13-004484 Office Of Financial Regulation vs. Capital City Check Cashing Status: Closed Recommended Order on Tuesday, September 16, 2014.

Summary: Petitioner proved by clear and convincing evidence that Respondent did not comply with record-keeping requirements for check-cashing businesses during the examination period.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OFFICE OF FINANCIAL

REGULATION ,

Petitioner ,

vs. Case No. 13 - 4484

CAPITAL CITY CHECK CASHING ,

Respondent .

/

RECOMMENDED ORDER

Pursuant to notice, a final hearing was initially held in

this case on April 23, 2014, and continued to May 21, 2014 , in

Tallahassee , Florida, before Suzanne Van Wyk, a designated

Administrative Law Judge of the Division of Administrative

H earings.

APPEARANCES

For Petitione r: Melinda Butler, Esquire

Office of Financial Regulation

200 East Gaines Street, Suite 550T

Tallahassee, Florida 32399

For Respondent: John O. Williams, Esquire

Williams and Holz, P.A .

211 East Virginia Street

Fort Walton Beach, Florida 32 301

STATEMENT OF THE ISSUE

Whether Respondent violated statutory and rule provisions

relating to record - keeping requirements for licensed check

cashers , and if so, what penalty should be imposed.

PRELIMINARY STATEMENT

On October 8 , 2013, the Office of Financial Regulation (the

Office) filed an Administrative Complaint against Capital City

Check Cashing (Capital City), charging Capital City with seven

counts o f violating chapter 560, Florida Statutes, and Florida

Administrative Code chapter 69V - 560, the record - keeping

requirements for licensed check cashers. Capital City filed a

Request for Hearing with the Office on October 24, 201 3 . On

November 20, 2013, th e matter was forwarded to the Division of

Administrative Hearings for assignment of an Administrative Law

Judge to conduct a hearing and issue a recommended order.

T he final hearing was scheduled for January 14, 201 4 , but

was rescheduled a number of times . The relevant motions and

orders can be viewed on the docket for this matter. On

March 26, 2014, this case was consolidated with Case No. 14 -

1291RU, an unadopted rule challenge filed by Capital City Check

Cashing against the Office. The undersigned sub sequently

severed the cases, both of which were scheduled for final

hearing on April 23, 2014.

The final hearing in this matter convened on April 23,

2014, but was not completed on that date. The parties

reconvened on May 21, 2014, to complete the final h earing.

Petitioner offered the testimony of John O. Williams,

RespondentÓs owner; William Morin, the OfficeÓs Financial

Examiner / Analyst Supervisor; and Andrew Grosmaire, the OfficeÓs

Chief of its Bureau of Enforcement. Petitioner introduced

E xhibits P1 through P7, which were received into evidence.

Respondent offered the testimony of Mr. Grosmaire; Kane

Fuhrman, RespondentÓs manager ; and Mr. Williams. Respondent

introduced exhibits R1 through R4, R12 through R16, and R23,

which were admitted into evid ence. Respondent proffered

Exhibit R5, and the undersigned issued an Order accepting the

exhibit on June 4, 2014.

At the close of the final hearing, the parties requested an

opportunity to provide the undersigned with documents for

official recognition. The undersigned granted PetitionerÓs

request for official recognition of section 560.109, Florida

Statutes (2008), and various county codes and ordinances

requested by Respondent. The parties also requested, and were

granted, an extension of time to file proposed recommended

orders until 30 days after the date the transcript was filed.

The first two volumes of the Transcript of the proceedings

were filed on April 30, 2014, and the final two volumes were

filed on June 16, 2014. On July 9, 2014, Responde nt filed an

Amended Motion to Interchangeably Consider Evidence (Motion),

requesting the undersigned to consider the evidence introduced

in Case No. 14 - 1291RU, Capital CityÓs unadopted rule challenge,

as evidence in the instant case. Petitioner did not fi le a

response to the Motion. The undersigned denied the Motion on

July 14, 2014. The parties timely filed Proposed Recommended

Orders on July 16, 2014.

FINDINGS OF FACT

1 . Petitioner , Office of Financial Regulation (the Office

or Petitioner), is the st ate agency charged with administering

and enforcing chapter 560, Florida Statutes, related to

licensing of Money Services Business es , a term that includes

check - cashing businesses.

2 . Respon dent, Capital City Check Cashing (Capital City or

Respondent), h as been a licensed check casher, pursuant to

chapter 560, Part III, Florida Statutes, since March 2007.

