13-004478PL Department Of Financial Services, Division Of Insurance Agent And Agency Services vs. William Robert Pearson Status: Closed Recommended Order on Wednesday, October 15, 2014.

Summary: DFS proved violations on 2 of 9 counts. Others not proven by clear and convincing evidence. Ex post facto mandatory revocation not applied. Recommended 12-month suspension.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF INSURANCE

AGENT AND AGENCY SERVICES,

Petitioner,

vs. Case No. 13 - 4478PL

WILLIAM ROBERT PEARSON,

Respondent.

_______________________________/

RECOMMENDED ORDER

On June 4 and 5, 2014, a final administrative hearing in

this case was held in Tampa, Florida, before J. Lawrence

Johnston, Administrative Law Judge, Division of Administrative

Hearings.

APPEARANCES

For Petitioner: David J. B usch, Esquire

Derick Dehmer, Esquire

Department of Financial Services

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

For Respondent: John Angelo Richert, Esquire

John Richert , P.A.

13575 58th Street North

Clearwater, Florida 33760 - 3740

STATEMENT OF THE ISSUE

The issue in this case is whether the Respondent , William

Robert Pearson, should be disciplined for alleged statutory and

rule violations for his role in several insurance transactions.

PRELIMINARY STATEMENT

The Petitioner, Department of Financial Services (DFS),

Division of Insurance Agent and Agency Services, filed an

Administrative Complaint against the Respondent (DFS C ase

137722 - 13 - AG). The Respondent filed an Answer t hat disputed

allegations, pled three affirmative defenses (including that DFS '

Office of Financial Regulation (OFR), Division of Securities,

previously settled the case with the Respondent in his capacity

as securities licensee), and requested a hearing.

The parties filed a pre - hearing stipulation that included

statements of position, admitted facts, agreed law, and issues to

be determined. Two days before the final hearing, the Petitioner

moved to amend to add Count IX . The Respondent filed an

emergenc y motion to continue, which was denied . L eave to amend

was granted , resulting in an Amended Administrative Complaint .

At the final hearing, the Petitioner called Paula Rego

(a professional guardian who was appointed as the guardian of two

insureds, Will iam and Josefa Kesish), Tarek Richey (a former

employer of the Respondent) , 1/ Mercedes Bujans (an investigator

for OFR ' s Division of Securities), and Karen Ortega (an

investigator for DFS ' s Division of Insurance Agent and Agency

Services). The Petitioner also introduced the transcripts of the

depositions of three insureds (Edith Paz, Geraldine Busing, and

Wayne Penwarden) and an insurance agent (Glenn Cummings), each

with numerous exhibits attached. The Petitioner also introduced

numerous exhibits, design ated as Kesish exhibits, relating to

insurance and securities transactions of the Kesishes (namely,

Kesish Exhibits 1 through 7, 10 through 14, 16 through 30,

32 through 38, 40 through 43, 48 through 59, 61, 62, 67, 68,

70 through 75, 77, 94, 96, and 97), and Busing contract

documents 1 through 25. The Respondent objected to the admission

of some of these exhibits; those objections either were overruled

or were deferred and are now overruled. 2/ The Respondent

testified , but offered no additional exhibits.

The Transcript of the final hearing was filed on July 16,

2014 , and the parties filed proposed recommended orders that have

been considered.

FINDING S OF FACT

1. The Respondent is licensed in Florida as a life

including variable annuity agent (2 - 14), li fe including variable

annuity and health agent (2 - 15), life agent (2 - 16), life and

health agent (2 - 18), and health agent (2 - 40 ), regulated by the

DFS ' s Division of Insurance Agent and Agency Services. He was so

licensed a t al l times pertinent to this case . He was first

licensed in 1988 and has been disciplined once, in September

2002, when he was given a Letter of Guidance for misrepresenting

to a Pinellas Park resident that an annuity he sold her would

generate interest in excess of 6.8 percent , when the guaranteed

rate was three percent for the first year.

2. During the transactions alleged in the Amended

Administrative Complaint, t he Respondent also was registered with

OFR ' s Div ision of Securities as a Financial Industry Regulatory

Authority (FINRA) broker representative associated with

Transamerica Financial Advisors, Inc . (Transamerica) . On

August 21, 2012, b ased on some of the same facts alleged in this

case, OFR charged the Respondent with failing to observe high

standards of commercial honor and just and equitable principles

of trade because he: participated in the liquidation of variable

and fixed annuities on behalf of several elderly customers

referred by insurance agent s not licensed as FINRA broker

representative s ; executed the liquidations recommended to the

customers by insurance a gent Richard Carter ; failed to

appropriately record the transactions on the books and records of

Transamerica; failed to review the transactions, or have them

reviewed by Transamerica, as to suitability; and prov ided Agent

Carter with blank Transamerica letterhead to be used to

facilitate the transactions. A Stipulation and Consent Agreement

was entered on December 18, 2012, in which t he Respondent

admitted the OFR charges and agreed to never seek a license or

re gistration as a dealer, investment advisor , or associated

person under the Florida Securities and Investor Protection Act,

c hapter 517, Florida Statutes. A Final Order incorporating the

settlement agreement was entered on January 11, 2013. (This

Final Or der is the basis for Count IX, which was added to the

charges in this case, as well as for one of the Respondent ' s

affirmative defenses.)

Count I - Î Geraldine Busing

3 . Geraldine Busing was born on December 1, 1930. She has

a high school education. Her husband of 44 years died in 2001.

When alive, he handled the family finances.

4 . Mrs. Busing ' s income is from a pension of $728 a month

and social security payments of $1,090 a month. In addition, she

had substantial investments in two Schwab accounts .

5 . During the market decline of 2007 - 2008, Mrs. Busing

became dissatisfied with the performance of her Schwab accounts.

An insurance agent named Richard Carter recommended that she

invest in annuities, which would reduce her taxes . (In her

depositio n, testimony was elicited from Mrs. Busing that Agent

Carter told her that the Respondent would do her taxes for free

for the rest of her life. It is not likely that he made such a

representation, and there is no evidence that the Respondent knew

about su ch a representation.) Mrs. Busing follow ed Agent

Carter ' s recommendation.

6 . Agent Carter did not have a FINRA license and approached

the Respondent , who worked for Transamerica, to facilitate the

liquidation of Mrs. Busing ' s Schwab accounts , so she co uld follow

A gent Carter ' s recommendations. The Respondent agreed.

7. The Petitioner alleged that the Respondent provided

blank Transamerica forms to Agent Carter and that Agent Carter

" shuffled " the forms together with an EquiT rust Life Insurance

Compa ny (EquiTrust) annuity application and suitability forms and

requested Mrs. Busing ' s signatures (although, it is alleged, one

or more of the signatures on the Transamerica forms were not

hers.) It is alleged that, unbeknownst to Mrs. Busing, Agent

Carter gave the Respondent these forms, as well as a copy of her

Schwab account statements, so he could liquidate her accounts ,

which totaled $627,000 at the time, " dump " the proceeds into a

Transamerica account , and then " funnel " the liquidated assets

into two E qui T rust annuities. It is alleged that Mrs. Busing

became aware of these transactions in September 2010 after

discussions with her accountant.

