14-001291RU Capital City Check Cashing vs. Office Of Financial Regulation Status: Closed DOAH Final Order on Friday, July 25, 2014.

Summary: Petitioner did not demonstrate by a preponderance of the evidence that the agency's alleged statements were rules as defined by section 120.52(16), and not adopted as such according to section 120.54.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CAPITAL CITY CHECK CASHING ,

Petitioner ,

vs. Case No. 14 - 1291RU

OFFICE OF FINANCIAL REGULATION ,

Respondent .

/

FINAL ORDER

A duly - noticed hearing was held in this matter on May 22,

2014 , in Tallahassee, Flori da, before Suzanne Van Wyk, an

A dministrative L aw J udge assigned by the Divis ion of

Administrative Hearings.

APPEARANCES

For Petitioner: John O. Williams , Esquire

Williams an d Holz, P.A.

The Cambridge Centre

211 East Virginia Street

Tallahassee, Florida 32301

For Respondent: C. Michael Marschall , Esquire

Office of Financial Regulation

200 E ast Gaines Street

Fletcher Building, Suite 550

Tallahassee, Florida 32308

STATEMENT OF THE ISSUE

Whether Respondent, Office of Financial Regulation , has

made certain agency statement s with regard to record - keeping

requi rements for licensed check cashers, which are agency rule s

as defined in section 120.52(16), Florida Statutes, but have not

been adopted as rule s in violation of sect ion 120.54(1)(a),

Florida Statutes; and if so, whether costs and attorneyÓs fees

shou ld be awarded.

PRELIMINARY STATEMENT

Respondent , Office of Financial Regulation conducted an

examination of Petitioner Ós business records for the time period

of January 1, 2010, through October 23, 2012. Respondent found

Petitioner in violation of certain reco rd - keeping requirements,

and filed an Administrative Complaint seeking to impose

administrative fines against Petitioner . That license

disciplinary action is pending with the Division of

Administrative Hearings (Division) as Case No. 13 - 4484.

On March 18 , 2014, Petitioner filed a Petition to Determine

Two Agency Statements are Unadopted Rules, alleging that

Respondent requires strict compliance with the record - keeping

requirements of chapter 560, F lorida Statutes; and that check

cashers are prohibited fro m using banks to maintain certain

records, both of which constitute unadopted rules.

Respondent filed a Motion for More Definite Statements on

April 15, 2014, which was granted. On April 18, 2014,

Petitioner filed an Amended Petition to Determine Agency

Statements are Unadopted Rules , this time alleging that the

agency maintains the following statements which constitute

unadopted rules:

(a) The Office mandates strict compliance with record -

keeping requirements;

(b) The Office prohibits check cashers fr om using banks as

third - party record keepers;

(c) The Office requires check cashers to keep a daily

check - cashing log in spreadsheet format;

(d) The Office prohibits check cashers from affixing the

customerÓs thumbprint to the payment instrument with a

staple;

(e) The Office prohibits check cashers from using a

government agency as a third - party record keeper;

(f) The Office requires check cashers to maintain records

received from government data bases; and

(g) The Office uses a scoring system to determine

punishment for violations of chapter 560, Florida Statutes.

On April 22, 2014, the Office file d a Motion to Dismiss

PetitionerÓs Amended Petition (Motion) on several grounds .

Following a telephonic hearing on the Motion , the undersigned

entered an Order granting the Motion in part, and striking the

allegation labeled (f) , above . In an Amended Order on the

Motion, the undersigned also struck the allegation labeled (e),

above. The final hearing on the matters was scheduled for

May 22, 2014 in Ta llahassee, Florida.

The final hearing convened as scheduled. Petitioner

presented the testimony of Andrew Grosmaire, Chief of

RespondentÓs Bureau of Consumer Finance; and John O. Williams,

PetitionerÓs owner. Respondent presented the testimony of

Gregory Oaks, Director of the Division of Consumer Finance.

PetitionerÓs Exhibits P1, P2, and P4 were admitted into

evidence. The undersigned granted both PetitionerÓs and

RespondentÓs Requests for Official Recognition.

At the close of the final hearing, the p arties agreed to

file Proposed Final Orders within 3 0 days following the date the

T ranscript was filed with the Division. The T ranscript of the

final hearing was filed with the Division on June 16, 2014 . The

parties timely filed Proposed Final Orders on July 16, 2014,

which have been considered by the undersigned in preparing this

Final Order.

FINDINGS OF FACT

1 . Petitioner, Capital City Check Cashing (Capital City)

is a licensed check casher, pursuant to chapter 560, Part III,

Florida Statutes.

2 . Re spondent, Office of Financial Regulation (the

Office), is the state agency charged with administering and

enforcing chapter 560, Florida Statutes, related to licensing of

Money Services Business , at term that includes check - cashing

businesses.

License D isciplinary Case

3 . On or about October 23, 2012, the Office conducted an

examination of RespondentÓs business records for the period

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

ultimately culminated in an Amended Administrative Complaint

(Complaint) filed by the Office against Petitioner, a matter

which is pending before the undersigned in Case No. 13 - 4484.