Capital City is located at 458 West Tennessee Street in

Tallahassee, Florida.

3 . John O. Williams is the o wner of Capital City and

appeared as counsel for Capital City throughout these

proceedings.

4 . Kane Fuhrman is the manager and sole employee of

Capital City and directly provides check - cashing services to

Capital CityÓs customers.

Capital City Examination

5 . William Morin is employed by the Offic e as a Financial

Examiner/Analyst Supervisor .

6 . On October 23 and 24 , 2012, Mr. Morin conducted an

examination of Capital CityÓs records for the period of

January 1, 2010 through October 23, 2012. The examination was

conducted on the premises of Capital City. Mr. Morin was

accompanied by Matt Manderfield, a field analyst in training .

7 . Mr. Morin conducted the examination using an

examination module designed by the Office as both a checklist of

required records and an electronic notebook for recording the

examiners notes .

8 . Mr. Fuhrman was present for the examination.

Mr. Fuh rman provided voluminous records to Mr. Morin, which

Mr. Morin scanned into his computer while on site at Capital

City.

9 . Prior to leaving the premises on October 24, 2012,

Mr . Morin explai ned to Mr. Fuhrman that some statutor ily -

require d documents were missing and presented Mr. Fuhrman with a

written records request . The written request indicates that the

missing documents were needed by October 29, 2012.

10 . Through the rec ords request , the Office sought the

following documents for the examination period: (1) complete

customer files for Capital City clients JNJ Service, LLC; Swift

Delivery ; Johnson Maintenance Service; and CharlieÓs Electric

Service; (2) copies of payment i nstruments cashed, including the

back of the payment i nstruments showing endorsement; (3) daily

electronic check - cashing logs; and (4) customer thumbprints on

checks cashed.

Customer Files

11 . Florida Administrative Code Rule 69V - 560.704(4)(d)

(2009) , 1/ reads as follows:

(4) In addition to the records required in

subsections (1) and (2), for payment

instruments exceeding $1,000.00, the check

casher shall:

* * *

(d) Create and maintain a customer file for

each entity listed as the payee on corporate

pa yment instruments and third party payment

instruments accepted by the licensee. Each

customer file must include, at a minimum,

the following information:

1. Documentation from the Secretary of

State verifying registration as a

corporation or fictitious entity showing the

listed officers and FEID registration

number. If a sole proprietor uses a

fictitious name or is a natural person, then

the customer file shall include the social

security number of the business owner and

documentation of the fictitious name fi ling

with the Secretary of State.

2. Articles of incorporation or other such

documentation which establishes a legal

entity in whatever form authorized by law.

For purposes of this rule a sole proprietor

operating under a fictitious name register ed

with the Secretary of State shall not have

to present such documentation.

3. Documentation of the occupational

license from the county where the entity is

located.

4. A copy of the search results screen page

from Compliance Proof of Coverage Query P age

webpage from the Florida Department of

Financial Services Î Division of WorkersÓ

Compensation website

( http://www.fldfs.com/WCAPPS/Compliance_POC/

wPages/query.asp )

5. Documen tation of individuals authorized

to negotiate payment instruments on the

corporation or fictitious entityÓs behalf

including corporate resolutions or powers of

attorney. Payment instruments for insurance

claims where there are multiple payees shall

be exe mpt from this provision provided that

the maker of the check is an insurance

company and the licensee has obtained and

retained documentation as to the identity of

the natural person listed as payee on such

payment instrument.

12 . Capital City requires i ts customers to complete and

sign a ÐCheck Cashing Agreement Ñ (Agreement). The second page

of the A greement is a form soliciting customer information,

including the name, address, phone numbers, address, social

security number, and driverÓs license number of the conductor

(the person cashing the check on a corporate check) , as well as

the name of the personÓs employer , their bu siness address and

phone number . The form includes fields for information about

the check being cashed, such as the check number a nd amount, as

well as the payor and payee names.

13 . Customers are required to sign and date the Agreement,

as well as place their thumbprint in a designated box on the

face of the Agreement. By signing the Agreement, the customer

agrees to release thei r personal and business information to a

third - party verifier, to pay a fee for said verification, and to

pay Capital City three times the face value of any instrument

cashed which is returned for insufficient funds .