8 . Mrs. Busing testified that she has never met the

Respondent and does not know him. She testified that she gave

all of her Schwab account information to Agent Carter and did not

expect him to share it with the Respondent. She testified that

Agent Carter had her hurriedly sign a stack of papers without

giving her a chance to review them. She said she was surpr i sed

when her stock broker, Barry Tallman, called to tell her that her

Schwab accounts had been liquidated and used to open a

Transamerica account. She denied ever receiving or signing the

Schwab bank check dated July 7, 2010, used to open the

Transameric a accounts; denied ever providing the Respondent and

Transamerica with information for her customer account

information ( CAI ) form used to open the Transamerica accounts ;

and denied that several of the Geraldine Busing signatures on the

Transamerica docume nts used for the transact ion s were her

signatures. S he admitted to signing a Transamerica check dated

August 13, 2010, which was used to purchase the EquiTrust

policies.

9. The Respondent testified that he telephoned Mrs. Busing

at Agent Carter ' s reque st. He testified that she told him she

wanted to implement Agent Carter ' s recommendation to liquidate

the Schwab accounts and purchase annuities. He testified that he

told her his services were not required because her current

broker (Mr. Tallman) could handle it for her , unless she just

wanted to avoid confronting her current broker. He said she

wanted the Respondent to handle it, and he replied essentially

that he would do whatever she and Agent Carter wanted him to do

for her.

1 0 . The Respondent tes tified that he then mailed

Mrs. Busing forms she had to fill out, sign, and return to him.

He testified that he talked to her briefly by telephone about

15 to 20 times to answer questions she had about the forms. When

she told him she received a Schwab c heck in the amount of about

$150,000 and asked if she should mail it to him, he cautioned her

that it would be better not to mail it and offered to drive to

her house to get the check , which he did and returned immediately

to Transamerica to open a Transam erica account with it. He

testified that the Transamerica funds were used to purchase

EquiTrust annuities at the direction of Agent Carter and

Mrs. Busing.

1 1 . The evidence was not clear and convincing that

Mrs. Busing ' s version of the facts is true and that the

Respondent ' s version is untrue. To the contrary, Mrs. Busing ' s

memory did not seem to be very good , and she seemed confused

during her testimony. The evidence was not clear and convincing

that the Respondent made any investment or insurance

rec ommendations or misrepresentations to Mrs. Busing. T he

Petitioner ' s own witnesses ( DFS and OFR investigators, Ka ren

Ortega and Mercedes Bujans) testified that the Respondent never

acted as Mrs. Busing ' s insurance agent.

1 2 . It was not proven by clear an d convincing evidence that

Mrs. Busing incurred tax and commission charges as a result of

her Schwab account being liquidated , other than Transamerica ' s

standard " ticket charge " for the transactions , which the

Respondent admitted . There was no evidence th at the Respondent

received any remuneration on the EquiTrust annuity sale s. Those

commission s went to Agent Carter.

1 3 . The Petitioner contended in its proposed recommended

order that the Respondent listed Mrs. Busing ' s annual income to

be between $25, 000 and $50,000, her investment objective as

growth and income, and her investment time horizon as long - term.

(Busing D eposition E xhibit 87 ). T here was no testimony to put

the exhibit in context or e xplain it .

1 4 . On its face, Busing deposition E xhibit 87 was a request

from Transamerica to the client to confirm certain information.

The form had the Respondent ' s name printed on it, but it was not

signed by either the Respondent or Mrs. Busing, and the evidence

did not prove who completed the form. (The CAI form contained

similar information and had both their signatures.)

1 5 . The Petitioner contends that the information on the

confirmation request was " absurd, " because it listed

Mrs. Busing ' s annual income as between $25,000 and $50,000, when

her taxa ble income was $11,108 for 20 09 and $8,251 for 2010.

T here was evidence that her total annual income was about $48,000

for 2007 , $32,600 for 2008 , $22,358 for 2009 , and $19,001 for

2010, with the decline due to the decline in the stock market.

The eviden ce was not clear and convincing that the income

information on that form or the CAI form was absurd.

1 6 . The investment objective and invest ment time horizon on

the forms we re questionable, but the evidence was not clear and

convincing that these were mi srepresentations by the Respondent.

The Transamerica account was a Pershing money market account used

to facilitate the purchase of annuities. The evidence was that a

separate suitability analysis would be required by the insurance

company offering the a nnuity. The evidence was not clear that

the information in the forms signed by the Respondent was used

for the purchase of EquiTrust annuities on behalf of Mrs. Busing.

Those purchases were recommended and executed by Agent Carter.

17. The evidence was not clear and convincing that

switching Mrs. Busing ' s investments from Schwab to EquiTrust

annuities was not suitable for Mrs. Busing or in her best

interest. No expert witness testified to that effect.

Counts II through IV Î - The Kesishes

1 8 . In 2010, W illiam Kesish and his wife , Josefa , owned

several annuities. Mr. Kesish had managed their business affairs

before he developed Parkinson ' s disease and dementia in his old

age. After that, Mrs. Kesish cared for him and took over the

family ' s finances by d efault. Mr. Kesish died on November 26,

2010.

1 9 . Mrs. Kesish was born in Spain in 1937. English is her

second language. In 2010, she had difficulty conversing and

reading in English and was unable to write in English. After her

husband became mental ly disabled, she use d their bank account to

provide for their needs, but she had no investment acumen beyond

knowing generally that it was better to make more money from

their investments than to make less or to lose money. She was

recovering from cancer treatment in 2010 and was physically

frail.

20 . On May 25, 2010, Paula Rego, a professional guardian,

met with an attorney who believed the Kesishes were being

exploited and in need of a guardian. Ms. Rego reviewed

documentation provided by the attorney and , in June 2010 , agreed

to Mrs. Kesish ' s voluntary request to become the guardian of the

Kesishes ' property.

21 . On July 8, 2010, Ms. Rego became aware of the

Respondent ' s involvement in the Kesishes ' financial business .

She telephoned the Respondent to explain her guardianship role

and faxed him on July 15, 2010, to direct him to cancel any

investment transactions that were underway.

22 . The Petitioner presented the testimony of Ms. Rego to

explain her review of the documentation she collected in h er

research to attempt to piece together the financial transactions

involving the Kesishes. She also testified as to the surrender

charges and, to some extent, the tax liabilities that resulted

from them. She also related statements made by Mrs. Kesish t o

her and, to some extent, to the DFS and OFR investigators, Karen

Ortega and Mercedes Bujans, who also related some of the

statements Mrs. Kesish made to them . The Petitioner also

introduced an affidavit prepared by Ms. Ortega and signed b y

Mrs. Kesish o n March 31, 2011 . All of Mrs. Kesish ' s statements

were hearsay. The hearsay cannot itself support a finding of

fact. 3/ In general, the hearsay demonstrated that Mrs. Kesish did

not have a clear recollection of her interactions with the

Respondent at the time of her statements .

