13-001752EC In Re: David Berrones vs. * Status: Closed Recommended Order on Friday, February 28, 2014.

Summary: Board member of housing authority did not have a confllict of interest in voting to hire a candidate as executive director because he and the candidate were not business associates when the vote was cast.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IN RE: DAVID BERRONES , Case No. 13 - 1752EC

Respondent .

/

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was

conducted by video teleconferen ce between Miami and Tallahassee,

Florida, on January 7, 2014, before Administrative Law Judge

Claude B. Arrington of the Division of Administrative Hearings

(DOAH).

APPEARANCES

For Advocate: Diane L. Guillemette, Esquire

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399 - 1050

For Respondent: Craig C. Minko, Esquire

Cole, Scott and Kissane, P.A.

Suite 1850

110 Southeast Sixth Street

Fort Lauderdale, Florida 33301

Robert F. Dunlap, Esquire

Robert F. Dunlap, P.A.

200 South Biscayne Boulevard

Miami, Florida 33131

STATEMENT OF THE ISSUE

Whether David Berrones (Respondent), while a member of the

B oard of D irectors of the Homestead Housing Authority (H H A),

violated section 112.3143(3)(a), Florida Statutes (201 0 ), by

voting on February 15, 2011, to hire Oscar Hentschel (an alleged

business associate) as the Executive D irector of the HHA.

PRELIMINARY STATEMENT

On March 13, 2013, the Florida Commission on Ethics (the

Commission) issued an Order Finding Probable Cause to believe

that Respond ent committed the violation at issue in this

proceeding. Respondent timely requested a formal administrative

hearing to challenge the alleged violation, the matter was

referred to DOAH, and this proceeding followed.

In response to the undersigned ' s Order of Pre - Hearing

Instructions , the parties filed separate pre - hearing statements

which contained statements of undisputed facts. The respective

statements of undisputed facts are nearly identical, and the

stipulated facts that have been deemed relevant hav e been

incorporated as findings of fact in this Recommended Order.

At the final hearing, the Advocate for the Commission

(Advocate) presented the testimony of Sally Stribling (former

board chair of HHA), Oscar Hentschel (Executive Director of HHA),

and R espondent. The Advocate presented two exhibits, both of

which were admitted into evidence. The Advocate ' s first exhibit

was a Department of State record relating to Xcaret Group, LLC

(Xcaret) , and the second was an audio recording of the HHA board

meetin g of February 15, 2011. Respondent offered as his only

exhibit the T ranscript of the Advocate ' s audio recording , which

was admitted into evidence. Respondent presented no other

evidence.

A Transcript of the proceedings, consisting of one - volume,

was file d on January 31, 2014. The parties timely filed proposed

recommended order s , which have been duly considered by the

undersigned in the preparation of this Recommended Order.

Unless otherwise noted, all statutory references are to

Florida Statutes (2010), the law in effect when Respondent cast

the vote at issue.

FINDING S OF FACT

1. Respondent is a volunteer member of the Board of

Directors of the HHA.

2. Mr. Hentschel is the current Executive Director of the

HHA.

3. Respondent voted to appoint Mr. Hentschel as the

Executive Director of the HHA on February 15, 2011 ( " the Subject

Vote " ).

4. On September 22, 2010, Respondent and Mr. Hentschel

formed an entity cal led Xcaret to conduct " any and all lawful

business. " Department of State records listed Respondent and

Mr. Hentschel as the only officers of Xcaret. Xcaret was

administratively dissolved by the Department of State in

September 2011, when no annual report was filed . Xcaret was a

legal entity on the date of the s ubject v ote.

5. Xc aret was utilized by Respondent and Mr. Hentschel with

the hope of engaging in potential business with a particular

group of real estate investors, which consisted of

Mr. Hentschel ' s brother - in - law, and a group of individuals from

Mexico, who were introdu ced to Mr. Hentschel by Mr. Hentschel ' s

brother - in - law (hereinafter " the Investment Group " ).