4 . The Complaint charges, among other alleged violations,

that Petitioner failed to (1) keep a daily payment instrument

log includ ing all the information required by section

560.3110(2)(d) and Florida Administrative Code Rule 69V -

560.704(5)(a); (2) maintain copies of payment instruments cashed

as required by section 560.310(1) and rule 69V - 560.704(2)(a);

and (3) maintain records of c onductorÓs thumbprints on payment

instruments as required by section 560.310(2)(c) and rule

69V - 560.704(4)(a).

5 . The Complaint against Petitioner prompted Petitioner to

file the instant unadopted rule challenge. 1/

Examination Process

6 . The Office e xamines licenseesÓ records to ensure

compliance with the record - keeping requirements of section

560.310 .

7 . The general process for an examination is a site visit

from an examiner, a report from the examiner of his or her

findings to the Chief of the Bur eau of Enforcement, and a

recommendation from the Bureau Chief to the Director of the

Division of Enforcement whether to file a complaint against a

licensee, and if so, recommended sanctions.

Examination Module 2/

8 . William Morin is the examiner who cond ucted the

examin ation of PetitionerÓs records in the underlying license

disciplinary case. Mr. Morin utilized an Ðexamination moduleÑ

to track compliance with various statutory and rule requir e ments

during the examination.

9 . The examination module is a chart divided into four

columns. The columns are labeled , from left to right, ÐArea of

Review,Ñ ÐResults of Review,Ñ ÐFindings,Ñ and ÐReport

Reference.Ñ The first column is pre - filled with the particular

record - keeping statutory and rule requirements , a long with

directions to the examiner, such as Ð [t] he examiner should

access the FinCEN registration list to determine if the licensee

has registered with FinCEN as a money services business (MSB).Ñ

10 . The second column allows the examiner to note the

re sults of his or her review of the particular requirement found

in the first column. For example, in his review of PetitionerÓs

records, Mr. Morin noted in column 2 Ð [n] o branch officesÑ in

response to the requirement noted in column 1, that he Ðverify

all branch locations have been properly and timely reported to

the Office.Ñ

11 . The examination module also allows the examiner to

input detailed notes regarding the results of the review. In

the case at hand , Mr. Morin made notes regarding the records

rev iewed for each of approximately 10 of PetitionerÓs named

customers. The notes reflect observations such as Ð [d] id not

provide consumer with full amount of cash;Ñ Ð [n]o customer

file;Ñ and Ð[n] o thumbprint from consumer.Ñ

12 . The examination module is a work plan used by an

examiner to document the findings of each examination. The

examination module is used consistently by the OfficeÓs

examiners.

13 . The examination module is an internal agency document

used to assist in conduct of examinations of lic enseeÓs records.

14 . The examination module does not, in and of itself,

create rights, require compliance, or otherwise have the direct

and consistent effect of law .

Sanction Computation Worksheet

15 . Andrew Grosmaire is the OfficeÓs Chief of the Burea u

of Enforcement. Mr. Grosmaire reviews examiners Ó reports of

examination.

16 . When Mr. Grosmaire receive s an examination report, he

u tilizes a sanction computation worksheet to calculate a

recommended sanction amount based on violations n oted in the

ex amination report. The sanction computation worksheet is a

spreadsheet developed for him by Jay Newton , a financial

administrator with the Office.

17 . Mr. Grosmaire uses the sanction computation worksheet

with every examination report that is referred to him.

18 . Florida Administrative Code Rule 69V - 560.1000

establishes the disciplinary guidelines applicable to each

ground for disciplinary action that may be imposed against a

licensee for violatin g chapter 560. The rule establishes both

administrative f ine s associated with violations of particular

statutory sections, as well as levels of suspension or

revocation , if applicable to the corresponding violation.

Administrative fines and levels of suspension are classified as

A, B, and C. Generally, the gui delines increase the severity of

the recommended administrative fine and level of suspension for

repeat violations of the same requirements.

19. The rule establishes a range of administrative fines,

as well as a range of days of suspension , that corresp onds with

A, B, and C penalties. For example, an A - level administrative

fine ranges between $1,000 and $3,500 . An A - level suspension

ranges between 3 to 10 days.

20 . The rule authorizes the Office to consider a list of

enumerated circumstances when det ermining an appropriate penalty

within the range of penalties prescribed for each violation, as

well as when determining whether to impose a penalty outside of

the established range. These circumstances are generally

referred to as Ðmitigating and aggrava ting factors.Ñ

21 . Mr. Grosmaire uses the sanction computation worksheet

to calculate an overall recommended penalty against a licensee

based on the particular violations noted in the examinerÓs

report, the range of sanctions for th ose particular violati on s

as established in rule 69V - 560.1000 , and any mitigating or

aggravating factors.

22 . For each finding noted in the examinerÓs report,

Mr. Grosmaire inputs the corresponding statute or rule, the

level of sanction from the corresponding rule, a descript ion of

the violation, the minimum and maximum fine established by the

rule, the minimum and maximum suspension established by the

rule, and whether or not revocation is authorized by the rule

for the specific violation. The chart also contains fields for

Mr. Grosmaire to input the sample size utilized by the examiner,

the number of violations of a particular requirement within the

particular sample, and the percentage of the sample containing

the same violation.