23 . Agent Carter introduced the Respondent to Mrs. Kesish

in March 2010 . The Petitioner alleged essentially that Agent

Carter schemed and collaborated with the Respondent to exploit

the Kesishes by tricking them into financial a nd insurance

transactions that would not be in their best interest , but would

generate commissions and fees for them. It was alleged that, a s

with Mrs. Busing, the Respondent ' s FINRA licensure was required

to buy and sell securities in furtherance of the scheme.

2 4 . The Respondent testified that Agent Carter told him

about his clients, the Kesishes , and that he went to meet

Mrs. Kesish in person because he had difficulty communicating

with her over the telephone due to her hard - to - understand Spanish

acc ent and limited proficiency in spoken English. He testified

that she told him she wanted to get out of the stock market and

was unhappy with her current stockbroker, Doreen Scott. (That

part of the Respondent ' s testimony was corroborated by Ms. Rego,

who concurred that Mrs. Kesish did not like dealing with

Ms. Scott because she talked down to her.) The Respondent

testified that he went to Mrs. Kesish ' s house, asked if he could

be of assistance to her, and discussed her financial situation

with her. He t estified that he then returned to his Transamerica

office and mailed forms for her to fill out and sign. 4 / Similar

to his dealings with Mrs. Busing, t he Respondent testified that

he spoke to Mrs. Kesish several times by telephone to answer

questions about the forms.

2 5 . It is reasonable to infer that t he Respondent knew

Agent Carter would be helping her. The Respondent testified that

when the completed forms were returned to him by mail, he

telephoned Mrs. Kesish to verify the information on the forms

and, in some cases, get information that was omitted to add it to

the forms .

2 6 . The Petitioner attempted to prove that the Respondent

knew or should have known Mrs. Kesish was mentally disabled and

incapable of voluntarily instructing the Respondent to effectuate

financial transactions on her behalf. Mrs. Kesish lacked

knowledge in investing and was susceptible to being misled and

exploited , but it was not proven that Mrs. Kesish was mental ly

incapacit ated or unable to consent to Agent Carter ' s

recommen dations or instruct the Respondent . Ms. Rego herself did

not find it necessary to initiate involuntary proceedings to

establish a plenary guardianship of Mrs. Kesish ' s person and

property until October 2013.

27. (Count II ) O ne of the Kesishes ' investmen ts was a

Genworth Life and Annuity Insurance Company (Genworth) variable

annuity (G - 58), which they bought on October 31, 2008, for

$86,084.89. It was designed to begin paying monthly income on

October 31, 2022. It provided a waiver of surrender charges if

either Kesish was hospitalized, admitted to a nursing facility,

or died. As of March 31, 2010, G - 58 had a contract value of

$102,954.90.

2 8 . Mrs. Kesish signed a form on l etterhead of the

Respondent and Transamerica that expressed her desire for the

Respondent to be thei r insurance agent on G - 58.

2 9 . On May 27, 2010, the Respondent used an automated

account transfer ( ACAT ) to liquidate G - 58 and transfer the funds

to a Transamerica brokerage account he opened for the Kesishes on

the same date . The R espondent did not independently determine

whether the liquidation was suitable or in the Kesishes ' best

interest . He re lied on Agent Carter to do this .

30 . The Respondent and the Kesishes signed the CAI form to

open the brokerage account. The surrende r of G - 58 took effect on

June 14, 2010. As a result of the liquidation, the Kesishes were

assessed a surrender charge of $4,576.91 and federal tax was

withheld , and the net proceeds from the liquidation were

$90,314.19.

31 . On June 29, 2010 , the funds i n Mrs. Kesish ' s

Transamerica account were added to an EquiTrust policy Agent

Carter had sold her (E - 92F). The Respondent testified that this

was done at the direction of Agent Carter and Mrs. Kesish. The

Respondent did not act as the Kesishes ' EquiTrust agent and

received no commissions.

32 . The Petitioner alleged and proposed a finding that the

liquidation of G - 58 allowed Agent Carter to represent to

EquiTrust that the Kesishes had no other annuities an d that the

addition to E - 92F was not replacing an other annuity, which

allowed Agent Carter to avoid having Genworth attempt to

" conserve " G - 58 (i.e., question the Kesish es as to whether they

wanted to reverse the liquidation within the grace period for

doing so). T he evidence cited in support of the all egation and

proposed finding is documentation of the initial purchase of

E - 92F in April 2010 , not the addition in June 2010. There was no

clear and convincing evidence that actions taken by the

Respondent resulted in Agent Carter circumventing the replace ment

notice requirement , or that the Respondent should be held

responsible for what Agent Carter did or did not do regarding the

EquiTrust annuity .

33 . According to the Respondent, he made no investment

recomm endations to Mrs. Kesish , and all such recomm endations were

made by Agent Carter . He testified that he only took action in

accordance with the wishes of Mrs. Kesish, who was being advised

by Agent Carter . He denied that his purpose was to generate

commissions or fees for himself or for Agent Carter , or to enable

Agent Carter to conceal the replacement of the Genworth annuity .

It was not proven by clear and convincing evidence that the

Respondent ' s testimony was false.

3 4 . The Petitioner ' s proposed recommended order cites the

testimony of Tarek Ri chey regarding his concerns about the

Respondent ' s use of an ACAT to liquidate annuities, transfer of

the proceeds to Pershing accounts at Transamerica, and use of

those funds to purchase other annuities. Mr. Richey is a FINRA -

licensed securities broker a t Questar Capital Corporation, who

employed and supervised the Respondent for about a month in early

2011 , after he left Transamerica in December 2010 . While

supervising the Respondent, Mr. Richey was advised of OFR ' s

investigation of the Respondent and r eviewed the Respondent ' s

documentation on the subject of OFR ' s investigation.

3 5 . One of Mr. Richey ' s concerns from his review of the

Respondent ' s documentation was the use of ACAT , which would not

guarantee that the client is aware of resulting surrende r charges

and tax consequences. He also was concerned that ACAT could have

been used to bypass and avoid the use of forms required to

analyze the suitability of annuities purchased for the Kesishes

(and other clients) . While he expressed these concerns,

Mr. Richey had no personal knowledge and did not testify that the

Kesishes (or the other clients) actually were un aware of

surrender charges and tax consequences , or that liquidation was

not suita ble or in their best interest.

3 6 . Another of Mr. Richey ' s concerns was that the use of

ACAT could result in the replacement of annuities without

completing the required forms that would provide notice to the

insurance company that its annuity was in the process of being

replaced and give it an opportunity to con serve its annuity.

Mr. Richey did not know that the use of ACAT actually resulted in

the bypass of the replacement policy notice requirements for the

Kesishes and other clients . He also did not testify that the

Respondent sh ould be held responsible for w hat Agent Carter did

or did not do regarding replacement notices .

37. Ms. Rego testified (based in part on discussions with a

financial planner who did not testify) that she did not think the

Genworth and EquiTrust transactions were not in the best inter est

of the Kesishes, mainly because of the Genworth surrender charge

and tax consequences. There was no other expert testimony on the

subject, and the evidence was not clear and convincing that those

transactions were unsuitable or not in their best inter est .