6. Specifically, the Investment Group had expressed their

interest in purchasing two particular distressed real estate

properties in Miami, which Respondent an d Mr. Hentschel referred

to as: 1) the Sixth Avenue Property; and 2) the Triangle

Property.

7. At no point did Xcaret own, or have any legal interest

in, the Sixth Avenue Property or the Triangle Propert y , or any

other real estate.

8. Other than Xcaret, Respondent and Mr. Hentschel had no

prior business relationships and have since created no other

business relationships.

9. Respondent and Mr. Hentschel did not form Xcaret for the

purpose of engaging in general real estate business; rather, the y

formed Xcaret for the sole purpose of showing the Investment

Group, who expressed their interest in investing in two

particular properties (i.e., the Sixth Avenue Property and the

Triangle Propert y ), that there was a legal entity ready to accept

the Inve stment Group ' s particular investment funds.

10. I n November 2010 (a pproximately two months after Xcaret

was formed and approximately three m onths prior to the date of

the s ubject v ote ) , the Investment Group informed Respondent and

Mr. Hentschel that they were no longer interested in purchasing

the Sixth Avenue Property or the Triangle Propert y .

11. Because the Investment Group informed Respondent and

Mr. Hentschel that they were no longer interested in purchasing

either the Sixth Avenue Property o r the Triangle Propert y ,

Mr. Hentschel and Respondent devoted no further resources or time

whatsoever to Xcaret, after November 2010. When the investors

from Mexico decided not to invest in Miami in November 2010,

Mr. Hentschel told Respondent to close Xcare t. Prior to the

subject v ote, neither Respondent nor Mr. Hentschel checked to

determine whether Xcaret had been dissolved.

12. The parties stipulated that:

No income whatsoever was ever realized by

Xcaret;

No contracts were ever entered into on

X caret ' s behalf;

No bank account was ever opened in Xcaret ' s

name;

No assets were ever acquired in Xcaret ' s

name;

Xcaret never issued any stock;

Xcaret never obtained or purchased any

options to buy or lease any real estate or

other property;

Xc aret, and/or Respondent or Mr. Hentschel,

individually, never made any offers to

purchase the Sixth Avenue Property or the

Triangle Propert y or any other real estate;

and

Respondent and/or Mr. Hentschel never engaged

in any communications or transaction s with

any of the owners of Sixth Avenue Property or

the Triangle Propert y or any other real

estate.

13. Prior to the subject v ote, in response to the question

whether anyone had a relationship with Oscar Hentshel, Respondent

disclosed to the HHA Boa rd that: " He [Hentschel] is a very good

friend of my brother ' s and I met him about ten years ago th r ough

my brother. He is a smart guy. "

14. Prior to the s ubject v ote, in response to the question

if anyone had a relationship with Oscar Hents c hel, Respo ndent did

not disclose to the HHA Board, Respondent ' s and Mr. Hentschel ' s

involvement with Xcaret.

15. While Xcaret was a legal entity on the date of the

s ubject v ote, the record is clear that it was not an active

business enterprise on that date. 1/

16 . Respondent and/or Mr. Hentschel never received any

monetary benefit or gain, whatsoever, as a result of the s ubject

v ote, other than the salary and benefits Mr. Hentschel ultimately

received by virtue of his employment as Executive Director for

the HH A.

CONCLUSIONS OF LAW

17 . DOAH has jurisdiction over the subject matter of and

the parties to this case pursuant to sections 120.569 and

120.57(1), Florida Statutes (2013).

18 . Section 112.322 and Florida Administrative Code Rule

34 - 5.0015, authorize t he Commission to conduct investigations and

to make public reports on complaints concerning violations of

Code of Ethics for Public Officers and Employees.