23 . Finally, Mr. Grosmaire inputs a recom mended fine and

recommended sanction in their respective columns. The

spreadsheet automatically calculates the total recommended fine

and recommended days of suspension for all the violations . This

sum can be compared with the total of the minimum and ma ximum

fine and days of suspension for each violation based on the

range established by rule .

24 . Mr. Grosmaire exercises discretion in determining the

recommended sanctions against a licensee based upon the range of

penalties provided in the rule and any mitigating or aggravating

circumstances. After completing the sanction computation

worksheet, Mr. Grosmaire makes a written recommendation of

appropriate penalties against the licensee to the Division

Director and the OfficeÓs legal counsel.

Payment Inst rument Log

25 . Section 560.310, Florida Statutes (2012), provides in

pertinent part:

(1) A licensee engaged in check cashing

must maintain for the period specified in

s. 560.1105 a copy of each payme nt

instrument cashed.

(2) If the payment instrument exceeds

$1,000, the following additional information

must be maintained:

* * *

d) The office shall, at a minimum, require

licensees to submit the following

information to the check cashing database o r

electronic log, before entering into each

check cashing transaction for each payment

instrument being cashed, in such format as

required by rule:

1. Transaction date.

2. Payor name as displayed on the payment

instrument.

3. Payee name as displayed o n the payment

instrument.

4. Conductor name, if different from the

payee name.

5. Amount of the payment instrument.

6. Amount of currency provided.

7. Type of payment instrument, which may

include personal, payroll, government,

corporate, third - par ty, or another type of

instrument.

8. Amount of the fee charged for cashing of

the payment instrument.

9. Branch or location where the payment

instrument was accepted.

10 . The type of identification and

identification number presented by the payee

or conductor.

11 . PayeeÓs workersÓ compensation insurance

policy number or exemption certificate

number, if the payee is a business.

12 . Such additional information as required

by rule.

For purposes of this subsection, multiple

payment instruments accept ed from any one

person on any given day which total $1,000

or more must be aggregated and reported in

the check cashing database or on the log.

26 . Florida Administrative Code Rule 69V - 560.704 provides,

in pertinent part:

(5)(a) In addition to the recor ds required

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 numbe r presented 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.

27 . Petitioner alleges that t he Office requires check

cashers to keep the daily payment instrument log in a

spreadsheet format, a statement Petitioner argues is an

unadopted rule.

28 . In his exam notes, Mr. Morin wrote ÐLicensee maintains

an electronic log; however, it lacks the inf ormation and data

fields required by rule.Ñ

29 . Petitioner was not charged with failing to maintain an

electronic log in a spreadsheet format.

30 . Gregory Oaks is the OfficeÓs Director of the Division

of Consumer Finance, and oversees the Bureau of Enf orcement , as

well as the Bureau of Registration. Mr. Oaks testified that if

a licensee kept an electronic log in some format other than a

spreadsheet, the Office would look at whether the information

was Ðreadily retrievable and capable of being exported into some

software application, including or similar to ExcelÑ in

determining compliance. 3 /

31 . Andrew Grosmaire is the OfficeÓs Chief of the Bureau

of Enforcement. Mr. Grosmaire testified that software other

than a spreadsheet program might comply with the statute and

rule if it was searchable, allowed for sampling, and aggregation

of multiple checks cashed for less than $1,000 by the same

person on the same day .

32 . Mr. Grosmaire conceded that a .pdf copy of documents

would likely not meet the require ment of rule 69V - 560.704 that

the information be Ðeasily retrievable and capable of being used

in the format the same way that an application such as Microsoft

Excel would do.Ñ 4 / Mr. Grosmaire testified consistently that the

determinative factor is that t he data on the electronic log be

Ðretrievable and capable of being exported.Ñ 5 /

33 . Petitioner did not demonstrate by a preponderance of

the evidence that the Office maintains a statement that check

cashers must maintain the electronic log in a spreadsh eet

format.

Copies of Checks

34 . Section 560.301(1) provides, Ð[a] licensee engaged in

check cashing must maintain for the period specified in

s. 560.1105 a copy of each payment instrument cashed.Ñ

35 . Section 560.301(3) provides, Ð[a] licensee under thi s

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.Ñ

36 . Florida Administrative Code Rule 69V - 560.704(2)

provides as follows:

(2) Every check casher 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 pay ment 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 a ll payment instruments

accepted by the check casher shall be made at

the time of acceptance.

37 . Petitioner was cited by the Office as follows:

ÐRespondentÓs records from J uly 2012 failed to show copies of

the back of all accepted payment instruments.Ñ 6 /

38 . In the examination module for examination of

PetitionerÓs records , Mr. Morin noted as follows:

Licensee claims that the copies of the back

of the checks are on their bank statements.

The licensee cannot rely on their financial

institution to kee p these records for them .

Reviewed bank statements and saw no copies

of backs of customer checks. (emphasis

added).

39 . Petitioner alleges the Office prohibit s check cashers

from designating a bank as a third - party record keeper of the

documents requ ired to be kept by section 560.301(1) and rule

69V - 560.704(2) , i.e., copies of the checks cashed. Petitioner

claims that this policy constitutes a rule, pursuant to section

120.52(16), but ha s not been adopted as a rule in violation of

sect ion 120.54(1)(a ).