3 8 . (Count III ) The K esishes owned a Riversource Life

Insurance Company (Riversource) annuity (R - 30) that they bought

on October 5, 2006. The contract had declining withdrawal charge

rates that held at eight percent for the first four years. It

ha d a death benefit rider.

3 9 . On March 23, 2010, a letter on the Respondent ' s

Transamerica letterhead, written in English and signed by

Mrs. Kesish, directed Riversource to list the Respondent as the

Kesishes ' financial advisor. On April 23, 2010, Mrs. K esish

signed a form directing Riversource to liquidate R - 30. She also

signed a form saying she knew there would be surrender charges.

On April 26, 2010, Riversource sent the Kesishes a check for

$26,430.07 (which was net after $2,454.30 in surrender char ges) .

40. The testimony from Ms. Rego as to whether the

liquidation of the Riversource annuity was contrary to the

Kesishes ' best interest, unsuitable, or in violation of

suitability form or replacement notice requirements , was similar

to her testimony w ith respect to the Genworth liquidation. There

was no other expert or other clear and convincing evidence.

41 . (Count IV ) The Kesishes also had Great American Life

Insurance Company (Great American) annuities in the amounts of

approximately $560,854 (GA - 25) and $28,785 (GA - 00), which were

purchased in January 2010. GA - 25 was owned by the Kesishes '

t rust, with Mrs. Kesish as trustee; GA - 00 was owned by

Mr. Kesish. By June 4, 2010, they had contract values of

$580 , 854.71 and $29,970.46, respectively.

4 2 . On June 18, 2010, Agent Carter took Mrs. Kesish to

lunch. A letter dated June 18, 2010, signed by Mrs. Kesish for

her and her husband , written in English on the Respondent ' s

Tr ansamerica letterhead, directed the transfer of GA - 25 to a

Transamerica Pers hing account (TA - 25). An ACAT form dated

June 20, 2010, signed by Mrs. Kesish and the Respondent , directed

the liquidation of Mr. Kesish ' s GA - 00 and the transfer of the

proceeds to the Kesishes ' Transamerica Pershing account. This

transaction took effect on July 7, 2010. 5/

43 . After becoming involved through A ttorney Hook , Ms. Rego

had numerous discussions with Mrs. Kesish and with Agent Carter

regarding the Kesishes ' investments . Agent Carter attempted to

explain and justify his actions to Ms. Rego a nd blame other

insurance agents who he claimed had essentially stolen his

clients by tricking the m into replacing Allianz Life Insurance

Company of North America (Allianz) annuities sold to them by him

with G A - 25 and G A - 00. Ms. Rego ' s research notes evide nce her

understanding that the Great American sales to the Kesishes were

unsuitable.

44. During Ms. Rego ' s discussions and research throughout

June 2010, the Respondent ' s name did not come up , and Ms. Rego

was unaware of the Respondent having anything t o do with the

Kesishes. When she learned about the Respondent ' s role on

July 8, 2010, she attempted to contact him . On July 15, 2010,

she faxed the Respondent to instruct him to stop acting on behalf

of the Kesishes. There is no clear and convincing evi dence that

the Respondent did not follow Ms. Rego ' s instructions. 6/

45 . On July 17, 2010, Great American sent Mr. Kesish a

conservation letter urging him not to surrender GA - 00. Ms. Rego

then contacted Great American and had the surrender of GA - 25 and

G A - 00 stopped. Had the transactions not been stopped, the

Kesishes $60,000 in surrender charges would have been imposed .

46. There was no other expert testimony or other clear and

convincing evidence that the liquidation of the Great American

annuities w as contrary to the Kesishes ' best interest,

unsuitable, or in violation of suitability form or replacement

notice requirements.

Counts V through VI Î - Edith Paz

4 7. Edith Paz was born on January 20, 1926, and lives in

Sun City Center. She has a high schoo l diploma and held various

jobs, from retailing to making plates in a dental office.

4 8 . Mrs. Paz married a GI returning from World War II. Her

husband was successful in business before his retirement.

Meanwhile, Mrs. Paz founded a successful real esta te business and

invested in the stock market.

4 9 . Mr. Paz died in 1999. In 2001, Mrs. Paz created a

revocable trust with her self as trustee.

50 . When Mrs. Paz retired, she moved to Sun City Center.

She did some investing , but was dissatisfied with he r investments

and her financial representative at the time. About that time,

she met Glenn Cummings, an insurance agent who was a less

experienced associate of Agent Carter and also not FINRA -

licensed . After several conversations, Agent Cummings gained h er

trust and advised her to liquidate and consolidate her assets

before deciding what other financial products to purchase. He

referred her to the Respondent for that purpose.

51 . Agent Cummings and Mrs. Paz testified that he referred

Mrs. Paz to the Re spondent on the advice of Agent Carter to save

" exit fees " on liquidating her investments. The evidence was not

clear as to how the Respondent would be able to do this. The

Respondent testified to his understanding that Mrs. Paz wanted to

get out of the stock market and switch to more stable investments

and that she had a bad relationship with her stockbroker. The

Respondent ' s testimony is consistent with Mrs. Paz ' s actual

losses in the stock market and her testimony that she listened to

and followed the advice of Agent Cummings because she was

dissatisfied wit h her prior financial advisor, a Mr. Shrago .

52 . Mrs. Paz testified that she spoke to the Respondent

just once, briefly. That conflicts with the testimony of the

Respondent and Agent Cummings . T heir testimony was that there

were several telephone conversations after the initial contact.

They related that the Respondent mailed Mrs. Paz the forms that

needed to be filled out, that Agent Cummings was with Mrs. Paz

when she filled out the forms, and that both spoke to the

Respondent s everal times during the process . According to

Agent Cummings, this happened on July 29, 2010, when he visited

Mrs. Paz to show her illustrations regarding the annuities he was

recommending . While there, he helped her c omplete the forms the

Respondent had sent to have her investments liquidated and

consolidated into a Transamerica Pershing account.

53 . There also was conflict in the testimony as to whether

anyone explained investment options and consequences to Mrs. Pa z.

She testified that no one gave her any explanation. Agent

Cummings testified that he explained everything in detail to

Mrs. Paz and that she also talked to the insurance agents who

represented the companies whose annuities she would be

surrendering. He testified that Mrs. Paz knew exactly what she

was doing. The Respondent testified that he had no involvement

in those explanations. He testified that he simply made sure he

understood what Mrs. Paz wanted him to do for her.

54 . (Count V ) In May 2007 , Mrs. Paz purchased a Jackson

National Life Insurance Company (Jackson National or JNL) annuity

( JNL - 42A ) on the advice of Mr. Shrago . The initial premium was

$100,000, and it was issued with a five - percent bonus. As of

May 25, 2007, it had an account b alance of $105,017.01 and was

receiving an annual rate of return of 7.75 percent.

55 . On July 12, 2010, Mrs. Paz signed a letter directing

Jackson National to make the Respondent , who held an appointment

to represent Jackson National , her agent - of - record on JNL - 42A .

The change took effect on July 15, 2010.