14 . During the on - site examination, Mr . Fuhrman provided

to Mr. M orin the following documents for client, JNJ Service,

LLC: a copy of an executed A greement, copies of the

photographic identification and social security card of the

conductor, a copy of the face of a check for $4,471.68 cashed, a

copy of the receipt for the check, and a printout from the

Secretary of StateÓs Sunbiz website for corporate status of JNJ

Service, LLC. The printout show s the FEIN number for JNJ

Service, LLC, and reports corporate status as ÐInactiveÑ with

last event shown ÐAdministrative Dissolution for Annua l ReportÑ

on September 23, 2011 .

15 . During the onsite examination, Mr. Fuhrman provided to

Mr. Morin the following documents for client, Swift Delivery,

LLC: copies of the face of three checks cashed in amoun ts

exceeding $1,000.00 and three accompanying executed A greements.

16 . During the onsite examination, Mr. Fuhrman provided to

Mr. Morin the following documents for client, JohnsonÓs

Maintenance Service : copies of two checks cashed in amounts

exceeding $1 ,000.00, accompanying executed A greements, and

copies of the photo ID and social security card of the

conductor.

17 . During the onsite examination, Mr. Fuhrman provided to

Mr. Morin the following documents for client, CharlieÓs

Electric: a copy of the fa ce of a check cashed for $28,000.00,

an executed A greement, and a receipt for the check cashed.

18 . Prior to the examination, Capital City did not

routinely keep copies of the corporate information from the

Secretary of StateÓs website as part of the cust omer files.

19 . Prior to the examination, Capital City did not

request, or otherwise obtain, the Articles of Incorporation for

its corporate clients.

20 . Prior to the examination, Capital City did not request

copies of its corporate clientsÓ occupationa l license. If a

corporate client presented its occupational license, Capital

City kept a copy.

21 . Prior to the examination, Capital City did not

request, or otherwise obtain, information regarding its

corporate clientsÓ compliance with workers Ó compensa tion

insurance requirements.

22 . On October 29, 2012, in response to Mr. MorinÓs

written records request, Mr. Fuhrman printed from the Secretary

of StateÓs website, the corporate detail page for JNJ Service,

LLC, Swift Delivery, LLC, Johnson Maintenance, Inc., and

Ch arlieÓs Electric Company, Inc. The information showed that

JNJ Service, LLC, was an active corporation having been

reinstated on September 10, 2012; Swift Delivery, LLC, had been

administratively dissolved on September 23, 2011; Johnson

Mainte nance, Inc. , had been administratively dissolved on

September 26, 2008; and CharlieÓs Electric Company, LLC, had

been administratively diss olved on September 15, 2006.

23 . Following the examination, and in response to

Mr. MorinÓs records request, Mr. Fuhr man obtained articles of

incorporation for JNJ Service, LLC, and Johnson Maintenance,

Inc.; articles of organization for Swift Delivery, LLC; and a

corporat e reinstatement application for CharlieÓs Electric

Company, Inc. , filed February 29, 2008.

24 . Foll owing the examination, and in response to

Mr. MorinÓs request for information, Mr. Fuhrman checked the

Office of Financial Regulation Î Division of Workers Ó

Compensation website, and queried the name of each of its four

corporate customers. Mr. FuhrmanÓs queries returned ÐO records

foundÑ for each client. Mr. Fuhrman printed a screen shot of

each query return.

25 . On November 5, 2012, Mr. Morin returned to Capital

City and picked up a package of documents from Mr. Fuhrman, as

well as the records request form whereon Mr. Fuhrman had written

the types of records which were being provided.

26 . There was conflicting testimony regarding whether the

documents Mr. Fuhrman obtained in response to the records

request were included in the package Mr. Morin obtaine d from

Mr. Furhman on November 5, 2012 . The Office maintains that the

documents were not furnished. Mr. Fuhrman was unable to testify

with certainty that the documents obtained were in the pack age

of documents he gave to Mr. Morin .

27 . Whether or not th e documents were sent to the Office

is a red herring , and the extent of testimony on this issue was

largely irrelevant . The issue is whether the documents were

maintained by Capital City in its customer files during the

examination period, not whether Cap ital City was able to produce

the documents following the examination. Capital City admitted

that it did not maintain those documents during the examination

period.

28 . As such, Capital City did not maintain customer files

for JNJ Service, LLC; Swift Del ivery, LLC; Johnson Maintenance

Service; and CharlieÓs Electric Company, Inc., in compliance

with rule 69V - 560.704(4) during the examination period.