40 . The Office maintains that it has no such policy.

Rather, the statute prohibit s check cashers from designating a

bank as a third - party record keeper.

41 . Neither chapter 560 nor rule 69V - 560.704 defines

Ðdepository institution.Ñ

42 . Section 4 94.001 defines Ðdepository institutionÑ to

have the same meaning as in section(3)(c) of the Federal Deposit

Insurance Act, and to include any credit union. See

§ 494.001(9), Fla. Stat. Chapter 494 provides for regulation of

loan originators , mortgage bro kers , and lenders.

43 . Section(3)(c) of the Federal Deposit Insurance Act

defines Ðdepository institutionÑ to include any bank or savings

association. See 12 U.S.C. § 1813(c) (1989).

44 . Further, section 560.104 provides, in pertinent part,

as follows :

560.104 Exemptions. Ï The following entities

are exempt from the provisions of this

chapter:

(1) Banks, credit card banks, credit

unions, trust companies, associations,

offices of an international banking

corporation, Edge Act or agreement

corporations, or other financial depository

institutions organized under the laws of any

state or the United States.

§ 560.104(1), Fla. Stat.

45 . Chapter 560, Part I, provides for general regulation

of money services business, a term which specifically includes

check cashing businesses. See § 560.104(22), Fla. Stat.

46 . The Office Ós practice of prohibiting check cashers

from designating banks as third - party record keepers of copies

of the checks cashed, is a simple re iterat ion of the statutory

prohibition .

Thumbprints

47 . Section 560.310(2) provides, in pertinent part, as

follows:

(2) If the payment instrument exceeds

$1,000, the following additional information

must be maintained or submitted:

* * *

(c) A thumbprint of the customer taken by

the licensee when the payme nt instrument is

presented for negotiation or payment.

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

provides, in pertinent part:

(4) In addition to the records required in

subsections (1) and (2), for payment

instruments exceeding $1,000.00, th e 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[.]

49 . Petitioner was cited for violating section

560.310(2)(c) and r ule 69V - 560.704(4 ) by failing Ðto maintain

records of conductorsÓ thumbprints from approximately twenty - two

(22) accepted payment instruments exceeding $1,000.Ñ Off. of

Fin. Reg. v. Capital City Check Cashing , Case No. 13 - 4484, Amd.

Admin . Comp . at 7 (Dec. 4, 2013).

50 . In the examination module for examination of

PetitionerÓs records, Mr. Morin noted as follows: ÐThumbprint

is not affixed to the payment instrument. It is affixed to the

check cashing agreement.Ñ

51 . It is PetitionerÓs practice to obtain the customerÓ s

thumbprint on a check - cashing agreement at the time a check is

presented. Petitioner then staples a copy of the check - cashing

agreement to a copy of the check cashed, which is kept for his

records.

5 2 . Mr. Grosmaire testified it is his understanding th at

the rule requires the original thumbprint be placed on the

original check.

Strict Compliance

5 3 . Finally, Petitioner argues that the Office requires

strict compliance with the regulations applicable to check

cashers, a requirement which is in and of i tself a rule. 7 /

5 4 . The Office does not distinguish between Ðstrict

complianceÑ and Ðsubstantial complianceÑ in determining whether

a licensee has complied with the applicable statutory and

administrative record - keeping requirements.

CONCLUSIONS OF LAW

Jurisdiction

5 5 . The Division of Administrative Hearings has

jurisdiction over the parties and subject matter in this

proceeding pursuant to sections 120.56(4), 120.569 , and

1 20.57(1), Florida Statutes (201 3 ). 8 /

Parties and Standing

5 6 . The Office is the state agency charged with

administering and enforcing chapter 560, Florida Statutes,

related to licensing of Money Services Businesses, including

check cashers . See § 560.105, Fla. Stat.

5 7 . Subsection 120.56(4) provides that a person

substantially a ffected by an agency statement that comes within

the definition of a rule, but which has not been adopted by

rulemaking procedures, may challenge that statement.

58 . In order to prove stand ing, Petitioner must show that:

1) the agency statement of policy will result in a real or

immediate injury in fact; and 2) the alleged interest is within

the zone of interest to be protected or regulated. Jacoby v.

Fla. Bd. of Med . , 917 So. 2d 358, 360 (Fla. 1st DCA 2005).

59 . Petitioner has standing to bring this proceeding

pursuant to paragraph 120.56(4)(a). The statements at issue,

such as they exist, factored into the OfficeÓs determination to

seek penalties against Petitioner for violation of specified

statutes and rules.

Burden of Proof

60 . An agency statemen t that comes within the definition of

a rule must be adopted according to rulemaking procedures.

Envtl. Trust, Inc. v. DepÓt of Envtl. Prot. , 714 So. 2d 493

(Fla. 1st DCA 1998); Christo v. DepÓt of Banking & Fin. , 649

So. 2d 318 (Fla. 1st DCA 1995). Sect ion 120.54(1)(a) provides

in relevant part:

Rulemaking is not a matter of agency

discretion. Each agency statement defined

as a rule by s. 120.52 shall be adopted by

the rulemaking procedure provided by this

section as soon as feasible and practicable .

