09-000993 Dr. Eric J. Smith, As Commissioner Of Education vs. Chc Private Schools Status: Closed Recommended Order on Monday, May 4, 2009.

Summary: Respondent was guilty of fraudulent activity. Recommend revocation of eligibility for a scholarship program.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DR. ERIC J. SMITH, AS )

COMMISSIONER OF EDUCATION, )

)

Petitioner, )

)

vs. ) Case No. 09-0993

)

CHC PRIVATE SCHOOLS, )

)

Respondent. )

)

RECOMMENDED ORDER

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

on March 19, 2009, in Titusville, Florida, before Susan B.

Harrell, a designated Administrative Law Judge of the Division

of Administrative Hearings.

APPEARANCES

For Petitioner: Jason M. Hand, Esquire

Department of Education

325 West Gaines Street, Suite 1244

Tallahassee, Florida 32399-0400

For Respondent: Lisa L. Hogreve, Esquire

Lisa L. Hogreve, L.C.

96 Willard Street, Suite 206

Cocoa, Florida 32922-7946

STATEMENT OF THE ISSUES

The issues in this case are whether Respondent’s

participation in the John M. McKay Scholarships for Students

with Disabilities Program (McKay Scholarships) and the Corporate

Income Tax Credit Scholarship Program (CTC Scholarships) should

have been suspended, and whether Respondent’s eligibility to

participate in the programs should be revoked.

PRELIMINARY STATEMENT

On December 17, 2008, Petitioner, Dr. Eric J. Smith, as

Commissioner of Education (Agency), issued an Administrative

Complaint against Respondent, CHC Private Schools (CHC),

suspending CHC’s participation in the McKay Scholarships

and CTC Scholarships programs for failure to comply with

Subsection 1002.421(2)(g)1., Florida Statutes. 1 CHC came into

compliance with Subsection 1002.421(2)(g)1., Florida Statutes,

on or after December 23, 2008.

On January 23, 2009, the Agency amended the Administrative

Complaint, withdrawing the violation of Subsection

1002.421(2)(g)1., Florida Statutes, and immediately suspending

scholarship payments to CHC and revoking CHC’s eligibility to

participate in the McKay Scholarships and CTC Scholarships

programs for alleged fraudulent activity. By letter dated

January 27, 2009, CHC requested an administrative hearing.

By letter dated February 19, 2009, the Agency forwarded the

case to the Division of Administrative Hearings for assignment

to an Administrative Law Judge. The case was originally

assigned to Administrative Law Judge Lawrence P. Stevenson, but

was transferred to Administrative Law Judge Susan B. Harrell to

conduct the final hearing.

On March 4, 2009, the Agency filed a Motion for Leave to

Amend Administrative Complaint. The motion was granted by Order

dated March 12, 2009.

At the final hearing, CHC moved for a rehearing on

Petitioner’s Motion for Leave to Amend Administrative Complaint.

The Motion for Rehearing was denied. At the final hearing,

CHC’s Motion to Dismiss Complaint as Amended was heard and

denied.

At the final hearing, the Agency called the following

witnesses: Laura Harrison, Doug Carter, William Scott

Morissette, Riley Hyle, Rebecca Hendricks, and Joanna Ostrom.

Petitioner’s Exhibits 1 through 5, 7 through 11, and 13

through 18 were admitted in evidence.

At the final hearing, CHC called the following witnesses:

Doug Carter, William Scott Morissette, Rebecca Hendricks,

Dorothy Maudra, Jacqueline Maglashan, Jade Quinif, Lara Nichilo,

Riley Hyle, and Laura Harrison. Respondent’s Exhibits 1

through 6 and 8 through 16 were admitted in evidence.

The Transcript was filed on April 3, 2009. The parties

agreed to file their proposed recommended orders within ten days

of the filing of the Transcript. The parties timely filed their

Proposed Recommended Orders, which have been considered in the

preparation of this Recommended Order.

FINDINGS OF FACT

1. CHC is a private school located in Merritt Island,

Florida. Lara Nichilo is the owner and head administrator of

CHC. Ms. Nichilo was also the owner and head administrator of

another private school located in Cocoa, Florida. For the

purposes of this proceeding, the school located in Cocoa,

Florida, will be referred to as CHC 2. 2

2. CHC and CHC 2 had participated in the McKay

Scholarships and CTC Scholarships programs.

