11-006262PL Department Of Business And Professional Regulation, Board Of Accountancy vs. Ahmad Labib Baltagi Status: Closed Recommended Order on Thursday, April 12, 2012.

Summary: No clear and convincing evidence that Respondent, a certified public accountant, failed to maintain good moral character or that his license had been disciplined or acted against by a licensing agency.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, BOARD )

OF ACCOUNTANCY , )

)

Petitioner , )

)

vs. ) Case No. 11 - 6262PL

)

AHMAD LABIB BALTAGI , )

)

Respondent . )

)

RECOMMENDED ORDER

P ursuant to notice, a hearing was conducted in this case

pursuant to sections 120.569 and 120.57(1), Florida Statutes

(2011), before Jessica E. Varn, an Administrative Law Judge of

the Division of Administrative Hearing s (DOAH), on February 1,

2012, by video teleconference at sites in West Palm Beach and

Tallahassee, Florida.

APPEARANCES

For Petitioner: C. Erica White, Esquire

Department of Business

and Professional Regulation

1940 North Monroe Street, Suite 42

Tallahassee, Florida 32399

Eric R. Hurst, Esquire

Department of Business

and Professional Regulation

1940 North Monroe St reet, Suite 42

Tallahassee, Florida 32399

For Respondent: Frederick R. Dudley, Esquire

Holland & Knight

315 S. Calhoun Street, Suite 600

Tallahassee, Florida 32301

STATEMENT OF THE I SSUE

Whether Respondent committed the violations alleged in the

Administrative Complaint and, if so, what disciplinary action

should be taken against him.

PRELIMINARY STATEMENT

The instant proceeding began when Mr. Baltagi (Baltagi)

requested a hearing to contest the allegations that the

Department of Business and Professional Regulation, (De partment),

had made against him in an Administrative Complaint filed on

July 5, 2011. In Count One, Baltagi is charged with a failure to

maintain good moral character , in violation of section

473.323(1)(l), Flor ida Statutes (2010), by having a default

judgment entered against him. In Count Two, Baltagi is charged

with violating section 455.227(1)(f), Florida Statutes (2010) , by

having his authority to practice a regul ated profession acted

upon by the licensing authority of any jurisdiction.

The case was transferred to DOAH pursuant to section

120.57(1) on December 12, 2011. On January 31, 2012, a

telephonic motion hearing was held with the parties, on a Motion

for Tel ephonic Appearance filed by the Department. During the

motion hearing, the parties agreed to not offer any evidence at

the final hearing concerning the facts and circumstances that led

to the entry of a default judgment against Baltagi.

During the final h earing, the Department presented the

testimony of Baltagi and Dan Hevia, an expert in accounting;

Exhibits 8 - 11, 17, and 20 - 23 were admitted at the request of the

Department. Baltagi presented the testimony of Jim Thielen, an

expert in accounting; Exhibit s 12 - 16 and 24 - 27 were offered by

Baltagi and admitted into the record. Judicial Notice was taken

of Chapters 455 and 473, Florida Statutes, and Rule 61H1 -

36.004(2)(b) of the Florida Administrative Code.

A Transcript of the hearing was filed with DOAH on

February 16, 2012. At the final hearing, the parties agreed to

extend the deadline for the filing of proposed recommended orders

to March 16, 2012. Both proposed recommended ord ers were filed

on that date , and have been fully considered in entering this

Recommended Order.

FINDING S OF FACT

1. The Department i s the state agency charged with the duty

to regulate the practice of certified public accountants in

Florida and to prosecute administrative complaints pursuant to

c hapters 120, 455, and 473, Florida Statutes.

2. At all times relevant to the allegations of the

Complaint, Baltagi was licensed in Florida as a certified public

accountant. Baltagi ' s license number is AC 0028318.

3. Baltagi is the sole owner of Baltagi Business Servic es,

Inc., which doe s business as " Fast Cash Services. " He is also

the sole owner of Lab ib Baltagi, Inc., which prepares income tax

returns as a Jackson Hewitt tax franchise. The two businesses

are located adjacent to each other , but are two separate

businesses.

4. Fast Ca sh Services had as its primary business operation

the cashing of checks for the customers of Baltagi ' s Jackson

Hewitt tax franchise.