6 1 . Subsection 120.52(16) defines "rul e" in relevant part

as follows:

Ð Rule Ñ means each agency statement of

general applicability that implements,

interprets, or prescribes law or policy or

describes the procedure or practice

requirements of an agency and includes any

form which imposes any requirement or

solicits any information not specifically

required by statute or by an existing rule.

6 2 . Petitions seeking relief under s ection 120.56(4),

Florida Statutes, if found by DOAHÓs director to meet the

ple ading requirements of the statute, are assigned to an

administrative law judge, who has the authority to determine, by

Final Order, Ðwhether all or part of [the] statement [being

challenged] violates [ s ection] 120.54(1)(a) [Florida Statutes].Ñ

§ 120.56(4) (c), Fla. Stat.

63 . The petitioner bears the burden of proving by a

preponderance of the evidence, as determined by the

administrative law judge, that the challenged Ðagency statementÑ

actually exists and is operative and effective; that it

constitutes a Ðrule,Ñ within the meaning of s ection 120.52(16),

Florida Statutes; and that it has not been adopted in accordance

with s ection 120.54. See DepÓt of Banking & Fin . v. Osborne

Stern and Co. , 670 So. 2d 930, 934 (Fla. 1996)(ÐThe general rule

is that a part y asserting the affirmative of an issue has the

burden of presenting evidence as to that issue.Ñ); and

§ 120.56(1)(e), Fla. Stat. (ÐHearings held under this section

shall be de novo in nature. The standard of proof shall be the

preponderance of the eviden ce.Ñ).

Examination Module

6 4 . The examination module utilized by the OfficeÓs field

examiners is not a rule as defined by section 120.52(16) . The

module is an internal document used to ensure a thorough review

of licensee records and to capture the exam inersÓ findings at

the examination site. See Humphr e y v. DepÓt. of Law Enf . , Case

No. 13 - 1037RU (Fla. DOAH June 25, 2013); affÓd , 132 So. 3d 224

(Fla. 1st DCA 2014) ( form that prompts inspectors to visually

review the physical condition of each instrument and to guide

inspectors through a review of the mechanical function of an

instrument by a series of Ðquality checksÑ is not a rule);

Wissel v. State , 691 So. 2d 507 (Fla. 2d DCA 1997)(Ðprocedures

that are implicit and incidental to procedures otherwise

exp licitly provided for in a properly adopted rule or regulation

do not require further codification by a further adopted rule or

regulationÑ) .

6 5 . The examination module does not impose any requirement

on licensees, nor does it solicit any information from licensees

that is not already required by statute and the existing rules.

T he governing statute and rules , rather than the examination

module, require licensees to maintain the records at issue.

6 6 . In sum, the examination module does not purport in a nd

of itself to create rights or adversely affect licensees. The

examination module itself has no consequenc e beyond prompting

the examiner to check for each statutory and rule record - keeping

requirement, and acting as a centralized note - keeping database.

Sanction Computation Worksheet

6 7 . Like the examination module , the sanction computation

worksheet does not constitute an agency rule. The worksheet is

nothing more than Mr. GrosmaireÓs notes of the sanctions to be

applied , within the range of sanctio ns established by rule, for

each requirement the licensee is found to be in violation , as

well as a tool for calculating the total sanctions. The

worksheet , in and of itself , creates no rights and imposes no

penalties on licensees. If Mr. Grosmaire aband oned use of the

sanction computation worksheet, he would use a calculator to add

the sanction amounts for each violation to arrive at the final

total.

6 8 . Likewise, the worksheet , in and of itself , does not

require compliance with any statute, rule, or r egulation, or

otherwise have the direct and consistent effect of law. Rule

69V - 560.1000 establishes a range of penalties by type of

violation, allowing the Office to exercise its discretion to

apply a penalty within the range, or exceeding the range , if

c ircumstances warrant. The worksheet does not eliminate the

exercise of discretion or pre - determine the penalty for any

particular violation.

Payment Instrument Log

6 9 . Unlike the examination module and sanction computation

worksheet, Petitioner has no w ritten instrument to present as

evidence of the OfficeÓs alleged unadopted agency statement

requiring a payment instrument log to be kept in spreadsheet

format .

70 . To qualify as a Ðrule,Ñ an Ðagency statementÑ need not

have been reduced to writing. See DepÓt of High . Saf . & Motor

Veh . v. Schl u ter , 705 So. 2d 81, 86 (Fla. 1st DCA 1997)(Ð[W]e

find no support for Judge BentonÓs argument that an agencyÓs

policy statement must be in writing before it can be considered

an nonadopted rule.Ñ) Absent such direc t evidence, the

petitioner must resort to relying on circumstantial evidence

from which the statementÓs existence may be reasonably inferred

or extrapolated. Such circumstantial evidence may include

agency conduct. See Pembroke Pines v. Broward Cnty. Sch . Bd. ,

09 - 5626RU (Fla. DOAH Feb. 26, 2010) ; affÓd , 53 So. 2d 1024

(2011) (City failed to prove by a preponderance of the evidence

that the school board had an unwritten policy of categorically

excluding charter schools from consideration in distributing

fun ds under section 1011.71(2)) .