3. Section 1002.39, Florida Statutes, authorizes the McKay

Scholarships program, which affords a disabled student an

opportunity to receive a scholarship to defray the cost of

attending a private school of choice. Section 220.187, Florida

Statutes, authorizes the CTC Scholarships program, which enables

taxpayers to make private, voluntary contributions so that

students who qualify for free or reduced-price school lunches

under the National School Lunch Act may receive a scholarship to

defray the cost of attending a private school of choice. The

Department of Education has the responsibility to annually

verify the eligibility of a private school to participate in

these scholarship programs.

4. Private schools participating in the McKay Scholarships

and CTC Scholarships programs are required to comply with

Section 1002.421, Florida Statutes, and must meet applicable

state and local health, safety, and welfare laws, codes, and

rules, including laws, codes, and rules relating to firesafety

and building safety.

5. If a private school participating in the McKay

Scholarships and CTC Scholarships programs desires to renew its

participation in the programs, the school must file a signed,

notarized Form IEPC SCF-1 affidavit with the Department of

Education by March 1 of each year for participation in the

subsequent school year. The Form IEPC SCF-1 affidavit contains

a list of requirements to which the private school must certify

that it meets or does not meet. If the school certifies that it

does not meet a requirement, such certification constitutes an

outstanding compliance issue, which must be resolved by the

school prior to May 1 of each year for the school to remain

eligible to participate in the scholarship programs.

6. Specifically, the signature page of the Form IEPC SCF-1

to any requirement in Section 9: School Facility, the provision

of a reason for answering ‘No’ shall not make the school

compliant with the reporting requirement and will be considered

an outstanding compliance issue for resolution as described in

State Board of Education Rules 6A-6.03315, 6A-6.0960, and 6A-

6.0970, Florida Administrative Code.”

7. Florida Administrative Code Rule 6A-6.03315(2) requires

that every third year a school applies for renewal of

eligibility for the scholarship programs there must be a review

of compliance documentation. This means that the school must

submit documentation to support its eligibility along with the

affidavit. For the renewal of eligibility for the 2009-2010

school year, CHC had to submit compliance documentation for

review.

8. On November 6, 2008, Ms. Nichilo executed and mailed

the Form IEPC SCF-1 affidavit for CHC for renewal of CHC’s

eligibility to participate in the McKay Scholarships and CTC

Scholarships programs for the 2009-2010 school year.

Subsection 1 of Section 9 of the Form IEPC SCF-1 affidavit

requires the school to answer the following question:

Does the school facility possess a current,

violation free or satisfactory Fire Code

Inspection and compliance report in

accordance with Section 1002.421(2)(g)1.,

Florida Statutes, State Finance Services

Rule 69A-58.004, Florida Administrative

Code, and county and/or municipal ordinance?

Ms. Nichilo answered “Yes” to the question. CHC submitted a

fire inspection certificate for CHC with a date of February 22,

2008.

9. At the time Ms. Nichilo executed and submitted the Form

IEPC SCF-1 affidavit in November 2008, CHC did not have a

current Fire Code Inspection and compliance report. The last

fire inspection certificate was dated February 22, 2006, and had

expired on February 22, 2007.

10. Ms. Nichilo executed and submitted a Form IEPC SCF-1

affidavit for the 2007-2008 school year, certifying that CHC had

a current, violation-free fire inspection report. The

certificate affidavit which Ms. Nichilo signed stated:

I have read the applicable scholarship

program rules and understand that by signing

this form I am certifying that the school is

currently in compliance and agrees [sic] to

remain in compliance with all scholarship

program rules and reporting requirements.

If at any point, the school is not in

compliance with scholarship rules, or if

there is a change in the status of any

reporting requirement, the school will have

15 days to notify the Department of

Education and will provide all information

necessary to document its continued

compliance with program rules and

requirements.

At the time the certification was submitted on January 11, 2007,

CHC did have a current, violation-free fire inspection report;

however, CHC did not have a current, violation-free fire

inspection report that was valid for the entire 2007-2008 school

year. CHC did not notify the Department of Education that it

was not in compliance with the fire safety inspections during

the 2007-2008 school year.