5. In 2006, the United States, on behalf of the Internal

Revenue Service (IRS), filed a complaint against Baltagi,

allegin g that he had prepare d 32 federal tax returns for Native

Americans that failed to include per - capita distributions from

gaming proceeds in their taxable income.

6. In June of 2006, Baltagi signed a Stipulated Judgment of

Permanent Injunction, which provid ed as follows:

Pursuant to 26 U.S.C. §§ 7402(a), 7407 and

7408, defendants and their employees are

permanently enjoined from:

a. preparing or assisting in the preparation

of, or counseling of or advising the

preparation of filing of, federal tax returns

which assert that per capita distributions of

gaming proceeds paid to Native Americans are

exempt from federal income tax;

b. preparing or assisting in the preparation

of, or counseling or advising of federal tax

returns that assert any position for whic h

there is not a realistic possibility of being

sustained on its merits that results in the

understatement of tax liability, or that

evinces a willful, intentional, or reckless

disregard for the applicable laws, rules, and

regulations;

c. engaging in any fraudulent or deceptive

conduct which interferes with the proper

administration of the internal revenue laws.

7. In summary, the Stipulated Judgment prohibited Baltagi

from preparing federal income tax returns that asserted that per

capita gaming proce eds were exempt from federal income taxes, and

from preparing federal income tax returns that understate tax

liability by asserting any other frivolous or unrealistic

position.

8. The Stipulated Judgment merely prohibited Baltagi from

actions that all per sons, whether they are certified public

accountants or not, are prohibited from performing. Baltagi was

never prohibited from filing tax returns, and his license was

not, in any manner, discipli ned . In fact, subsequent to this

Stipulated Judgment, the IR S accepted Baltagi into its Enrolled

Agent Program.

9 . The re was no clear and convincing evidence establish ing

that the IRS is a licensing agency, or that it regulate s Florida

certified public accountants.

10 . Also in 2006, Fast Cash Services entered int o a

contract with iStream Financial Services, Inc., and its

affiliate, Kenny Bank and Trust (KBT). Fast Cash Services was

tasked with verifying identification via current driver ' s

licenses or other appropriate for m of identification for clients

who sought to cash a check.

11 . In July and August of 2009, KBT received multiple

Department of Treasury reclamation claims from Fast Cash

Services . Someone other than the named payee cashed the

reclamation checks, and one of Baltagi ' s employees failed to

notice t he discrepancy.

12 . As a result of these checks being cashed, the Circuit

Court for Waukesha County, Wisconsin, entered a default judgment

against Baltagi in the amount of $276,160.42 in response to a

complaint filed by iStream Financial Services and KBT.

13 . Baltagi began to pay KBT dama ges as a result of the

judgment, although he firmly believes he was the victim of fraud

as to the cashing of those reclamation checks.

14 . The fact that a default judgment was entered against

Baltagi does not, standing a lone, establish that Baltagi fail ed

to maintai n good moral character .

CONCLUSIONS OF LAW

15 . DOAH has jurisdiction over the subject matter of the

instant proceeding and of the parties hereto pursuant to chapter

120, Florida Statutes.

16. The Department s eeks to impose penalties against

Baltagi pursuant to section 473.323(3), Florida Stat utes (2010),

which includes the following penalties:

(a) Denial of an application of licensure;

(b) Revocation or suspension of the

certified public accountant or firm ' s license

or practice privileges in this state;

(c) Imposition of an administrative fine not

to exceed $5,000 for each count or separate

offense;

(d) Issuance of a reprimand;

(e) Placement of the certified public

accountant on probation for a long pe riod of

time and subject to such conditions as the

board may specify, including requiring the

certified public accountant to attend

continuing education courses or to work under

the supervision of another licensee; or

(f) Restriction of the authorized sc ope of

practice by the certified public accountant.

