8. On January 7, 2004, the United States Securities and

Exchange Commission (hereinafter referred to as the “SEC”),

entered an Order against Mr. Zanello in a case styled In the

Matter of Louis L. Zanello, Sr. , Admin. Proceeding File No. 3-

11370 (hereinafter referred to as the “SEC Order”).

9. The SEC Order involves violations by Mr. Zanello of

Federal securities laws.

10. As admitted by Mr. Zanello, no copy of the SEC Order

was submitted to the Department by him within 30 days after it

was entered as required by Section 626.536, Florida Statutes.

Nor has a copy of the SEC Order ever been submitted by

Mr. Zanello to the Department.

11. Mr. Zanello’s claim that he was unaware of the SEC

Order was unconvincing and has not been credited. Some of the

reasons for rejecting Mr. Zanello’s testimony on this issue have

been more fully described in paragraph 15 of the Department’s

Proposed Recommended Order. Those proposed findings are

incorporated into this Recommended Order by this reference.

D. Count III: Misstatement in the Sale of an Insurance

Policy and Twisting .

12. On January 3, 2004, Mr. Zanello met with Ms. Anne Paul

of Coconut Creek, Florida. Ms. Paul was 80 years of age at the

time she met with Mr. Zanello.

13. At the January 3, 2004, meeting with Ms. Paul,

Mr. Zanello sold her a long-term care insurance policy with AF&L

purchased the AF&L insurance policy (hereinafter referred to as

the “AF&L Policy”), Ms. Paul already had a long-term care

insurance policy. That policy was with Kanawha Insurance

Company (hereinafter referred to as “Kanawha”)(the long-term

care insurance policy from Kanawha will hereinafter be referred

to as the “Kanawha Policy”).

14. Shortly after her meeting with Mr. Zanello, Ms. Paul

informed Rita Baskin, whom Ms. Paul then regarded as her

“financial advisor,” of her purchase of the AF&L Policy.

Ms. Baskin convinced Ms. Paul that the AF&L Policy was not as

beneficial as her Kanawha Policy and that she should immediately

cancel the AF&L Policy. Why Ms. Baskin, who is now deceased,

told Ms. Paul that the Kanawha Policy was a better product and,

more importantly, why Ms. Paul believed that the Kanawha Policy

was a better long-term care insurance policy than the AF&L

Policy were not proven at hearing.

15. Regardless of the specific reasons why, in reliance on

Ms. Baskin’s advice, Ms. Paul cancelled the AF&L Policy.

16. Ms. Paul testified by telephone during the hearing of

this matter. Ms. Paul testified that she had informed

Mr. Zanello about her Kanawha Policy at the time she purchased

the AF&L Policy. She also testified that she agreed to purchase

the AF&L Policy in complete reliance upon Mr. Zanello’s

representation to her that the AF&L Policy was a better product

than the Kanawha Policy. Ms. Paul’s testimony came more than

five years after she had purchased the AF&L Policy (she was more

than 85 years of age at the time of the hearing), and she had

suffered a broken wrist the Friday before the hearing. Her arm

was in a cast, she was taking no pain medication, and she

indicated that she was in distress from pain during her

testimony. In light of these facts and others, Ms. Paul’s

testimony concerning what she told Mr. Zanello and her reliance

upon representations from him concerning which policy was better

was not clear and convincing. Ms. Paul’s testimony in this

regard has, therefore, been rejected.

17. Based upon the totality of the evidence in this case,

the evidence simply failed to prove clearly and convincingly

what transpired on January 3, 2004, when Mr. Zanello sold

Ms. Paul the AF&L Policy, other than the fact that Ms. Paul

purchased the AF&L Policy.

D. Count IV: Misstatement on Insurance Application .

18. Question 2 of Part IV of the AF&L Policy application

signed by Ms. Paul, asks the following:

Do you now or within the last 12 months had

[sic] another Long-term Care, Nursing Home,

or Home Health Care Insurance policy in

force (including health care service or

health maintenance organization contracts)?

19. Question 3 of Part IV of the AF&L Policy application

asks the following:

Will this policy replace any of your

medical, health or long-term care insurance?

20. Mr. Zanello completed Part IV of the application for

the AF&L Policy, asking Ms. Paul the questions and recording her

answers. The answer to Questions 2 and 3 of Part IV of the

application recorded by Mr. Zanello is “No.” Because the

evidence failed to prove clearly and convincingly that Ms. Paul

informed Mr. Zanello of the Kanawha Policy, the evidence failed

to prove that incorrect answers to Questions 2 and 3 of Part IV

of the application for the AF&L Policy were knowingly filled in

by Mr. Zanello.