11. On December 5, 2007, Ms. Nichilo executed and

submitted a Form IEPC SCF-1 affidavit for the 2008-2009 school

year, certifying that CHC had a current, violation-free fire

inspection report. At the time of submission of the affidavit,

CHC did not have a current, violation-free fire inspection

report, and, from the beginning of the 2008-2009 school year

until December 23, 2008, CHC did not maintain a current,

violation-free fire inspection report nor did CHC notify the

Department of Education as late as December 11, 2008, that CHC

was not in compliance with the fire inspection requirement.

12. On November 19, 2008, Assistant Fire Marshall Doug

Carter of Brevard County Fire Rescue (BCFR) received a complaint

concerning CHC and CHC 2 from an anonymous caller. It is the

policy of BCFR to follow up on all complaints. On November 20,

2008, Lead Fire Inspector William Morissette, following up on

the anonymous complaint, went to CHC for the purpose of

performing a fire inspection.

13. On November 20, 2008, Mr. Morissette performed a fire

inspection on CHC and noted some violations. During the

inspection on November 20, 2008, Mr. Morissette noticed that the

fire inspection certificate that was posted at CHC was partially

obscured, and he could not see the school’s address.

14. On November 20, 2008, Mr. Morissette performed a fire

inspection of CHC 2 and noted some violations. He observed the

posted fire certificate at CHC 2 during his inspection. The

fire certificate had an account number 23832 and was dated

February 22, 2008. The font used in the printing of the

certificate did not appear to be the same type as used by BCFR.

While at CHC 2, Mr. Morrissette called Assistant Fire Marshall

Carter and learned that account number 23832 was for CHC and not

CHC 2 and that no fire certificate had been issued to CHC 2 on

February 22, 2008. The last fire certificate that had been

issued to CHC 2 was on December 15, 2005, and had expired on

December 16, 2006.

15. On November 6, 2008, CHC sent a copy of the fire

inspection certificate dated February 22, 2008, to the

Department of Education as part of the documentation supplied to

verify CHC’s eligibility for renewal. The fire inspection

certificate was a forgery. Ms. Nichilo testified that she did

not send the forged certificate to the Department of Education

and that some disgruntled former employee who had access to

CHC’s files must have sent the certificate to the Department of

Education or must have put the forged certificate in the

envelope containing the renewal information that was sent to the

Department of Education. Ms. Nichilo’s testimony is not

credible. The certificate came in the same envelope as the

other material which CHC submitted in November 2008.

Ms. Nichilo signed and mailed the renewal information on

November 6, 2008. Her testimony that the envelope must have

been in the mail room a couple of days before it was mailed,

thereby allowing the disgruntled employee an opportunity to slip

the forged certificate in the envelope, is not credible.

16. After the renewal package was sent to the Department

of Education, Ms. Nichilo asked her secretary to contact BCFR to

schedule a fire inspection. Ms. Nichilo knew that she needed a

fire inspection because she knew that she did not have a current

fire inspection certificate when she sent the renewal submittal

to the Department of Education. Based on the clear and

convincing evidence presented, it can only be concluded that

Ms. Nichilo knew the fire inspection certificates, which she

included with the renewal submittals, were forgeries.

17. On or about December 5, 2008, Mr. Carter contacted the

Department of Education and informed the Department of Education

that he had concerns about CHC’s and CHC 2’s fire inspection

certificates. Mr. Carter sent a memorandum dated December 9,

2008, to Riley Hyle with the Department of Education, explaining

BCFR’s observations and concerns relating to the fire inspection

certificates. After learning from Mr. Carter that CHC’s and

CHC 2’s fire inspection certificates were in question, Mr. Hyle

checked the Department of Education’s renewal files on CHC and

CHC 2. Mr. Hyle found forged fire inspection certificates in

both files.

18. When CHC’s and CHC 2’s submittals arrived on

November 10, 2008, in the same envelope, Mr. Hyle reviewed the

submittals and verified that both submittals contained fire

inspection certificates. He received no further documentation

from CHC or CHC 2 from November 10, 2008, and the time he talked

to Mr. Carter on December 5, 2008.

19. On December 8, 2008, Mr. Morrissette returned to CHC 2

to do a follow-up inspection. CHC 2 had not corrected all its

violations. Mr. Morrissette was advised by the principal at

CHC 2 that CHC also had not corrected all of its violations.