5 6 . On July 29, 2010, Jackson National faxed the Respondent

a statement of account for JNL - 42A, listing the balance as

$108,253.48 (which reflected a prior withdrawal of $2,500 by

Mrs. Paz) . The sta tement disclosed the surrender charges in

effect. After her discussions with Agent Cummings , Mrs. Paz

signed forms requesting that JNL - 42A be liquidated and the

proceeds rolled over into a Great American Life Insurance Company

(Great American or GA) annui ty ( GA - 61 ). The Respondent

facilitated the rollover. As a result of the rollover, Mrs. Paz

incurred surrender charges of $4,871.41 and a partial recapture

of the initial bonus in the amount of $2,706.34, for a total loss

of $7,577.75.

5 7 . The Petition er alleged, and Mrs. Paz testified, that

the Respondent never discussed with her that there would be

surrender charges. The R espondent did not disagree, but

explained that h e understood Agent Cummings already had done so

and that he just made sure he was following Mrs. Paz ' s wishes.

Concurring, Agent Cummings testified that he did explain the

surrender charges to Mrs. Paz.

5 8 . The Petitioner alleged that the Respondent ' s actions

" insulated M[r]s. P[az] from comparative financial counseling by

her then current Jackson National insurance agent Gary Mahan. "

This was not proven by clear and convincing evidence. To the

contrary, there was evidence that it was Mrs. Paz ' s choice to

change agents, that Mr. Mahan kn e w about the change, and that he

had no objec tion to the Respondent taking over f or hi m as agent

of record on the policy.

5 9 . The Petitioner also alleged that the Respondent

" provided [Agent Cummings] with the Transamerica brokerage

application, transfer forms and letter of instructions to

transfe r JNL 42A " to the Respondent as account representative.

It was not proven that these documents were not mailed to

Mrs. Paz in accordance with the Respondent ' s testimony.

60. There was no expert testimony or other clear and

convincing evidence that the l iquidation of Mrs. Paz ' s Jackson

National annuity and purchase of a Great American annuity was

contrary to her best interest, unsuitable, or in violation of

suitability form or replacement notice requirements.

61 . Mrs. Paz testified that Agent Cummings i nitially told

her she would have to pay the Respondent $1,500 as a fee for his

services with respect to JNL - 42a and later told her the fee would

be $2,600. Agent Cummings testified that the Respondent told her

what his fee would be during the telephon e co nversation on

July 29, 2010 .

62 . Regardless who told Mrs. Paz what the Respondent ' s fee

would be, or wh at she was told it would be , Mrs. Paz made out a

$2,607.28 check to Agent Cummings ' company, Big Financial , on

July 29, 2010 . On August 2, 2010, Big F inancial gave the

Respondent a check made out to the Respondent for $2,530, with

the notation " Paz. " ( It is not clear from the evidence why the

Big Financial check was made out for $2,530. When the DFS

investigator questioned the discrepancy, Agent Cummi ngs

reimbursed Mrs. Paz $77.28. ) The Respondent deposited the check

the next day.

63 . The Allianz compliance guide prohibited agents from

charging an additional fee for services that customarily are

associated with insurance products. The Great America n

compliance guide prohibited fraudulent acts. By accepting the

check from Big Financial, the Respondent received a fee from

Mrs. Paz that was not authorized.

64 . (Count VI ) Prior to meeting Agent Cummings or the

Respondent, Mrs. Paz had investment acco unts with Wedbush ( WB - 37 )

and Wells Fargo. There were two Wells Fargo accounts, an IRA

( WF - 15 ) , and a trust account ( WF - 70 ). As of June 30, 2010, the

Wedbush account ( WB - 37 ) had a balance of $349,438.11. The Wells

Fargo IRA account ( WF - 15 ) had a net val ue of $51,737.11 prior to

June 30, 2010. The Wells Fargo trust account ( WF - 70 ) had a

balance of $332,798.76 prior to June 2010.

65 . The Respondent and Mrs. Paz communicated in the same

manner they did for the Jackson National transaction. Mrs. Paz

sign ed forms that enabled the Respondent to transfer the funds in

the Wedbush and Wells Fargo accounts into two Transamerica

brokerage accounts ( TA - 02 ) and ( TA - 86 ) using ACAT. Some of the

forms referred to the Respondent as Mrs. Paz ' s " investment

professional , " but the sole purpose of the Respondent ' s

involvement was to use Transamerica as a funnel to transfer funds

from one investment to another .

66 . By August 11, 2010, the funds in the TA - 02 account were

used to purchase an Allianz annuity sold by Agent Cu mmings in the

amount of $335,589.65. The funds in the TA - 86 account were used

to purchase a Great American annuity ( GA - 60 ) sold by Agent

Cummings in the amount of $45,769.38.

67. There was no expert testimony or other clear and

convincing evidence that the liquidation of Mrs. Paz ' s Wedbush

and Wells Fargo accounts and purchase of an Allianz annuity was

contrary to her best interest, unsuitable, or in violation of

suitability form or replacement notice requirements.

Counts VII and VIII - Î The Penwardens

68 . Wayne Penwarden was born on December 4, 1943. His

wife, Sandra, was born on October 10, 1939. They inherited some

money and decided to invest it. As of August 31, 2009, they had

Morgan Stanley investment accounts that totaled close to half a

million d ollars. They also had an annuity with ING USA Annuity

and Life Insurance Company (ING) purchased for $150,000 on

April 24, 2008.

6 9 . Agent Carter became acquainted with the Penwardens and

introduced them to the Respondent. T he Amended Administrative

Co mplaint alleged that the Respondent provided required forms to

Agent Carter for him to get the Penwardens signatures and , then ,

us e d funds from their Transamerica accounts to fund the purchase

of Allianz annuities, which was deceitful and again st the wishe s

of the Penwardens. The Petitioner ' s proposed recommended order

proposed no such findings, and there was no clear and convincing

evidence that the Respondent was guilty of those acts, that he

said or did anything to deceive or mislead or withhold

informa tion from them, or took any action regarding them without

their full knowledge and consent.

70 . (Count VII ) On September 30, 2009, the Penwardens

signed a change of agent request to make the Respondent their new

ING insurance agent. They also signed CAI forms to open

Transamerica brokerage accounts and transfer the funds from the

Morgan Stanley investment accounts into them, using ACAT.

71 . The funds in the Transamerica accounts were then used

to purchase Allianz ' s indexed annuities sold to the Penward ens by

Agent Carter . On September 23 and October 16 , 2009, the

Penwardens purchased two Allianz MasterDex X annuities (MD - 47)

and (MD - 24), respectively, with initial premium payments of

$141,269.40 for MD - 47 and $373,979.59, plus a premium bonus of

$37,39 7.96 , for MD - 24.

72. On June 17, 2010, acting on instructions from Agent

Carter on behalf of the Penwardens, the Respondent liquidated the

ING annuity. On June 30, 2010, the Penwardens added the

$115,281.47 proceeds from the liquidation of the ING annui ty

to MD - 47.

73. The Petitioner proposed a finding that the surrender of

the ING annuity cost $6,000 in surrender charges, which is true.

The Petitioner omits from its proposed finding that the

Penwardens received a premium bonus on the Allianz policy t hat

more than offset the ING surrender charge.