71 . In the instant case, Petitioner alleges that the

Office requires the daily electronic log required by section

560.310 and rule 69V - 560. 704(5)(a), must be in a spreadsheet

format. As noted in the Facts section of this Fi nal Order,

there has been an inadequate showing that such a statement or

policy exists. Petitioner was not charged with failing to keep

an electronic log in a spreadsheet format, but rather with

failing to keep a log with all the information required by

r ule. 9 / The testimony offered at hearing was that the crucial

factor is whether the information contained in the log is

Ðeasily retrievable and capable of being exported to most widely

available software applications incl uding Microsoft EXCEL. Ñ

Fla. Admin . Code R. 69V - 560.704(5)(a). The operative issue is

whether the data can be manipulated to aggregate multiple same -

day payments from the same payor below the $1,000 threshold, or

used for similar regulatory purposes .

Copies of Checks

72 . Next, Petition er alleges that the Office maintains a

statement, which has not been adopted by rule, prohibiting a

check casher from designating a bank as the record - keeper of

records required by section 560.310(1) and rule 69V -

560.704(2)(a), to wit : a copy of each chec k cashed.

73 . The Office counters that the licensing statute, rather

than agency policy, prohibits the designation of a bank as the

record - keeper of copies of the checks cashed. The Office

maintains it is simply enforcing the statute as written.

74 . S ection 560.310 (3) provides, Ð 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. Ñ § 5 60.310(3), Fla. Stat. (emphasis added) .

75 . Neither section 560.310 nor rule 69V - 560.704 define s

the term Ðdepository institution.Ñ Petitioner admits that a

bank Ð may well be Ñ a depository institution , but argues that the

Office should undertake rulema king to flesh out the issue. 10 /

76 . The undersigned does not agree that the issue requires

fleshing out. Section 560.104 provides, in pertinent part, as

follows:

560.104 Exemptions. Ï The following entities

are exempt from the provisions of this

chapter:

(1) Banks, credit card banks, credit

unions, trust companies, associations,

offices of an international banking

corporation, Edge Act or agreement

corporations, or other financial depository

institutions organized under the laws of any

state or the Unite d States. (emphasis

added)

77 . There is no need to resort to either other chapters of

the Florida Statutes , or to federal regulations , to decipher the

meaning of the term Ðdepository institutionÑ as applied to

regulation of check cashers. Section 560. 104 is found in Part I

of chapter 560, the general provisions governing licensed money

services businesses, includ ing check cashers .

78 . In interpreting a statute, all parts of a statute must

be read together, or in pari materia , to achieve a consistent

whole . See Knowles v. Beverly Enter . , 898 So. 2d 1, 14 (Fla.

2004)(citations omitted). Reading the two statutes together, it

is clear that the Legislature intended to prohibit designation

of a bank as a keeper of the records required by section

560.310(1 ). The OfficeÓs policy of prohibiting check cashers

from doing so is a simple reiteration of the governing statute.

79 . As stated by the First District Court of Appeal in

State B oar d of Admin istration . v. Huberty , 46 So. 3d 1144, 1147

(Fla. 1st DCA 2010 ):

As we said in St. Francis Hospital, Inc. v.

Department of Health and Rehabilitative

Services , 553 So. 2d 1351, 1354 (Fla. 1st

DCA 1989):

It is well established that an

agency interpretation of a statute

which simply reiterates the

legislatureÓs statuto ry mandate

and does not place upon the

statute an interpretation that is

not readily apparent from its

literal reading, nor in and of

itself purport to create certain

rights, or require compliance, or

to otherwise have the direct and

consistent effect of t he law, is

not an unpromulgated rule , and

actions based upon such an

interpretation are permissible

without requiring an agency to go

through rulemaking.

See North Star Assoc., Inc. v. DepÓt of Fin. S ervs . , Case

No. 11 - 2433 RU (Fla. DOAH July 1, 2011)(agen cyÓs statement that

registrations as a claimantÓs representative are licenses is

apparent from a literal reading of the statute); My Friend Home

Care, Inc. v. Agency for Health Care Admin. , Case No. 10 - 2657 RU

(Fla. DOAH July 6, 2010)(agencyÓs denial of lic enseeÓs renewal

application based upon actions occurring within two years of the

renewal application date was readily apparent from the plain

language of the statute and, thus, not an unadopted rule); c f.

Leonard v. DepÓt of Mgmt. S erv s. , Case No. 11 - 1529 (Fla. DOAH

Sept. 8, 2011; Fla. DMS Nov. 10, 2011)(agencyÓs definition of

the phrase ÐactiveÑ employment as synonymous with perfect

attendance is an interpretation not readily apparent from a

literal reading of the statute) ; Vazquez v. DepÓt of Health ,

Case No. 08 - 0490RU (Fla. DOAH April 9, 2008); affÓd , 11 So. 3d

994 (Fla. 1st DCA 2009) (agency statement that statute imposes a

Ðrebuttable presumptionÑ and establishes what will be considered

a Ðprima facie caseÑ was not a simple reiteration of the

statutory m andate and was, in fact, Ðcontrary to any reasonable

interpretation of the statuteÑ) .