19 . The Commission seek s to penalize Respondent for his

alleged violation of the Code of Ethics for Public Officers and

Employees. Consequently, the Commission has the burden of

proving , by clear and convincing evidence , the allegations

against Respondent. See Ferris v. Turlington , 510 So. 2d 292

(Fla. 1987); Evans Packing Co. v. Dep ' t of Agric. & Con sumer

Servs. , 550 So. 2d 112 (Fla. 1st DCA 1989); and Inquiry

Concerning a Judge , 645 So. 2d 398 (Fla. 1994). As stated by the

Florida Supreme Court:

[C]lear and convincing evidence requires that

the evidenc e must be found to be credible;

the facts to whi ch 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

fac t a firm belief or conviction, without

hesitancy, as to the truth of the allegations

sought to be established.

In re Davey , 645 So. 2d 398, 404 (Fla. 1994) (quoting Slomowitz

v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983)).

20. Penal statutes, such as the statutes within the Code of

Ethics for Public Officers and Employees, must be strictly

construed. See City of Miami Beach v. Galubut , 626 So. 2d 192,

194 (Fla. 1993) ( " When a statute imposes a penalty, any doubt as

to its meaning must be resolved i n favor of strict construction

so that those covered by the statute have clear notice of what

conduct the statute proscribes. " ).

21. Pursuant to section 286.012, when Respondent cast the

s ubject v ote , public officials ha d (and still have) an

affirmative duty to vote on all matters before them . A bstaining

from a vote is prohibited unless " there is, or appears to be, a

possible conflict of interest under s. 112.311, s. 112.313, or

s. 112.3143. "

22. The Commission alleges that Respondent has violated

se ction 112.3143(3)(a), which provide d , in relevant part, as

follows:

No county, municipal, or other local public

officer shall vote in an official capacity

upon any measure . . . which he or she knows

would inure to the special private gain or

loss of a rel ative or business associate of

the public officer .

(emphasis added).

23. Respondent does not contest that at the time of the

s ubject v ote he was subject to the provisions of section

112.3143(3)(a) .

24. To establish that Respondent violated s ection

1 12.3143(3)(a) by casting the s ubject v ote , the Commission,

through its Advocate, must prove by clear and convincing

evidence, that Respondent voted in his official capacity on a

measure which Respondent knew would have inured to the " special

private gain " of a " business associate " of Respondent. There are

two elements that must be established by clear and convincing

evidence: 1) that Mr. Hentschel was a " business associate " of

Respondent ' s at the time of the s ubject v ote and 2) the s ubject

v ote was on a m easure that inured to the " special private gain "

of Mr. Hentschel. There is a violation only if both elements are

proven.

2 5 . The term " business associate " is defined under section

112.312(4) as " any person or entity engaged in or carrying on a

busines s enterprise with a public officer. " (emphasis added).

T he Commission has consistently recognized that section

112.3143(3)(a) i s " phrased in the present tense " requiring a

current (an at - the - time - of - the - vote) relationship between the

officer and the affe cted persons or entities. " Op. Fla. Comm.

Ethics 09 - 09 (2009) (emphasis added) (finding that a city

commissioner was not presented wit h a voting conflict under this

s ection regarding measures affecting his former employer, because

the statute was phrased in the present tense) . See also , Op.

Fla. Comm. Ethics 06 - 05 (2006) (opining that a city commissioner

voting on measures affecting a horse track which seasonally

employs him was not presented with a conflict under this

s ection ); F la. Comm. Ethics 80 - 75 (1 980) (finding no voting

conflict under this s ection was created when a municipal board of

adjustment member voted on a variance request concerning a

project in which he was previously involved as an architect, when

he had no continuing relationship with th e client at the time of

the vote) ; Op. Fla. Comm. Ethics 79 - 31 (1979) (opining that a

city planning commission member voting on a matter affecting a

person with whom he had occasionally subcontracted was not

presented with a voting conflict under this s ect ion) ; Op. Fla.

Comm. Ethics 78 - 96 (1978) (finding a city councilman was not

presented with a conflict under this s ection regarding matters

affecting potential clients of his real estate firm) ; Op. Fla.