21. If Mr. Zanello had been aware that Ms. Paul was

replacing her Kanawha Policy with the AF&L Policy, which the

evidence failed to prove, he was required to provide her with a

“Notice to Applicant Regarding Replacement.” See Fla. Admin.

Code R. 69O-157.016(2). While Ms. Paul was not provided a copy

of a Notice to Applicant Regarding Replacement by Mr. Zanello,

the evidence failed to prove that Mr. Zanello knowingly failed

to provide the Notice to her.

CONCLUSIONS OF LAW

A. Jurisdiction .

22. The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding and of

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

Florida Statutes (2009).

B. The Burden and Standard of Proof .

23. The Department seeks to impose penalties against Mr.

Zanello in the Administrative Complaint that include mandatory

and discretionary suspension or revocation of his licenses.

Therefore, the Department has the burden of proving the specific

allegations of fact that support its charges 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); and Pou v. Department of Insurance and

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

24. What constitutes "clear and convincing" evidence was

described by the court in Evans Packing Co. v. Department of

Agriculture and Consumer Services , 550 So. 2d 112, 116, n. 5

(Fla. 1st DCA 1989), as follows:

. . . [C]lear and convincing evidence

requires that the evidence must be found to

be credible; the facts to which the

witnesses testify must be distinctly

remembered; the evidence must be precise and

explicit and the witnesses must be lacking

in confusion as to the facts in issue. The

evidence must be of such weight that it

produces in the mind of the trier of fact

the firm belief or conviction, without

hesitancy, as to the truth of the

allegations sought to be established.

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

(Fla. 4th DCA 1983).

See also In re Graziano , 696 So. 2d 744 (Fla. 1997); In re

Davey , 645 So. 2d 398 (Fla. 1994); and Walker v. Florida

Department of Business and Professional Regulation , 705 So. 2d

652 (Fla. 5th DCA 1998)(Sharp, J., dissenting).

C. The Department's Charges .

25. Section 626.611, Florida Statutes, mandates that the

Department suspend or revoke the license of any insurance agent

if it finds that the agent has committed any of a number of acts

specified in that Section.

26. Section 626.621, Florida Statutes, gives the

Department the discretion to suspend or revoke the license of

any insurance agent if it finds that the agent has committed any

of a number of acts specified in that Section.

27. The Administrative Complaint contains four counts. As

to Count I and II that Mr. Zanello violated the following

statutory provisions: Section 626.611(8) and (13), Florida

Statutes, and Section 626.621(2), Florida Statutes (by failing

to comply with Section 626.536, Florida Statutes). In its

Proposed Recommended Order, the Department has apparently

dropped the allegation that Mr. Zanello violated Section

626.611(13), Florida Statutes.

28. As to Count III, it is alleged that Mr. Zanello

violated the following statutory provisions: Section 626.611(7)

and (8), Florida Statutes, and Section 626.621(6), Florida

Statutes (by having failed to comply with Section

29. As to Count IV, it is alleged that Mr. Zanello

violated the following statutory provisions: Section 626.611(7)

and (8), Florida Statutes, and Section 626.621(6), Florida

Statutes (by having failed to comply with Section

626.9541(1)(k)1., Florida Statutes).

D. Counts I and II .

30. Section 626.611, Florida Statutes, provides, in

pertinent part, the following:

The department shall . . . 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:

. . . .

(8) Demonstrated lack of reasonably

adequate knowledge and technical competence

to engage in the transactions authorized by

the license or appointment.

. . . .

31. Section 626.621(2), Florida Statutes, provides:

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:

(2) Violation of any provision of the

Florida Insurance Code in the course of

dealing under the license or appointment.

. . . .

32. Section 626.536, Florida Statutes, provides the

following:

An agent shall submit to the department,

within 30 days after the final disposition

of any administrative action taken against

the agent by a governmental agency in this

or any other state or jurisdiction relating

to the business of insurance, the sale of

securities, or activity involving fraud,

dishonesty, trustworthiness, or breach of a

fiduciary duty, a copy of the order, consent

to order, or other relevant legal documents.

The department may adopt rules implementing

the provisions of this section.

33. The evidence proved clearly and convincingly that

Mr. Zanello failed to timely submit the OFR Order and SEC Order

to the Department as required by Section 626.536, Florida

Statutes. As a consequence, the Department has proved that

Mr. Zanello has committed to violations of Section 626.621(2),

Florida Statutes.