29 . Subsequent to the examination, Capital City developed

a checklist for compiling customer files on corp orate customers

who cash checks of $1,000.00 or more. The checklist includes

all of the information required by rule 69 V - 560.704.

Check Copies

30 . Florida Administrative Code Rule 69V - 560.704(2) reads,

in pertinent part, as follows:

(2) Every check cas her shall maintain

legible records of all payment instruments

cashed. The records shall include the

following information with respect to each

payment instrument accepted by the

registrant:

(a) A copy of all payment instruments

accepted and endorsed by the licensee to

include the face and reverse (front and

back) of the payment instrument. Copies

shall be made after each payment instrument

has been endorsed with the legal name of the

licensee. Endorsements on all payment

instruments accepted by the che ck casher

shall be made at the time of acceptance.

31 . Prior to the examination, Capital City did not keep

copies of the backs of checks cashed. Rather, Capital City

relied upon its bank to maintain copies of the checks cashed

with endorsement.

32 . Cap ital City introduced at final hearing, a binder

containing the copies of the backs of all checks cashed, with

endorsements, by Capital City during the months of July,

September, and October 2012. These records were provided to

Responde nt from its banking institution after the examination

and after the Office filed its original Administrative

Complaint.

33 . It is unclear whether Capital City , subsequent to the

examination, has changed its practice of relying upon its bank

to maintain copies of the backs of checks cashed. Mr. Williams

testified both that Ðwe decided, after the audit that, to be

safe, weÓd go ahead and keep the backs of the checksÑ 2/ and Ð[w]e

pay $75 a month so that the bank will produce these for us each

month, and we pay extra if we have to produce them on demand

during the middle of the month if we have any issues that

involves law enforcement. But they are producible.Ñ 3/

34 . Capital CityÓs decision, prior to the examination, not

to maintain copies of the backs of checks cashed, was due in

part to Mr. Williams Ó belief that the governing statute allows a

check casher to designate its bank as a third - party maintainer

of records.

35 . Section 560.310(3) , Florida Statutes (2012) , 4/ reads as

follows:

(3) A licensee under this part may engage

the services of a third party that is not a

depository institution for the maintenance

and storage of records required by this

section if all the requirements of this

section are met.

36 . Capital CityÓs bank is a depository institution.

37 . Capital Ci tyÓs decision not to maintain copies of the

backs of the checks, prior to the examination, was also due in

part to Mr. WilliamsÓ belief that Ðthere is certain information

thatÓs added to the back of checks after they go through the

bankÑ 5/ that was more he lpful to law enforcement authorities

interested in the checks.

38 . Capital City offered no testimony to identify what

information on the backs of the checks existed at the time the

checks were deposit ed , and what, if any, information was added

during ban k processing.

39 . Mr. Morin prepared a Report of Examination (Report)

dated January 22, 2013, summarizing the findings of the

October 2012 Capital City records examination. The Report was

delivered to Kane Fuhrman, on behalf of Capital City, by

certifie d mail.

40 . The Report contains the following with regard to

maintenance of copies of the backs of checks cashed:

5. Section 560.1105 F.S./ Section

560.310(1)F.S./Rule 69V - 560.704(2)(a),

F.A.C. Î The licensee failed to maintain

copies of the backs of pay ment instruments

cashed: (Exhibit I - XV, XIX)

The licensee claims that the bank keeps

copies of the backs of payment instruments

cashed for them. This is also confirmed on

the records request form where the licensee

notes that their bank keeps these reco rds.

41 . After receipt of the Report, Mr. Williams prepared a

letter to the Office with responses to the findings. 6/ The

Office did not respond in any way to his letter. Mr. Williams

testified that he understood the lack of response to mean that

the Of fice accepted his explanation that Capital CityÓs bank was

the designated record - keeper of copies of the backs of checks

cashed.

Electronic Log

42 . Florida Administrative Code Rule 69V - 560.704(5) reads

as follows:

(5)(a) In addition to the records requir ed

in subsections (1) and (2) for payment

instruments $1,000.00 or more, the check

casher shall create and maintain an

electronic log of payment instruments

accepted which includes, at a minimum, the

following information:

1. Transaction date;

2. Payor name;

3. Payee name;

4. Conductor name, if other than the payee;

5. Amount of payment instrument;

6. Amount of currency provided;

7. Type of payment instrument;

a. Personal check;

b. Payroll check;

c. Government check;

d. Corporate check;

e . Third party check; or

f. Other payment instrument;

8. Fee charged for the cashing of the

payment instrument;

9. Branch/Location where instrument was

accepted;

10. Identification type presented by

conductor; and

11. Identification number present ed by

conductor.