One of the violations CHC had was a broken lockbox. On

December 7, 2008, CHC had called BCFR and requested an

application for a lockbox. Thus, on December 8, 2008, CHC would

still have not corrected its lockbox violation.

20. On December 11, 2008, Ms. Nichilo signed a revised

version of the Form IEPC SCF-1 affidavit 3 for CHC for the 2009-

2010 school year. The question posed in the affidavit submitted

in November 2008 concerning whether the facility had a current,

violation-free fire code inspection remained the same in the

revised affidavit. Again, CHC stated that it did have a

current, violation-free Fire Code Inspection and compliance

report. The revised affidavit also contained the same language

as the November 2008 affidavit that answering a question in the

negative in Section 9 would result in an out-of-compliance

issue. Both the November affidavit and the revised affidavit

contained the following language:

I have read the applicable scholarship

program rules and understand that by signing

the form I am certifying that the school is

currently in compliance and agrees [sic] to

remain in compliance with all scholarship

program rules and reporting requirements.

If at any point, the school is not in

compliance with the scholarship rules, or if

there is a change in the status of any

reporting requirement, the school shall have

15 days to notify the Department of

Education and will provide all information

necessary to document its continued

compliance with program rules and

requirements.

21. The revised affidavit was submitted to the Department

of Education, which received the affidavit on December 16, 2008.

At the time CHC submitted the affidavit, it did not have a

current, violation-free Fire Code Inspection and compliance

report. On December 23, 2008, the BCFR re-inspected CHC and

found that the violations had been corrected. After its

inspection on December 23, 2008, BCFR issued a fire inspection

certificate backdated to November 20, 2008, which was the date

of the original inspection.

22. On December 17, 2008, the Agency issued an

Administrative Complaint, suspending CHC’s eligibility for the

McKay Scholarships and CTC Scholarships programs for failure to

have a current fire inspection report. By letter dated

December 23, 2008, and received by the Department of Education

on December 29, 2008, CHC advised that the school had been re-

inspected and now had a current fire code inspection

certificate.

23. On January 2, 2009, CHC sent a 12-page facsimile

transmission to the Department of Education. One of the pages

of the transmission was a copy of a facsimile transmission

coversheet dated December 31, 2008, with the BCFR letterhead

concerning inspection reports. The comments section of the

coversheet read “Please read letter.” The second page of the

transmission was an unsigned to-whom-it-may-concern letter dated

December 30, 2008. At the top of the letter, printed in large,

bold type was the following: “Brevard County Fire Rescue.” The

letter stated:

To whom it may concern,

In reviewing and trying to figure out what

happen with the 2007 inspection reports this

is the conclusion we have come to.

If you review the two reports on both CHC-1

and CHC-2 the visiting inspection times over

lap each other making it seem like a 2007

inspection was done when in reality it was

not.

CHC-1 inspection has a date on it

February 22, 2006 to February 2007.

CHC-2 inspection shows January 12, 2006

(re-inspection) January 2007.

I believe that this was just an over site on

both our parts due to the fact that the fire

department does come in regularly every year

even without an appointment.

Lara Nichilo did notify us to come in ASAP

when the reports could not be found. But as

of November 20, 2008 all her inspections

were done and her follow up correction

reports have been completed putting her in

good standing with the fire and inspections

department. CHC-1 and CHC-2 (inspection

reports provided to you with this letter)

For more information you may contact us at

321-455-6383

Thank you for your time,

24. The telephone number given in the letter was the

telephone number for CHC. The original letter submitted at the

final hearing by CHC was written on stationary bearing the CHC

watermark. The letter received by the Department of Education

had no visible watermark.

25. The facsimile transmission coversheet that accompanied

the letter was a coversheet which BCFR had sent to CHC on

December 31, 2008. The statements in the comments section that

BCFR sent had been deleted and replaced with “Please read

letter.” The following are the comments which BCFR had written:

There are no reports or certificates for

690 Range Road for 2006 or 2007.

There are no inspection reports or

certificates for 55 McLeod for 2007.

Certificates will be issued upon receipt of

payment.

26. Laura Harrison, the director of the McKay Scholarships

and CTC Scholarships programs at the Department of Education,

transmitted a copy of the letter to BCFR and asked if the letter

had originated from BCFR. Mr. Carter advised Ms. Harrison that

the letter did not come from BCFR.