Comm. Ethics 77 - 183 (1977) (finding a water management district

board member was not presented with a voting conflict under this

s ection regarding measures affecting a surface water permit for

entity formerly retaining his engineering services) . For this

reason, " past relationships or possible future relatio nships do

not satisfy the requirements of the statute. " Op. Fla. Comm.

Ethics 06 - 05 (2006) .

2 6 . Specifically with regard to the term " business

associate, " the Commission has made the following relevant

statements:

It is apparent . . . that the intent of the

" business associate " definition is to bring

voting conflicts law to bear on business

endeavors . . . rather than to bring under

the law those relationships under which one

merely holds a technical label of status . .

. in relation to others , but abs ent

engagement or carrying on of any common

co mmercial/profit - making pursuit. Op. Fla.

Comm. Ethics 98 - 09 (1998)

2 7 . The law is clear that the relationship between

Respondent and Mr. Hentschel must be examined to determine

whether Mr. Hentschel wa s a business associate of the Respondent

at the time Respondent cast the s ubject v ote. The facts of this

case are clear that Xcaret, while technically still a

corporation, was a defunct business enterprise. Consequently,

the undersigned concludes that Mr . Hentschel was not a business

associate of Respondent at the time Respondent cast the s ubject

v ote.

28. T he Advocate has failed to meets its burden of proving

by clear and convincing evidence that Respondent and

Mr. Hentschel were " business assoc iates " within the meaning of

section 112.312(4), Florida Statutes, " at the time of the Subject

Vote " and, thus, no conflict of interest was created when

Respondent voted to appoint Mr. Hentschel as the Executive

Director of the HHA under section 112.3143(3 )(a) .

29 . T he Commission should enter a Final Order and Public

Report finding that Respondent did not violate section

112.3143(3)(a) .

3 0 . Whether voting to hire Mr. Hentschel as the Executive

Director of the HAA is a measure that would i nure to the " special

private gain " of Mr. Hentschel within the meaning of section

112.3143(3)(a) is a moot issue since Mr. Hentschel was not a

business associate of the Respondent.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of

Law, it is RECOMMENDED that the Florida Commission on Ethics

enter a f inal o rder and p ublic r eport that finds that Respondent,

David Berrones , did not violate section 112.31 43(3)(a). It is

FURTHER RECOMMENDED that the final order dismiss the complaint

fi led against David Berrones, with prejudice.

DONE AND ENTERED this 28th day of February , 2014 , in

Tallahassee, Leon County, Florida.

S

CLAUDE B. ARRINGTON

Administrative Law Judge

Division of Administrative Hearin gs

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 28th day of February , 2014 .

ENDNOTE

1/ Pe titioner elicited testimony from Respondent and

Mr. Hentschel that they likely would have been willing to pursue

business opportunities through Xcaret had appropriate investors

been located. That speculative testimony is not relevant to the

issue of whet her Respondent and Mr. Hentschel were business

associates at the time of the s ubject v ote.

COPIES FURNISHED:

Diane L. Guillemette, Esquire

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399 - 1050

Kaye B. Starling , A gency Clerk

Florida Commission on Ethics

Suite 200, Building E

Post Office Drawer 15709

325 John Knox Road

Tallahassee, Florida 32317 - 5709

Robert F. Dunlap, Esquire

Robert F. Dunlap, P.A.

200 South Biscayne Boulevard

Miami, Florida 33131

Craig C. Mink o, Esquire

Cole, Scott and Kissane, P.A.

Suite 1850

110 Southeast Six th Street

Fort Lauderdale, Florida 33301

Virlindia Doss, Exec utive Dir ector

Florida Commission on Ethics

Suite 200, Building E

325 John Knox Road

Post Office Drawer 15709

Tallahassee, Florida 32317 - 5709

C. Christopher Anderson, III

Gen eral Co unsel

Florida Commission on Ethics

Post Office Drawer 15709

Tallahassee, Florida 32317 - 5709

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.