(b) Electronic logs shall be maintained in

an electronic format that is readily

retrievable and capable of being exported to

most widely available software applications

including Microsoft EXCEL.

43 . During the examination, Mr. Fuhrman provided Mr. Morin

with copies of Capital CityÓs daily payment instrument log from

August 1, 2012 through August 31, 2012. Each log displays the

face value of each check cashed, the net amount of cash provided

to the customer, and the fee charged to the customer .

44 . The Capital City daily logs provided to Mr. Fuhrman do

not include the payee and payor name; the conductor name, if

different from the payee; the type of payment instrument; or the

identification type or number presented by the conductor.

45 . Capital City argues that all the information required

to be on the payment instrument log was in the possession of

Capital City, thus , it is in substantial compliance with the

rule. In fact, Capital City introduced at final hearing a

payment instrume nt log for checks over $1,000.00 accepted in

August 2012. The log includes all the information required by

the rule. The information used to complete the fields was

pulled from Capital CityÓs customer files, which include the

copies of the face of the ch ecks, as well as copies of

conductorÓs photo identification and social security card.

46 . The fact remains that Capital City did not maintain an

electronic payment instrument log which complied with rule 69V -

560.704(5) , during the examination period.

Cust omer Thumbprint

47 . Florida Administrative Code Rule 69V - 560.704(4) reads,

in pertinent part, as follows:

(4) In addition to the records required in

subsection (1) and (2), for payment

instruments exceeding $1,000.00, the check

casher shall:

(a) Affix an original thumbprint of the

conductor to the original of each payment

instrument accepted which is taken at the

time of acceptance[.]

48 . During the examination period, Capital City obtained

customer thumbprints on the customer A greement, rather than on

the surface of the check cashed. Subsequent to the examination,

Capital City has begun obtaining customer thumbprints on the

surface of the checks cashed.

49 . Capital City failed to maintain customer thumbprints

as required by rule 69V - 560.704(4) duri ng the examination

period.

Due Process Issues

50 . Capital City maintains that the Office conducted the

records examination in a manner that violated Capital CityÓs

right to due process of law.

51 . First, Capital City complains that the O ffice was

require d to conduct an examination of its records within the

first six months after licensure, and that the OfficeÓs failure

to do so prevented Capital City from a thorough understanding of

the applicable record - keeping requirements.

52 . Between 2008 and 2012, s ection 560.109(1) required the

Office to examine all licensees within the first six months

after licensure. See § 560.109, Florida Statutes (2011).

53 . The 2012 Legislature amended section 560. 109 to delete

the requirement for examination within six mont hs of licensure.

See ch. 12 - 85 , § 2, Laws of Fla.

54 . T he Office conducted the instant examination in

October 2012, after the effective date of chapter 12 - 85, Laws of

Florida.

55 . Next, Capital City argues that the Office failed to

comply with its own examination procedures.

56 . Capital City introduced into evidence PetitionerÓs

publication titled, ÐChapter 560 Money Services Businesses,

Examiner ManualÑ (Manual). The Manual is dated ÐRevised

September 2012.Ñ 7/

57 . The Manual requires the examiner to conduct an Exit

Interview with the licenseeÓs manager, and lists issues which

must be covered, at minimum, with the licensee.

58 . Section XIV of the Manual provides, in pertinent part,

as follows:

XIV. Exit Conference

1. When the Examiner has comple ted the

examination, an exit interview will be held

with the manager or his or her designated

representative.

a. The exit interview should consist of at

least the following:

b. Identification and discussion of any

findings noted and corrective action t hat

will be requested. The manager should be

allowed the opportunity to refute any

finding identified. The Examiner should not

engage in a debate over the law. Reiterate

that the Examiner is only a fact finder.

c. Advise the licensee that an examinati on

report will be prepared and sent to them or

their main office. Notify the licensee that

a written response to the examination is not

required; however, the licensee should be

encouraged to notify the Office of any and

all corrective action taken. If t hey decide

to make one, it will be part of the file.

59 . Respondent claims Mr. Morin did not provide a

meaningful exit interview with Mr. Furhman in which he explained

the requirements with which Capital City was not in compliance.