27. Ms. Nichilo wrote the letter. A person reading the

letter would be led to believe that the letter came from BCFR.

The letter was accompanied by a facsimile transmission

coversheet bearing the BCFR letterhead and the coversheet

comments said “Please read letter.” The letter refers to

Ms. Nichilo in the third person and uses first person plural

pronouns to refer to BCFR. The letter purports to bear the

letterhead of BCFR. It must be concluded that Ms. Nichilo

intended the Department of Education to rely on the letter as a

letter transmitted by BCFR to Ms. Nichilo to explain the

situation. If Ms. Nichilo had intended the Department of

Education to treat the letter as a letter written by her, she

would have written the letter using CHC letterhead, signed the

letter, not referred to herself in the third person, not

referred to BCFR in the first person, and not used a

transmission coversheet from BCFR in which the comments section

had been altered.

28. In a conversation on December 30, 2008, Ms. Nichilo

advised Mr. Hyle that she was sending him a letter that would

explain everything and would resolve the situation concerning

the fire inspections. Ms. Nichilo testified that she told

Mr. Hyle that she was writing the letter. Mr. Hyle did not

recall whether Ms. Nichilo said that she was writing a letter.

Jade Quinif, who was Ms. Nichilo’s administrative assistant on

December 30, 2008, listened to the conversation between Mr. Hyle

and Ms. Nichilo on speakerphone. She recalls Ms. Nichilo asking

Mr. Hyle if he would like her to write a letter regarding

Ms. Nichilo’s conversations with BCFR. Mr. Hyle said that would

be fine.

29. Ms. Nichilo typed a letter and asked Ms. Quinif to

send it to the Department of Education. Ms. Quinif sent a

letter to the Department of Education dated December 30, 2008.

Based on the evidence presented, the letter that Ms. Quinif sent

was a letter dated December 30, 2008, written on CHC letterhead

and signed by Ms. Nichilo. 4 It was not the letter dated

December 30, 2008, which appeared to be from BCFR (purported

BCFR letter).

30. The only evidence of receipt of the purported BCFR

letter by the Department of Education is in a 12-page facsimile

transmittal, which was transmitted twice on January 2, 2009.

Ms. Quinif credibly testified that she did not send a 12-page

transmission and that she did not send the doctored transmission

coversheet from BCFR. She also credibly testified that the

letter that she sent was a few days after Christmas and was not

more than a week after Christmas. Ms. Nichilo testified that

Ms. Quinif did sent the transmittal coversheet from the BCFR on

December 30, 2008; however, Ms. Nichilo’s testimony is not

credible given that the transmittal coversheet from BCFR was

dated December 31, 2008, and showed a transmission date of

December 31, 2008, to CHC. The clear and convincing evidence is

that Ms. Nichilo wrote and sent the purported letter from BCFR

and the doctored transmittal coversheet from BCFR in an attempt

to make it appear that BCFR was taking some of the blame for CHC

not having maintained current fire inspection certificates.

BCFR does not automatically do an annual inspection of schools.

If a school desires to have a fire inspection, the school must

notify BCFR and arrange for a fire inspection. The failure to

have current, violation-free fire inspection reports rests with

CHC and not with BCFR. The bogus letter was an effort by CHC to

seek mitigation for its failure to adhere to the requirements

for eligibility for the scholarships programs.

31. After learning that the letter transmitted on

January 2, 2009, was not from BCFR, the Agency issued an Amended

Administrative Complaint on January 23, 2009, which superseded

the December 17, 2008, Administrative Complaint. The Amended

Administrative Complaint deleted the allegations concerning the

failure to have a current, violation-free fire inspection report

and added allegations involving fraud and failure to maintain

current, violation-free fire inspection reports.

CONCLUSIONS OF LAW

32. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding. §§ 120.569 and 120.57, Fla. Stat.

33. Subsection 1002.39(7), Florida Statutes, provides that

the “Commissioner of Education shall deny, suspend, or revoke a

private school’s program, if it is determined that the private

school has failed to comply with the provisions of this section”

regarding the McKay Scholarships program. The Commissioner of

Education may immediately suspend payments of scholarship funds,

if is determined there is probable cause to believe there is

“[a]n imminent threat to the health, safety, or welfare of the

students” or there is “[f]raudulent activity on the part of the

private school.” The Commissioner of Education has the same

authority as it relates to private schools eligible for CTC

Scholarships funds pursuant to Subsection 220.187(10), Florida

Statutes.