74. There was no expert testimony or other clear and

convincing evidence that the liquidation of the Penwardens '

Morgan Stanley accounts and ING annuity and purchase of Allianz

annuities was contrary to thei r best interests, unsuitable, or in

violation of suitability form or replacement notice requirements.

75. (Count VIII) The Penwardens became dissatisfied with

Agent Carter , and on November 9, 2010, signed a letter drafted by

the Respondent on Transameric a letterhead to substitute him for

Agent Carter as their sole financial advisor.

76. On November 12, 2010, the Respondent was notified by

Allianz that he would receive no commissions as servicing agent

on policies sold to the Penwardens by another agent.

77. On or about November 22, 2010, $37,408.54 was

transferred from the Allianz MD - 47 annuity into a new Nationwide

Life and Annuity Insurance Company (Nationwide or NW) annuity

( NW - 08 ). The Respondent also effected a partial Internal Revenue

Code , sect ion 1035 , exchange from the MD - 47 annuity to a new

annuity purchased from Nationwide ( NW - 09 ) for $23,746.19.

78 . On November 7, 2011, the Respondent faxed a request to

transfer funds from the MD - 24 annuity to fund a North American

Company for Life and He alth Insurance (North American or NA)

annuity ( NA - 68 ).

79 . The Petitioner proposed a finding that the Respondent

undertook these transactions on November 22, 2010, and on

November 7, 2011, in order to benefit himself alone by generating

commissions to re place the servicing agent commissions he was not

getting on the Allianz policies. This was not proven by clear

and convincing evidence. To the contrary, the Respondent

explained that the transactions were done for the Penwardens '

benefit after discussion s regarding the benefits of diversifying

out of the Allianz annuity into other annuities, which was

accomplished cost - free. There was no clear and convincing

evidence that these transactions were contrary to the Penwardens '

best financial interest or that they were done sol ely to benefit

the Respondent.

80. There was no expert testimony or other clear and

convincing evidence that the partial transfers from the

Penwardens ' Allianz annuities to other Nationwide and North

American annuities were contrary to their best interest,

unsuitable, or in violation of suitability form or replacement

notice requirements.

81 . In early December 2011, Mr. Penwarden replaced the

Respondent with another insurance agent. The Petitioner alleged

that the Respondent went to t he Penwardens home to harangue them

for two hours about their decision to switch agents. The only

evidence on this allegation was the deposition testimony of

Mr. Penwarden and the testimony of the Respondent.

Mr. Penwarden ' s testimony as to what occurred was vague. The

Respondent agreed that he was disappointed that the Penwardens

were switching agents , but testified that he went to the home to

retrieve the policies he sold to the Penwardens, which would have

to be returned to the insurance companies to cancel at no cost

during the " free - look " period. He testified that he waited for

an hour or more while Mr. Penwarden tried to find the policies in

his home. The evidence was not clear and convincing, and the

Petitioner did not propose a finding as to thi s allegation.

Count IX and Related Affirmative Defenses

82 . Count IX is based on the Final Order entered in OFR ' s

securities case against the Respondent as an additional ground

for discipline under section 626.621(13), Florida Statutes. The

Respondent c ites it in his affirmative defenses of res judicata

and collateral estoppel on Counts I through VIII . See Finding 2 ,

supra . The Respondent also argues that the additional charge is

barred by the ex post facto clause of the Florida c onstitution

and due pr ocess clauses of the United States and Florida

constitutions.

83 . As to the due process argument , the Respondent admitted

the OFR Final Order in his answer to the original charges. He

also had ample opportunity to demonstrate prejudice from the

added ch arge, which he could not, and to present legal arguments,

which he did.

84. As to ex post facto , s ection 626.621(13) was added to

the Florida Statutes , effective June 1, 2011. See Ch . 175, §§ 47

and 53, Laws of Fla . (2010). That was before the Responde nt

entered into the Stipulation and Consent Agreement that formed

the basis for the OFR Final Order. Disciplinary guidelines for

section 626.621(13) were added to the Florida Administrative Code

on March 24, 20 14. Fla. Admin. Code R. 69B - 231 .090(13).

85. As to the collateral estoppel defense, t he Respondent

testified that he entered into the settlement with OFR because he

was under heightened supervision by his employer due to

securities violations, and he did not think any employer want ed

to provide t he required supervision (which he referred to as

" baby - sitting . " ) The Respondent did not testify that he relied

on the OFR Final Order to bar charges by DFS or that he believed

the OFR Final Order would bar DFS charges.

CONCLUSIONS OF LAW

86. The Respon dent ' s third affirmative defense was that the

Petitioner has no jurisdiction because the charges are all

securities charges, not insurance charges. To the contrary, the

Petitioner alleges that the Respondent is a licensed insurance

agent and alleges that he committed insurance violations. Some

of the actions taken by the Respondent clearly were taken as an

insurance agent. The Petitioner has jurisdiction ,

notwithstanding that some actions taken by the Respondent were in

the securities realm . When the Re spondent asked for a disputed

fact hearing, jurisdiction was conferred on the Division of

Administrative Hearings. §§ 120.569 and 120.57(1), Fla. Stat.

87. Because the Amended Administrative Complaint seeks to

impose license discipline, the Petitioner h as the burden to prove

its allegations by clear and convincing evidence. See Dep ' t of

Banking & Fin. v. Osborne Stern & Co. , 670 So. 2d 932 (Fla.

1996); Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987). This

" entails both a qualitative and quantitative s tandard. The

evidence must be credible; the memories of the witnesses must be

clear and without confusion; and the sum total of the evidence

must be of sufficient weight to convince the trier of fact

without hesitancy. " In re Henson , 913 So. 2d 579, 590 (Fla.

2005) (quoting Slomowitz v. Walker , 429 So. 2d 797, 800 (Fla. 4th

DCA 1983)). " Although this standard of proof may be met where

the evidence is in conflict, . . . it seems to preclude evidence

that is ambiguous. " Westinghouse Electric Corp. v. Shul er Bros. ,

590 So. 2d 986, 988 (Fla. 1st DCA 1991).

88. The Petitioner is limited to proving the charges and

allegations pled in the Amended Administrative Complaint.

Cf. Trevisani v. Dep ' t of Health , 908 So. 2d 1108 (Fla. 1st DCA

2005); Aldrete v. Dep ' t of Health, Bd. of Med. , 879 So. 2d 1244

(Fla. 1st DCA 2004); Ghani v. Dep ' t of Health , 714 So. 2d 1113

(Fla. 1st DCA 1998); Willner v. Dep ' t of Prof ' l Reg., Bd. of

Med. , 563 So. 2d 805 (Fla. 1st DCA 1990).

89. Counts I through VIII charge the Respondent w ith

violations of various statutes and rules that are described in

the following paragraphs.

90. Rule 69B - 215.210 7 / declared the business of life

insurance to be a public trust that obligates insurance agents to

work together in serving the best interest s of the public by

understanding and observing the laws governing life insurance,

presenting accurate and complete facts essential to a client ' s

decision, and being fair in all relations with colleagues and

competitors, always placing the policyholder ' s in terests first.