60 . The record establ ishes that Mr. Fuhrman was confused

about the record - keeping requirements and what the Office

considered to be Ðcustomer files.Ñ

61 . During the examination on October 23, 2012, Mr. Morin

gave a copy of rule 69V - 560.704 to Mr. Fuhrman to assist with

his un derstanding. Mr. Morin testified that he spoke with

Mr. Fuhrman Ðin generalÑ about the rule and explained they were

the minimum requirements for customer file s . Mr. Morin spoke

ÐminimallyÑ with Mr. Fuhrman about the purpose of the Capital

City Check - Cash ing Agreement relative to the customer file rule.

Mr. Morin told Mr. Fuhrman that designating the bank as the

record - keeper of copies of the backs of checks cashed did not

satisfy the rule requirement. Finally, Mr. Morin ÐgenerallyÑ

discussed the require ments with Mr. Fuhrman on October 24, 2012,

when Mr. Morin left the written records request with

Mr. Fuhrman.

62 . The ExaminerÓs Manual further provides, in pertinent

part, as follows:

XVI. REVIEW OF EXAMINATION TARGETÓS RESPONSE

1. Although there is no direct requirement

to respond to the Office concerning

corrective actions taken or to refute any

finding, the licensee may do so. If a

licensee does respond, the following should

be accomplished:

a. The Examiner who performed the

examination should rev iew the response,

complete the response evaluation, and make

comments as appropriate if directed to do so

by the AFM or his or her designee. It is

not the ExaminerÓs responsibility to

determine whether the action taken by the

licensee was appropriate to c orrect the

situation.

b. If the action is deemed to be

inappropriate or insufficient by the AFM or

Examiner Supervisor to correct the

situation, comments should be made as to

what additional action may be needed.

* * *

d. The completed response evalua tion should

be attached to the response and delivered to

the AFM.

* * *

f. The Regi onal Office may either file the

response or may, if required, issue a risk

based examination follow - up on the

information in the response.

63 . Respondent maintains the M anual requires the Office to

respond in writing to Capital CityÓs response to the OfficeÓs

Report of Examination. Respondent argues that if the Office had

responded to his explanation that the bank maintains copies of

the checks cashed, he would have pro vided the copies to the

Office.

64 . Nothing in Section XVI of the Manual requires the

O ffice to respond to a licenseeÓs response to the Report of

Examination.

65 . Finally, Respondent argues that the Office applies a

strict compliance, rather than substan tial compliance, standard

to review of licenseeÓs records, and fails to collect

information relative to mitigating circumstances, which can be

applied in determining appropriate penalties for violations.

66 . The first argument is strictly a legal argument which

is dealt with in the C onclusions of L aw. Findings relative to

the second argument are contained herein.

67 . Andrew Grosmaire, Chief of the OfficeÓs Bureau of

Enforcement, calculated the administrative sanctions to be

imposed on Respondent for each respective rule and statutory

violation.

68 . A violation of the customer file rule is a level B

offense according to Florida Administrative Code Rule 69V -

560.1000. Level B corresponds with a fine ranging from

$3,500.00 to $7,500.00 per violation. Mr. G rosmaire recommended

a fine of $7,500 .00 because all four customer files , or 100%,

were deficient.

69 . A violation of the requirement to maintain copies of

the backs of checks cashed could have been penalized pursuant to

section 560.114(1)(a), failure to comply with any order of the

Office, which is a B - level offense. However, Mr. Grosmaire

chose instead to charge Respondent under 560.1105, failure to

maintain all records for five years, which is an A - level offense

with a fine amount ranging from $1,000. 00 to $3,500.00. See

Fla. Admin. Code R. 69V - 560.1000(150). Mr. Grosmaire

recommended a fine of $3,500.00 because all of the records

reviewed, or 100% of the sample, failed to meet the requirement

for copies of backs of checks cashed.

70 . A violation of section 560.1105 can subject a licensee

to revocation, even for a first offense, pursuant to rule 69V -

560.1000(4), but Mr. Grosmaire did not recommend revocation of

RespondentÓs license.

71 . A violation of the electronic log requirement is also

a B - level offense. In this case, Mr. Grosmaire considered that

the electronic log produced by Capital City contained four of

the 11 fields required, and translated that to 64% compliance.

Applying that percentage to the range of fines, Mr. Grosmaire

recommended a fine of $6,000.