80 . The meaning of the term Ðdepository institutionÑ in

section 560. 310 is well - defined in the regulatory statute

itself. The agencyÓs statement that a check casher may not

designate a bank as a record - keeper of records required to be

kept pursuant to section 560.310 is simply a reiteration of the

statutory mandate and is not an unadopted rule.

Thumbprints

81 . PetitionerÓs next contention is that the Office

requires che ck cashers to maintain a copy of the customerÓs

thumbprint on the check itself.

82 . Rule 69V - 560.704 (4) provides, in pertinent part, 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:

(a) Affix an original thumbprint of

the conductor to the original of each

payment instrument accepted which is taken

at the time of acceptance;

(b) Secure and maintain a copy of the

original payment instrument, including the

thumbprint of the conductor[.] Fla. Admin.

Code R. 69V - 560.704(4)

83 . Petitioner insists that the term ÐaffixÑ is subject to

differing interpretations, including one in which the check

casher can obtain the customerÓs original thumbprint on a check -

cash ing agreement and staple the agreement to the check cashed,

which is Petitioner Ós practice . Respondent responds that the

rule, not the OfficeÓs interpretation thereof, requires the

thumbprint be placed directly on the check cashed.

84 . It is axiomatic th at s tatutory terms should be given

their plain and ordinary meaning. See Beverly Enter . , 898 So.

2d at 10 - 11 (citations omitted) . ÐWhen necessary, the plain and

ordinary meaning of words can be ascertained by reference to a

dictionary.Ñ Nehme v. Smithkl ine Beecham Clinical Labs , 863 So.

2d 201, 204 - 205 (Fla. 2003).

85 . The term ÐaffixÑ is a transitive verb mean ing Ðto

attach (something) to something else Ñ; Ðto attach physically

< affix="" a="" stamp="" to="" a="" letter="">Ñ; Ðto attach in any way: add, append

< affix="" a="" si="" gnature="" to="" a="" document="">Ñ; Ðimpress < affixed="" my="" seal="">.Ñ

MERRIAM - WEBSTER n.d., www.Merriam - Webster.com .

86 . Given its common and ordinary meaning, then, the rule

requires the thumbprint be physically attached to the check

being cashed by adhesion, impressi on , or other similar means .

Physical attachment is the key.

87 . Under PetitionerÓs interpretation, the thumbprint

itself is made on a customer check - cashing agreement, which is

then stapled to the check. Following this practice, the

thumbprint is physic ally attached to a document other than the

check. Under the agencyÓs interpretation, the thumbprint must

be placed physically on the check surface.

88 . An agencyÓs interpretation of a statute must be

adopted as a rule when the interpretation adds details that are

not otherwise apparent from the reading of a statute. See SW

Fla. Water Mgmt. Dist. v . Save the Manatee Club, Inc. , 773

So. 2d 594, 599 (Fla. 1st DCA 2000)(use of the term ÐinterpretÑ

in subse c tion 120.52(8), Florida Statutes, suggests that a ru le

will be more detailed than the applicable enabling statute);

Fla. Fine Wine and Spirits, LLC. v. Dept. of Bus. and ProfÓl

Reg. , Case No. 07 - 1858RU (Fla. DOAH July 20, 2007); affÓd , 2008

Fla. App. LEXIS 15016 ( Fla. 1st DCA 2008)(statements made by

variou s employees of the Division of Alcoholic Beverages and

Tobacco that the ÐTied House EvilÑ laws do not exclude in - house

servicing of distilled spirits do not establish, nor add details

to, the legal prohibition against in - store servicing of

distilled spirit s).

89 . The OfficeÓs interpretation does not add any details

which are not apparent from a literal reading of rule 69V -

560.704(4) (a) , which requires the check casher to Ð[a] ffix an

original thumbprint of the conductor to the original of each

payment instr ument accepted.Ñ The OfficeÓs interpretation is

further supported by section 560.704(4)(b) requiring the check

casher to maintain a copy of the original check Ðincluding the

thumbprint of the conductor[.]Ñ The statute plainly requires

that the check cash er keep a copy of the check that includes the

thumbprint.

Substantial Compliance

90 . Finally, Petitioner argues that the Office requires

strict compliance with the record - keeping requirements of the

statute and rule, which in and of itself is an unpromul gated

rule. Petitioner maintains that substantial compliance is the

standard in the regulatory context and should be applied in

determining compliance with the applicable regulations.

Petitioner concludes that the OfficeÓs departure from this

Ðindustry s tandardÑ is a rule.

91 . PetitionerÓs argument, while creative, is not

persuasive. Section 560.310 does not allow for substantial

compliance in that the said 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 ).

92 . 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 Ð substantial compliance Ñ with trau ma center and

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

(Agency for Health Care Administration surveys nursing homes to

determine Ðsubstantial complianceÑ with licensing criteria ).

Chapter 560 is not a statute authorizing substantial co mpliance

with regulatory criteria.

93 . The OfficeÓs requirement of strict compliance with the

record - keeping requirements of section 560.310 is not a rule

because it simply reiterates the legislative mandate. See

St. Francis Hosp . , 553 So. 2d at 1354.