34. The Second Amended Administrative Complaint

immediately suspends and seeks to revoke CHC’s eligibility for

failure to have a current, violation-free Fire Code Inspection

and compliance report for the entire 2007-2008 school year and

from the start of the 2008-2009 school year through December 23,

2008; for falsifying the Form IEPC SCF-1 affidavits for the

2007-2008, 2008-2009, and 2009-2010 school years; for submitting

a forged fire inspection certificate for CHC on November 10,

2008, as supporting compliance documentation; for submitting a

forged fire inspection certificate for CHC 2 on November 10,

2008, as supporting compliance documentation; and for submitting

a letter to the Department of Education purporting to be from

BCFR when the letter was not from BCFR.

35. The Agency argues that the burden to establish the

allegations in the Second Amended Administrative Complaint is a

preponderance of the evidence. CHC argues that the burden of

proof is clear and convincing evidence. The burden is a

preponderance of the evidence. See Winn v. Muskateers Academy ,

Case No. 06-5074 (DOAH April 2, 2007), adopted in Department of

Education Final Order dated May 4, 2007. However, in the

instant case, the Agency has established the allegations by

clear and convincing evidence with the exception which is noted

below.

36. Subsection 1002.421(2)(g), Florida Statutes, provides:

(2) A private school participating in a

scholarship program must be a Florida

private school as defined in s. 1002.01(2),

must be registered in accordance with s.

1002.42, and must:

* * *

(g) Meet applicable state and local health,

safety, and welfare laws, codes, and rules,

including:

1. Firesafety.

2. Building safety.

These statutory provisions apply to both the McKay Scholarships

and CTC Scholarships programs. See §§ 1002.39(8) and

220.187(8), Fla. Stat.

37. Florida Administrative Code Rule 6A-6.03315

incorporates by reference the Form IEPC SCF-1 affidavit, which

requires each private school participating in the scholarship

programs to certify it has a current, violation-free fire

inspection report. Further, the Form IEPC SCF-1 affidavit

provides that the school must agree to maintain its compliance

with all requirements for the program. Further, if the school

becomes non-complaint, the school is to notify the Department

within 15 days.

38. The Agency has established by clear and convincing

evidence that CHC did not have current, violation-free fire

inspection reports or certificates for the entire 2007-2008

school year. CHC did not advise the Department of Education

within 15 days of the expiration of its fire inspection

certificate on February 22, 2007, that it was not in compliance

with the fire inspection requirement.

39. The Agency has established by clear and convincing

evidence that at the time CHC submitted its renewal for the

2008-2009 school year that it did not have a current, violation-

free fire inspection report as it certified and that CHC was not

in compliance with having a current, violation-free fire

inspection report from the beginning of the 2008-2009 school

year until December 23, 2008.

40. The Agency has established by clear and convincing

evidence that CHC did not have a current, violation-free fire

inspection report when it certified that it did in the

submittals received by the Department of Education on

November 10, 2008, and December 16, 2008.

41. The Agency has alleged that CHC committed fraud when

it submitted a forged fire certificate for CHC in its

November 2008 renewal submittal to the Department of Education

and when it submitted to the Department of Education on

January 2, 2009, a letter and facsimile transmission coversheet

purporting to be from BCFR.

42. The essential elements of a claim of fraud are: (1) a

false statement concerning a material fact, (2) made with

knowledge that the representation is false and with the

intention of inducing another’s reliance thereon, and

(3) consequent injury to the other party acting in reliance on

the false representation. See Cohen v. Kravit Estate Buyers,

Inc. , 843 So. 2d 989, 991 (Fla. 4th DCA 2003).

43. “[F]raudulent intent usually must be proved by

circumstantial evidence and such circumstances may, by their

number and joint consideration, be sufficient to constitute

proof.” Nally v. Olsson , 134 So. 2d 265, 267 (Fla. 2d DCA

distinct acts, each of which may be a badge of fraud and when

taken together as a whole, constitute fraud.’” Department of

Revenue v. Rudd , 545 So. 2d 369, 372 (Fla. 1st DCA 1989),

quoting Allen v. Tatham , 56 So. 2d 337, 339 (Fla. 1952).