72 . A violation of the requirement to obtain thumbprints

on the face of checks cashed is a B - level offense.

Mr. Grosmaire recommended a fine amount of $7,500.00 because

100% of the check records reviewed failed to meet the thumbprint

req uirement.

73 . Mr. Grosmaire considered the aggravating and

mitigating factors listed in rule 69V - 560.1000(148). He

determined that two aggravating factors applied:

Ð(f) [w]hether, at the time of the violation, the licensee had

developed and implemented reasonable supervisory, operational or

technical procedures, or controls to avoid the violation;Ñ and

Ð(i) the length of time over which the licensee engaged in the

violations[.]Ñ Mr. Grosmaire determined that (f) applied

because three out of four violati ons were found in 100% of the

samples examined. He determined that (i) applied because the

violations existed for the entire examination period.

74 . Mr. Grosmaire recommended a total fine of $24, 5 00.00.

75 . Mr. Grosmaire determined that one mitigating f actor

applied Î Ðno disciplinary history for licensee.Ñ Mr. Grosmaire

applied that factor in determining what term of suspension to

impose on Respondent. Mr. Grosmaire recommended the minimum

suspension of 33 days for all violations because Respondent ha d

no disciplinary history.

76 . Mr. Grosmaire testified that he relied upon the

aggravating and mitigating factors Ðthat the examiner has

identified, that IÓve seen in the report, or the mitigating

circumstances IÓve seen in the report.Ñ 8/

77 . Mr. Morin testified that, during his examination, he

does not make a determination of whether there are ag gravating

or mitigating factors. 9/

CONCLUSIONS OF LAW

78 . The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceedi ng and the

parties thereto p ursuant to sections 120.569, 120.57(1), and

120. 60(5), Florida Statutes (2013).

79 . The Offic e is the state agency charged with

administering and enforcing chapter 560, Florida Statutes,

related to licensing of check - cashing bu sinesses.

80 . Because the Office seeks to impose an administrative

penalty, which is a penal sanction, the Office has the burden of

proving by clear and convincing evidence the specific

allegations in the Amended Administrative Complaint. See , e.g. ,

DepÓt of Banking & Fin. v. Osborne Stern & Co. , 670 So. 2d 932

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

Pou v. DepÓt of Ins. and Treasurer , 707 So. 2d 941 (Fla. 3d DCA

1998).

81 . Clear and convincing evidence Ðrequires more proof

th an a Òpreponderance of the evidenceÓ but less than Òbeyond and

to the exclusion of a reasonable doubt .Ó Ñ In re : Graziano ,

69 6 So. 2d 744, 753 (Fla. 1997).

Specific Violations

82 . Through the Amended Administrative Complaint ,

Respondent is alleged to h ave violated section 560.310(2)(a),

Florida Statutes (2012), and Florida Administrative Code Rule

69V - 560.704(4 )( d ) (2009) , requiring check cashers to create and

maintain customer files; section 560.310(2)(d) and rule 69V -

560.704 (5) (a), requiring check cas hers to create and maintain a

daily electronic log with minimum information on each check

cashed; section 560.310(1) and rule 69V - 560.704(2)(a), requiring

check cashers to maintain copies of checks cashed, including the

front and reverse; and section 560.3 10(2)(c) and rule 69V -

560.704(4)(a), requiring check cashers to affix an original

thumbprint of the conductor to the origi nal of each payment

instrument.

83 . In each violation cited , the Office proved by clear

and convincing evidence that the violation ex isted at the time

of the examination .

84 . Mr. Williams established that Respondent has taken

some steps to ensure that the violations are not duplicated in

the future. He established that Respondent has developed a

checklist for customer files to ensure that Respondent obtains

all the information required by rule 69V - 560.310(4)(d); has

developed and utilizes an electronic log of daily checks cashed

which includes all the information required pursuant to rule

69V - 560.310(5)(a) ; and obtains customer thumbpr ints on the face

of check s cashed.

85 . Unfortunately for Respondent , post - examination

correcti ve measures do not qualify as mitigation . Corrective

actions taken Ðprior to detection and intervention by the

OfficeÑ can be considered mitigation . See Fla. A dmin. Code

R. 69V - 560.1000(148)(d).

86 . The undersigned has considered RespondentÓs claim that

the Office incorrectly applied a strict compliance standard,

rather than a substantial compliance standard. That argument is

not persuasive.