91. Rule 69B - 215.230(1) declared insurance sales

misrepresentations as to terms, benefits, and advantages of

insurance products to be unethical and prohibited.

92. Section 627.4554(4 )(a), Florida Statutes, 8 / made it a

violation for an in surance agent to recommend to a senior

consumer the purchase or exchange of an annuity that result s in

another insurance transaction or series of transactions , unless

the agent has reasonable grounds to believe that the

recommendation is suitable based on facts disclosed by the

consumer as to his or her investments and other insurance

products and financial situation and needs. Section

627.4554(4)(c)2. made it a violation for an insurance agent to

make a recommendation unless it is reasonable under all the

circumstances known to the agent at the time of the

recommendation. Section 627.4554(4)(d) made it a violation for

the insurance agent who has recommended replacement or exchange

of an annuity contract to execute the replacement or exchange

without provi ding to the insurer the form adopted by the

Petitioner to explain the differences between the contracts under

consideration by the consumer. Rule 69B - 162.011 adopted the form

required by section 627.4554(4)(d) and also made it a violation

for the insuranc e agent recommending the purchase or exchange of

an annuity contract not to perform an alternative suitability

analysis, with contract comparison on the adopted forms, before

executing a purchase or exchange of an annuity to a senior

consumer.

93. Sectio n 626.611(5) made it a violation for an insurance

agent to willfully misrepresent any insurance policy or annuity

contract or to willfully deceive with regard to such a contract.

94. Section 626.611(7) made it a violation for an insurance

agent to demons trate a lack of fitness or trustworthiness to

engage in the business of insurance.

95. Section 626.611(9) made it a violation for an insurance

agent to engage in fraudulent or dishonest practices in the

conduct of licensed business.

96. Section 626.611 (13) made it a violation for an

insurance agent to willfully fail to comply with, or willfully

violate, any adopted rule or willfully violate any provision of

the Insurance Code. This statute is a der ivative of other

violations requiring willfulness, adds nothing of substance to

those violations, and does not warrant additional discipline for

the violations from which it is derived .

97. Section 626.621(2) made it a violation for an insurance

agent to violate any provision of the Insurance Code or any oth er

law applicable to the conduct of a licensed business of

insurance. This statute similarly is a der ivative of other

violations, adds nothing of substance to the other violations,

and does not warrant additional discipline for the violations

from which i t is derived.

9 8 . Section 626.9541(1)(a)1., which is in Part IX of

chapter 626, made it a violation for an insurance agent to

knowingly make, issue, circulate, or cause to be made, issued, or

circulated, any estimate, illustration, circular, statement,

s ales presentation, omission, or comparison, which misrepresents

the benefits, advantages, conditions, or terms of any insurance

policy.

99. Section 626.9541(1)(e)1., which is in Part IX of

chapter 626, made it a violation for an insurance agent to

knowin gly make, publish, disseminate, circulate, deliver, or

place before the public any false statement.

10 0 . Section 626.9541(1)(l), which is in Part IX of

chapter 626, made it a violation for an insurance agent to

knowingly make any misleading representati ons 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, a ssign, borrow on,

or convert any insurance policy or to take out a policy of

insurance o n another insurer (also known as " twisting " ).

10 1 . Section 626.621(6) made it a violation for an

insurance agent to engage in unfair methods of competition , or

unfair or deceptive acts or practices prohibited by P art IX of

chapter 626, or otherwise be a source of injury or loss to the

public.

10 2 . Section 626.9521(2) subjected anyone who violated the

Unfair Insurance Trade Practices Act, which is P art IX of

chapter 6 26 and includes s ection 626.9541, to a fine of not

greater than $40,000 per violation, in addition to any other

applicable penalty.

10 3 . With one exception, the violations charged in Counts I

through VIII were not proven by clear and convincing evidence .

Section 627.4554 required proof that the Respondent , as opposed

to Agents Carter and Cummings, made insurance recommendations.

T he violations also required proof that the Respondent , as

opposed to the other agents, made statements that were false ,

inac curate or incomplete, misleading , or dishonest . Those

elements of the violations were not proven by clear and

convincing evidence. Contrary to the argument made in the

Petitioner ' s proposed recommended order, the " contracts standing

alone " do not establi sh the violations. (If they did, there

would be no need for a hearing.)

10 4 . Of the charges in Counts I through VIII, the only one

proven by clear and convincing evidence was the one in Count V,

paragraph 84(c), that the Respondent charged and collecte d a

$2,500 fee from Mrs. Paz, through Agent Cummings , that was not

authorized. By c harging and collecting that fee, the Respondent

demonstrate d a lack of fitness or trustworthiness to engage in

the business of insurance , in violation of section 626.611(7) .

It also establishes a violation of r ule 69B - 215.210 . The single

lapse of misconduct was not enough to establish that the

Respondent was guilty of fraudulent or dishonest practice s in the

conduct of licensed business in violation of section 626.611(9) .

See Robert v. Dep ' t of Ins. , 854 So. 2d 681, 684 (Fla. 2d DCA

2003); Werner v. Dep ' t of Ins. & Treasurer , 689 So. 2d 1211, 1214

(Fla. 1st DCA 1997); Natelson v. Dep ' t of Ins. , 454 So. 2d 31

(Fla. 1st DCA 1984) .

10 5 . Count IX charged a violation of sect ion 626. 621(13) ,

which made it a violation if an insurance licensee " [h]as been

the subject of or has had a license, permit, appointment,

registration, or other authority to conduct business subject to

any decision, finding, injunction, suspension, prohibi tion,

revocation, denial, judgment, final agency action, or

administrative order by any court of competent jurisdiction,

administrative law proceeding, state agency, federal agency,

national securities, commodities, or option exchange, or national

securiti es, commodities, or option association involving a

violation of any federal or state securities or commodities law

or any rule or regulation adopted thereunder, or a violation of

any rule or regulation of any national securities, commodities,

or options ex change or national securities, commodities, or

options association. "

10 6 . The Respondent argues that the addition of this charge

violates his due process rights. That argument has no merit, as

there was no dispute as to the existence of the OFR Final O rder

on which the additional charge is based, and the Respondent had

ample opportunity to defend himself against the additional

charge.

10 7 . The Respondent also argues that the additional charge

violates his rights under the ex post facto clause of the Florida

C onstitution. He does not , however, actually argue that the use

of section 626.621(13) violates the ex post facto clause. It

does not, since it was enacted before he entered into the

Stipulation and Consent Agreement that formed the basis of the

OFR Final Order. Rather, the Respondent ' s argument focuses on

rule 69B - 231 .090(13), the disciplinary guideline adopted on

March 24, 2014, under the authority of the statute. Th at

argument is well - taken. Werner v. Dep ' t of Ins. & Treasurer ,

supra , at 121 5. The mandatory revocation specified in the rule

cannot be applied to the Respondent under Count IX.

10 8 . Section 626.621(13) provides that the Petitioner may,

in its discretion, suspend or revoke the Respondent ' s insurance

licenses based on a " decisi on, finding, injunction, suspension,

prohibition, revocation, denial, judgment, final agency action,

or administrative order by any . . . administrative law

proceeding [or] state agency . . . involving a violation of any

federal or state securities . . . l aw or any rule or regulation. "

(Emphasis added . ) The evidence establishes a violation of the

statute .