Further, “[s]cienter, or guilty knowledge, [which] is an element

of intentional misconduct [such as fraud], . . . can be

established by showing actual knowledge, or that the defendant

was reckless or careless as to the truth of the matter

asserted.” Ocean Bank of Miami v. INV-UNI Inv. Corp. , 599 So.

2d 694, 697 (Fla. 3d DCA 1992).

44. The Agency has established by clear and convincing

evidence that CHC submitted forged fire inspection certificates

with its November 2008 renewal submittal. The forged fire

inspection certificates were submitted with the renewal package.

Ms. Nichilo was responsible for submitting the renewal package,

including the fire inspection certificate for CHC. Her claim

that some disgruntled employee slipped the forgeries into the

submittal package is incredulous. She knew that she did not

have current, violation-free fire inspection reports as

evidenced by her attempt to get her assistant to schedule an

inspection with BCFR shortly after the renewal package was

submitted. CHC is guilty of fraud. It submitted a forged fire

inspection certificate with the intent that the Department of

Education would rely upon the certificate to renew CHC’s

eligibility for the scholarships programs. Had not BCFR alerted

the Department of Education to the bogus certificate, the

Department of Education would have relied on the forged

certificate to approve CHC’s eligibility for the 2009-2010

school year, and the Department of Education would not have

known that CHC had not been in compliance with the fire

inspection requirement for some time.

45. The Agency has established by clear and convincing

evidence that CHC is guilty of fraudulent activity when it

submitted the purported letter from BCFR along with the altered

BCFR transmission coversheet. The letter was written to appear

that it came from BCFR and was written to place some of the

blame for CHC’s failure to maintain current, violation-free fire

inspection report status on BCFR. The BCFR transmission

coversheet was altered so that it appeared that the purported

BCFR letter was sent from BCFR to CHC. The letter was written

by the owner of CHC and not BCFR. It was intended that the

Department of Education would rely on the letter in mitigation

of the violations committed by CHC relating to the failure of

CHC to have current fire inspection reports.

46. The Agency has alleged that CHC is guilty of

fraudulent activity as it relates to the submittal of a forged

fire inspection certificate on behalf of CHC 2. The Agency has

failed to establish that it was CHC and not CHC 2 who was

responsible for submitting the forged certificate on behalf of

CHC 2. No evidence was presented to establish that Ms. Nichilo

was not acting in her capacity as the owner of CHC 2 when the

forged certificate was submitted with the renewal package.

47. The evidence establishes that the Agency had grounds

to immediately suspend CHC’s eligibility for the McKay

Scholarships and CTC Scholarships programs. The evidence

establishes that the actions of CHC were so egregious as to

warrant revocation of CHC’s eligibility for the McKay

Scholarships and CTC Scholarships programs.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a final order be entered sustaining

the suspension of CHC’s eligibility for the McKay Scholarships

and CTC Scholarships programs and revoking CHC’s eligibility for

the McKay Scholarships and CTC Scholarships programs.

DONE AND ENTERED this 4th day of May, 2009, in Tallahassee,

Leon County, Florida.

S

SUSAN B. HARRELL

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 4th day of May, 2009.

ENDNOTES

1/ Unless otherwise indicated, all references to the Florida

Statutes are to the 2008 version.

2/ An Administrative Complaint and Amended Administrative

Complaint had also been filed against CHC 2. CHC 2 had

requested an administrative hearing regarding the Administrative

Complaint and Amended Administrative Complaint, but later

dismissed its request for a hearing. CHC 2 has been sold.

3/ The Department of Education had revised its Form IEPC SCF-1

affidavits for use in renewals for the 2009-2010 school year.

At the time CHC submitted the affidavit in November, CHC had not

been given the revised form.

4/ Respondent’s Exhibit 10.

COPIES FURNISHED :

Jason M. Hand, Esquire

Department of Education

325 West Gaines Street, Suite 1244

Tallahassee, Florida 32399-0400

Lisa L. Hogreve, Esquire

Lisa L. Hogreve, L.C.

96 Willard Street, Suite 206

Cocoa, Florida 32922-7946

Lynn Abbott, Agency Clerk

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399-0400

Deborah K. Kearney, General Counsel

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399-0400

Dr. Eric J. Smith

Commissioner of Education

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida, 32399-0400

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.