87 . Section 560. 310 does not allow for substantial

compliance because the statutory provisions use the mandatory

terms ÐmustÑ and Ðshall.Ñ See Dep Ó t Bus. & ProfÓl Reg. v.

Whitehall Condo. of the Villages of Palm Bch. Lakes Assoc. , Case

No. 11 - 0180 (Fla. DOAH May 21, 2013 ); appeal pending (where

statute requiring condominium association to furnish certain

documents to condominium owners employs the term ÐshallÑ the

statute requires strict compliance).

88 . By contrast, other state agencies are given authority

to determine substantial compliance with regulatory

requirements. See , e.g. , § 395.4001, Fla. Stat. (Department of

Health verifies Ðsubstantial complianceÑ with trauma center and

pediatric trauma center standards); and § 400.23, Fla. Stat.

(Agency for Health Care Admi nistration surveys nursing homes to

determine Ðsubstantial complianceÑ with licensing criteria).

Chapter 560 is not a statute authorizing substantial compliance

with regulatory criteria.

89 . Finally, the undersigned finds no merit in

RespondentÓs argume nt that the Office relied upon statements

which constitute rules, pursuant to section 120.52(16), Florida

Statutes (2014), but which have not been adopted as rules, in

violation of section 120.57(1)(e) . The undersigned previously

found the alleged stateme nts not to be rules pursuant to section

120.52(16). See Cap . City Check Cashing v. Off . Fin . Reg , Case

No. 14 - 1291RU (DOAH July 25, 2014).

RECOMMENDATION

Based upon the aforementioned Findings of Fact and

Conclusions of Law, it is RECOMMENDED that Petit ioner, Office of

Financial Regulation , enter a final order:

1. Finding that Respondent, Capital City Check Cashing ,

violated subsections 560. 310(1) , 560.310(2)(a), 560.310(2)(c),

and 560.310(2)(d) , Florida Statutes ; and Florida Administrative

Code Rule s 69V - 560.704(2)(a), 69V - 560.704(4)(a), 69V -

560.704(4)(d), and 69V - 560.704(5)(a) .

2. Imposing an administra tive penalty against Respondent

in the amount of $ 24, 5 00.00 , payable to Petitioner within 30

calendar days of the effective date of the fi nal order e ntered

in this case.

3. Suspending RespondentÓs license for 33 days.

4. The undersigned retains jurisdiction in this matter to

rule on RespondentÓs Motion for Sanctions pursuant to section

57.105, Florida Statutes (2014), should Respondent be the

prevai ling party in the final order entered in this case.

DONE AND ENT ERED this 2 7 th day of August , 2014 , in

Tallahassee, Leon County, Florida.

S

SUZANNE VAN WYK

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 2 7 th day of August , 201 4 .

ENDNOTE S

1/ All citati ons herein to the Florida Administrative Code are

to the 2009 version which was in effect during the examination

period.

2/ T.511:3 - 5

3/ T.514:17 - 21

4/ Except as otherwise provided herein, all references to the

Florida Statutes are to the 2012 versio n, which was in effect at

the time of the examination.

5/ T.511:14 - 16

6/ The letter was not admitted into evidence at the final

hearing because Respondent did not identify it as an exhibit in

the pre - hearing stipulation in compliance with the undersign edÓs

Order of Pre - hearing Instructions. Respondent vehemently

contested this ruling, which can be reviewed in the Transcript

of the final hearing.

7/ The Office argued at hearing that the Manual was not in

effect on the dates of the exam in question. H owever, the

Office did not produce evidence upon which the undersigned can

make a finding that the manual was not in effect on October 23

and 24, 2012. The Office did not address this issue in its

Proposed Recommended Order.

8/ T.342:16 - 18

9/ T.233:7 - 10

COPIES FURNISHED :

Melinda Butler, Esquire

Office of Financial Regulation

200 East Gaines Street, Suite 550T

Tallahassee, Florida 32399

John O. Williams, Esquire

Williams and Holz, P.A.

211 East Virginia Street

Fort Walton Beach, Florida 32 301

Dre w J. Breakspear , Commissioner

Office of Financial Regulation

200 East Gaines Street

Tallahassee, Florida 32399 - 0350

Colin M. Roopnarine, General Counsel

Office of Financial Regulation

The Fletcher Building

200 East Gaines Street, Suite 118

Tallahassee, F lorida 32399 - 0370

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

iss ue the Final Order in this case.