F INAL ORDER

Upon consideration of the above Findings of F act and

C onclusions of L aw, it is ORDERED that Capital City Check

CashingÓs Amended Petition to Determine Agency Statements are

Unadopted Rules is dismissed.

DONE AND ORDERED this 25 th day of July , 201 4 , 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 Fil ing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 25 th day of July , 2014 .

ENDNOTES

1/ Petitioner also challenged a number of the OfficeÓs

administrative rules which he allegedly violat ed , as c ontrary to

the OfficeÓs rulemaking authority. See Capital City Check

Cashing v. Of f. of Fin. Reg. , Case No. 1 3 - 4739 RX (Fla. DOAH

May 6, 2014).

2/ Although the parties did not include in the pre - hearing

statement the issue of whether the examination modu le

constitutes an unadopted rule, Petitioner presented considerable

evidence on the issue. It is unclear whether Petitioner

intended to abandon the issue. Therefore, the undersigned

includes Findings of Fact and Conclusions of Law on that issue.

3/ T.1 06:9 - 11.

4 / T.27:22 - 24.

5 / T.31:21 - 22.

6 / See Off . of Fin. Reg. v. Cap. City Check Cashing , Case

No. 13 - 4484, Amd. Admin. Complaint at 6 (Dec. 4, 2013)

7 / Petitioner has alleged in the underlying license disciplinary

action that the standard in the industry is Ðsubstantial

complianceÑ and that his due process rights have been violated

by the OfficeÓs application of strict compliance. See , Id .

Resp. Proposed Rec . Order at 35 - 36 .

8 / Unless otherwise noted herein, all statutory references are

to the 201 3 version of the Florida Statutes.

9 / Even if the Office had cited Petitioner for failure to keep

an electronic log in a spreadsheet format, that statement, in

and of itself , would not necessarily be sufficient to prove that

the statement constituted a rule. It is well - established that

allegations in an agency administrative complaint meant to

enforce regulatory statutes do not constitute agency statements

defined as rules. See George Marshall Smith v. Alex Sink , Case

No. 07 - 4746RU (DOAH Jan. 25, 20 08), affÓd , 993 So. 2d 522 (Fla.

1st DCA 2008)(allegations in Department of Financial Services

complaint against the Petitioner for selling unregistered

securities in violation of chapter 517, Florida Statutes, are

not agency statements defined as rules); United Wisconsin Life

Ins. v. DepÓt of Ins. , Case No. 01 - 3135RU (DOAH Nov. 27, 2001),

affÓd , 831 So. 2d 239 (Fla. 1st DCA 2002)(particular allegations

in the Department of Insurance complaint against Petitioner for

committing unfair and deceptive practices in violation of

chapter 626, Florida Statutes, are not agency statements defined

as rules) ; Dayspring Village, Inc. v. Ag . for Health Care

Admin . , Case No. 13 - 1836RU (DOAH June 24, 2013)(allegations in

AHCAÓs administrative complaint that Petitioner, a li censed

Assisted Living Facility Ðfailed to provide adequate and

appropriate health care consistent with t he established and

recognized standards within the community by allowing diabetic

residents to use the same glucometer without disinfecting or

cleaning the glucometer deviceÑ was not an agency statement

defined as a rule).

10 / Petitioner emphatically mai ntains, and argued vehemently

both at the final hearing and in his proposed final order, that

there is no logical reason to prohibit banks from maintaining

the records at issue, thus, the Legislature could not have meant

to prohibit this practice. While t he legislatureÓs logic, or

lack thereof, is not squarely before the undersigned in this

proceeding, the fact that the legislature exempted banks from

regulation under chapter 560 appears to be a logical reason for

excluding banks as record - keepers under th e statute. Allowing

an entity unregulated by the Office to act as record - keeper for

licensees would likely present problems with exercise of the

OfficeÓs jurisdiction.

COPIES FURNISHED :

John O. Williams, Esquire

Williams and Holz, P.A.

The Cambridge Ce ntre

211 East Virginia Street

Tallahassee, Florida 32301

C. Michael Marschall, Esquire

Office of Financial Regulation

200 E. Gaines Street

Fletcher Building, Suite 550

Tallahassee, Florida 32308

Melinda Hilton Butler, Esquire

Office of Financial Regula tion

101 East Gaines Street, Suite 550T

Tallahassee, Florida 32399 - 2202

Julie Jones, CP, FRP, Agency Clerk

Division of Legal Services

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

Liz Cloud, Program Administrat or

Administrative Code

Department of State

R.A. Gray Building, Suite 101

Tallahassee, Florida 32399

(eServed)

Ken Plante, Coordinator

Joint Administrative Procedures Committee

Room 680, Pepper Building

111 West Madison Street

Tallahassee, Florida 32399 - 1400

(eServed)

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is

entitled to judicial review pursuant to section 120.68, Florida

Statutes. Review proceedings are governed by the Florida Rules

of Appellate Proc edure. Such proceedings are commenced by

filing one copy of a Notice of Administrative Appeal with the

agency clerk of the Division of Administrative Hearings and a

second copy, accompanied by filing fees prescribed by law, with

the District Court of Appe al, First District, or with the

District Court of Appeal in the appellate district where the

party resides. The Notice of Administrative Appeal must be

filed within 30 days of rendition of the order to be reviewed.