17 . Section 455.227(2), Florida Statutes (2010), provides

that when the board, or the department when there is no board,

finds any person guilty of the grounds set f orth in subsection

(1) or of any grou nds set forth in the applicable practice act,

including conduct which occurred prior to obtaining a license, it

may enter an order imposing one or more of the following

penalties:

(a) Refusal to certify, or to certify with

restrictions, an application for a license;

(b) Suspension or permanent revocation of a

license;

(c) Restriction of practice;

(d) Imposition of an administrative fine not

to exceed $5,000 for each count or separate

offense;

(e) Issuance of a reprimand;

(f) Placement of the lice nsee on probation

for a period of time and subject to such

conditions as the board, or the Department if

there is no board, may specify. Those

conditions may include, but are not limited

to, requiring the licensee to undergo

treatment, attend continuing e ducation

courses, submit to be reexamined, work under

the supervision of another licensee, or

satisfy any terms which are reasonable

tailored to the violations found; or

(g) Corrective action.

18. At the hearing, the Department bears the burden of

prov ing the allegations contained in the Administrative

Complaint. Proof greater than a mere preponderance of the

evidence must be presented by the Department to meet its burden

of proof. Clear and convincing evidence of the licensee ' s guilt

is required. Se e Dep ' t of Banking & Fin., Div. of Sec. and

Investor Prot. v. Osborne Stern and Co. , 670 So. 2d 932, 935

(Fla. 1996); Ferris v. Turlington , 510 So. 2d 292, 294 (Fla.

1987); and § 120.57(1)(j), Fla. Stat.

19. Clear and convincing evidence is an intermediat e

standard, requiring more proof than a preponderance of the

evidence but less than the exclusion of a reasonable doubt. In

re Graziano , 696 So. 2d 744, 753 (Fla. 1997). For proof to be

considered clear and convincing, the evidence must be found to be

cr edible; the facts to which the witnesses testify must be

distinctly remembered; the testimony 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 a firm belief or conviction,

without hesitancy, as to the truth of the allegations. In re

Davey , 645 So. 2d 398, 404 (Fla. 1994).

20. Section 4 73.323(1)(1) subjects a licensee to discipline

for:

Failing to maintain a good moral character as

provided in s. 473.308 while applying for

licensure , or while licensed in this state or

using practice privileges pursuant to s.

473.3141.

21. Section 473.308(6)(a) provides the following

definition:

Good moral character means a personal hi story

of honesty, fairness, and respect for the

rights of others and for the laws of this

state and nation.

22. A circuit court in Wisconsin entered a default judgment

against Baltagi, resulting from allegations that Baltagi had

cashed checks without pro perly verifying the identity of the

payees. Baltagi believes he was a victim of fraud in the cashing

of those checks, yet he has been making payments on the amount he

owes pursuant to the default judgment.

23. The fact that a default judgment was entered against

Baltagi does not establish, clearly and convincingly, that

Baltagi failed t o maintain good moral character, as defined in

section 473.308(6)(a).

24. As to Count Two, s ection 455.227(1)(f) subjects a

licensee to discipline for:

Having a license or th e authority to practice

the req uired profession revoked, suspended,

or otherwise acted against, including the

denial of licensure, by the licensing

authority of any jurisdiction, including its

agencies or subdivisions, for a violation

that would constit ute a violation under

Florida law. The licensing authority ' s

acceptance of a relinquishment of licensure,

stipulation, consent order, or other

settlement, offered in response to or in

anticipation of the filing of charges against

the license, shall be con strued as action

against the license.

25. There is no evidence establishing, clearly and

convincingly, that the IRS is a l icensing agency. Likewise,

there was no evidence that Baltagi ' s l icense was revoked,

suspended, or otherwise acted against by the I RS or any other

entity.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that Petitioner dismiss the Administrative

Complaint against Respondent.

DONE AND ENTERED this 12th day of April , 2012 , in

Tallahass ee, Leon County, Florida.

S

JESSICA E. VARN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 12th day of April , 2012 .

COPIES FURNISHED:

Frederick R. Dudley, Esquire

Holland & Knight

315 S. Calhoun Street, Suite 600

Tallahassee, Florida 32301

fred.dudley @hklaw.com

C. Erica White, Esquire

Department of Business

and Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399

[e-mail]

Eric R. Hurst, Esquire

Department of Business and

Professional Regulation

1940 N orth Monroe Street, Suite 42

Tallahassee, Florida 32399 - 2202

[e-mail]

Layne Smith, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

[e-mail]. us

Veloria Kelly, Director

Division of Certified Public Accounting

Board of Accountancy

240 Northwest 76th Drive, Suite A

Gainesville, Florida 32607

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.