34. Having committed two violations of Section 626.621(2),

Florida Statutes, by reason of having failed to comply with the

reporting requirements of Section 626.536, Florida Statutes, it

is also concluded that the Department proved that Mr. Zanello

lacks “reasonably adequate knowledge and technical competence to

engage in the transactions authorized by the license” in

violation of Section 626.611(8), Florida Statutes.

E. Counts III and IV .

35. Section 626.611, Florida Statutes, defines, in

pertinent part, the following conduct, in addition to the act

contained in Section 626.611(8), Florida Statutes, quoted in

paragraph 30 of this Recommended Order, for which the Department

may punish a licensee: “(7) Demonstrated lack of fitness or

trustworthiness to engage in the business of insurance.”

36. As to the violation of Section 626.621(6), Florida

Statutes, quoted in paragraph 31, supra , the Department has

alleged in Count III that Mr. Zanello violated the following

provisions:

(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 be 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.

. . . .

6. Is a misrepresentation for the purpose

of inducing, or tending to induce, the

lapse, forfeiture, exchange, conversion, or

surrender of any insurance policy.

. . . .

(e) False statements and entries. —

1. 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.

(k) Misrepresentation in insurance

applications. —

1. Knowingly making a false or fraudulent

written or oral statement or representation

on, or relative to, an application or

negotiation for an insurance policy for the

purpose of obtaining a fee, commission,

money, or other benefit from any insurer,

agent, broker, or individual.

. . . .

(l) Twisting. --Knowingly making any

misleading representations or incomplete or

fraudulent comparisons or fraudulent

material omissions of or with respect to any

insurance policies or insurers for the

purpose of inducing, or tending to induce,

any person to lapse, forfeit, surrender,

terminate, retain, pledge, assign, borrow

on, or convert any insurance policy or to

take out a policy of insurance in another

insurer.

As to Count IV, the Department has alleged that Mr. Zanello only

violated Section 626.9541(1)(k)l., Florida Statutes, in

violation of Section 626.621(6), Florida Statues.

37. The evidence in this case failed to prove the material

allegations necessary to conclude that Mr. Zanello violated any

of the statutory provisions quoted, supra , cited by the

Department in Counts III and IV of the Administrative Complaint.

Those Counts should be dismissed.

E. Penalty .

38. Florida Administrative Code Rule Chapter 69B-231

provides guideline penalties for violations of Section 626.621,

Florida Statutes. The suggested penalty for the violations

alleged in Counts I and II a suspension of three months. Fla.

Admin. Code R. 69B-231.090(2). Having committed two violations,

the Department may impose two three-month suspensions.

39. Florida Administrative Code Rule 69B-231.160 provides

the following relevant aggravating and mitigation factors:

(1) For penalties other than those

assessed under Rule 69B-231.150, F.A.C.:

(a) Willfulness of licensee’s conduct;

(b) Degree of actual injury to victim;

(c) Degree of potential injury to victim;

(d) Age or capacity of victim;

(e) Timely restitution;

(f) Motivation of agent;

(g) Financial gain or loss to agent;

(h) Cooperation with the Department;

(i) Vicarious or personal responsibility;

(j) Related criminal charge; disposition;

(k) Existence of secondary violations in

counts;

(l) Previous disciplinary orders or prior

warning by the Department; and

(m) Other relevant factors.

40. There do not appear to be any aggravating or

mitigating circumstances to consider in recommending a penalty

for the violations alleged in Counts I and II.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a final order be entered by the

Department finding that Leonard Louis Zanello violated the

provisions of Chapter 626, Florida Statutes, as alleged in

Counts I and II of the Administrative Complaint and described,

supra ; dismissing Counts III and IV of the Administrative

Complaint; and suspending his licenses for a period of six

months.

DONE AND ENTERED this 1st day of December, 2009, in

Tallahassee, Leon County, Florida.

___________________________________

LARRY J. SARTIN

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 1st day of December, 2009.

COPIES FURNISHED:

Robert Alan Fox, Senior Attorney

Division of Legal Services

Department of Financial Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399-0333

Leonard Louis Zanello, Sr.

1074 Northwest 121st Lane

Coral Springs, Florida 33071-5005

Tracey Beal, Agency Clerk

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399-0390

Honorable Alex Sink

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0300

Benjamin Diamond, General Counsel

Department of Financial Services

The Capitol, Plaza 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.