1 09 . The Respondent argues that the statute plainly

requires a hearing and finding of another violation before it can

be applied and that the OFR Fin al Order does not qualify because

it is based on a settlement. However, in the Stipulation and

Consent Agreement, the Respondent admitted the charges. For that

reason, the OFR Final Order clearly qualifies, according to the

plain meaning of the statute, and the violation has been proven.

11 0 . Under rule 69B - 231.080(7), the stated penalty for a

violatio n of section 626.611(7) is a six - month suspension . Under

rule 69B - 231. 130 , the stated penalty for a violation of r ule

69B - 215.210 is a six - month suspens ion because it was a willful

violation. Without rule 69B - 231.090(13), there is no stated

penalty for Count IX.

11 1 . R ule 69B - 231.040(1) allows for multiple violations

based on a single count or based on a single act of misconduct.

However, only the vi olation specifying the highest stated penalty

will be considered for the count. In this case, th e highest

stated penalty is a six - month suspension. Rule 69B - 231.040(1)

provides that, for multiple counts, the highest stated penalties

per count are to be a dded.

11 2 . Rule 69B - 231.160(1) provides for aggravating and

mitigating factors to be applied to the total penalty in reaching

the final penalty. These include: (a) the licensee ' s

willfulness; (b) the degree of actual injury to the victim;

(c) the degr ee of potential harm to the victim; (d) the age or

capacity of the victim; (e) restitution to the victim;

(f) motivation of the licensee; (g) financial gain or loss to the

licensee; (h) financial loss to the victim; (i) vicarious or

personal responsibility ; (j) related criminal charge and

disposition; (k) secondary violations in counts; (l) previous

discipline or warnings; (m) violations of sections 626.9541 and

627.4554, relating to sales to senior citizens; and (n) other

factors. Taking all of the factor s into consideration,

aggravation of the calculated final penalty would be warranted.

In addition, the Count IX violation should be considered under

paragraph (n).

11 3 . Taking all factors into consideration, an appropriate

penalty would be a 12 - month s uspension. (Rule 69B - 231.040(3)(b)

authorizes conversion of the total penalty to an administrative

fine, but that is not recommended in this case.)

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Financial Services ,

Division of Agent and Agency Services, enter a final order

finding the Respondent guilty of violating section 626.611(7) and

rule 69B - 215.210 under Count V, and section 626.621(13) under

Count IX, dismissing the other cha rges, and suspending the

Respondent ' s insurance licenses for 12 months.

DONE AND ENTERED this 15th day of October , 2014 , in

Tallahassee, Leon County, Florida.

S

J. LAWRENCE JOHNSTON

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 15th day of October , 201 4 .

ENDNOTE S

1/ The Respondent objected to some of Mr. Richey ' s testimony as

being inappropriate expert opinion testimony from a witness not

listed as an expert. The objections were overruled. The

Respondent made further written argument in a post - hear ing brief

on the subject. The argument was based primarily on the decision

in Fittipaldi USA, Inc. v. Castroneves , 905 So. 2d 182, 185 (Fla.

3d DCA 2005). The objectionable testimony in Fittipaldi is

distinguishable from Mr. Richey ' s testimony. Alternat ively, if

some of Mr. Richey ' s testimony were expert opinion testimony, it

was not established that the failure to list Mr. Richey as an

expert prejudiced the Respondent. For these reasons, the rulings

made during the hearing stand.

2/ Ruling also was d eferred on the Respondent ' s objection to the

use of hearsay statements from Mrs. Kesish as the sole support

for f indings of f act. The Respondent further addressed the issue

in its proposed recommended order. That issue is addressed in

Endnote 3 .

3/ S ection 120.57(1)(c), Fla. Stat. (2014) ( " Hearsay evidence may

be used for the purpose of supplementing or explaining other

evidence, but it shall not be sufficient in itself to support a

finding unless it would be admissible over objection in civil

actions . " ) Section 90.803(24) is an exception for the hearsay

statements made by an elderly person or disabled adult. There is

case law that the statute is an unconstitutional violation of a

criminal defendant ' s right to confront his or her accuser unless

the e lderly or disabled person is mentally disabled. Compare

Conner v. State , 748 So. 2d 950 (Fla. 1999) , with Hosty v. State ,

944 So. 2d 255 (Fla. 2006), and State v. Townsend , 635 So. 2d 949

(Fla. 1994). It is not clear whether the statute similarly would

b e unconstitutional as applied in an administrative case.

Cf. State ex. r el. Vining v. Fla. Real Estate Comm ' n , 281 So. 2d

487, 491 (Fla. 1973). If not , it still was not proven that

Mrs. Kesish was mentally disabled at the times she was

interacting with t he Respondent. See Finding 26 . Also, the

statute only applies to hearsay " describing . . . any act of

exploitation, " whereas Mrs. Kesish ' s hearsay essentially

describes her lack of knowledge concerning exploitation. In

addition, the use of the 90.803(24 ) exception requires a finding

" that the time , c ontent, and circumstances of the statement

provide sufficient safeguards of reliability. " Such a finding

" may consider the mental and physical age and maturity of the

elderly person or disabled adult, the na ture and duration of the

abuse or offense, the relationship of the victim to the offender,

the reliability of the assertion, the reliability of the elderly

person or disabled adult, and any other factor deemed

appropriate. " Taking into consideration all a ppropriate factors,

such a finding cannot be made as to Mrs. Kesish ' s hearsay.

4/ T he Respondent admitted to charges in the OFR case that he

provided Agent Carter with blank stationery with Transamerica

letterhead for him to use to get the Kesishes ' au thorizations.

The greater weight of the evidence was that the Respondent mailed

the Kesishes either blank stationery or stationery with some

writing on it , and Agent Carter helped the Kesishes complete the

authorizations. See Finding 25 .

5 / The Petit ioner ' s proposed findings of fact 46 - 47 do not appear

to be supported by the evidence.

6 / The Respondent admitted to the charges in the OFR case that,

after directing Transamerica to stop the transaction when so

instructed by Ms. Rego, he later talked to Agent Carter and then

asked Transamerica if it was too late to reinstate the

transaction, which it was.

7 / Unless otherwise noted, all rule references are to the version

of the Florida Administrative Code that was in effect at the time

of the transa ctions that form the bases of the charges.

8 / Unless otherwise indicated, statutory references are to the

version in effect at the time of the transactions that form the

bases of the charges.

COPIES FURNISHED:

Julie Jones, CP, FRP, Agency Clerk

Div ision of Legal Services

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

(eServed)

David J. Busch, Esquire

Division of Legal Services

Department of Financial Services

612 Larson Building

200 East Gaines Street

Talla hassee, Florida 32399 - 0333

(eServed)

Derick Dehmer, Esquire

Division of Legal Services

Department of Financial Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

(eServed)

John Angelo Richert, Esquire

John Richert , P.A.

13575 58th Street North

Clearwater, Florida 33760 - 3740

(eServed)

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.