15-004335 Office Of Financial Regulation vs. First Solutions, Inc., D/B/A Credit One, And Andrew Mangini Status: Closed Recommended Order on Monday, February 15, 2016.

Summary: OFR proved by clear and convincing evidence that Respondents acted as a loan broker by assessing or collecting advance fee payments from two borrowers. Recommended $10,000 fine and cease and desist order.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OFFICE OF FINANCIAL REGULATION,

Petitioner,

vs. Case No. 15 - 4335

FIRST SOLUTIONS, INC., d/b/a

CREDIT ONE, AND ANDREW MANGINI,

Respondents.

_______________________________/

RECOMM ENDED ORDER

This case came before Administrative Law Judge Darren A.

Schwartz of the Division of Administrative Hearings (ÐDOAHÑ) for

final hearing by video teleconference on October 14 and 15, 2015,

at sites in Tallahassee and Lauderdale Lakes, Florida.

APPEARANCES

For Petitioner: Melinda Hilton Butler, Esquire

Office of Financial Regulation

The Fletcher Building , Suite 550

101 East Gaines Street

Tallahassee, Florida 32399 - 2202

For Re spondent: William G. McCormick, Esquire

Gray Robinson, P.A.

Suite 1000

401 East Las Olas Boulevard

Fort Lauderdale, Florida 33301

STATEMENT OF THE ISSUE S

Whether Respon dents acted as a loan broker by assessing or

collecting advance fee payment s from borrowers in violation of

sections 687.14(4)( a ) and (b) and 687.141(1), Florida Statutes ,

and, if so, the appropriate penalty to be imposed against

Respondents.

PRELIMINARY STATEMENT

On March 6, 2015, Petitioner, Office of Financial Regulation

(ÐOFRÑ) , issued an Administrative Complaint and Notice of Intent

to Issue Cease & Desist Final Order against Respondents, First

Solutions, Inc. , d/b/a Credit One , and Andrew Mangini

(ÐR espondentsÑ). The Administrative Complaint alleged that

Ð[ b ] etween September 2011 and July 2014, in more than 140

instances, Respondents assessed and/or collected up - front fee

payments (of approximately $499) from consumers.Ñ By engaging in

such conduct, OFR alleged that Respondents conducted themselves

as a loan broker in violat ion of sections 687.14(4)(a) and (b)

and 687.141(1) . OFR seeks to impose an administrative fine

against Respondents in the amount of $700,000 (140 alleged

violations times $5,000 per violation) and a cease and desist

order.

On March 26, 2015, Respondents timely filed a Request for

Formal Hearing . On July 30, 2015 , OFR referred the matter to

DOAH to assign an Administrative Law Judge to conduct the final

hearing. On August 6, 2015, the undersigned set the final

hearing for October 14 and 15, 2015. On October 9, 2015, the

partie s timely filed their Joint Pre - h earing Stipulation, in

which they stipulated to certain issues of law and exhibits.

On S eptember 23, 2015, OFR filed a m otion to r elinquish

j urisdiction . On September 29, 2015, OFR filed a Motion to Issue

Order of Confidentiality. On September 30, 2015, Respondents

filed RespondentsÓ Response in Opposition to Petition e rÓs Motion

to Relinquish Jurisdiction ; Motion for Leave to File Amended

Request for Administrative Hearing ; and Motion to Stay

Proceeding.

On October 7, 2015, OFR filed a response to Respondents Ó

Response in Opposition to PetitionerÓs Motion to Relinquish

Jurisdiction ; the Motion for Leave to File Amend ed Req uest for

Administrative Hearing; and Motion to Stay. A telephonic hearing

was held on October 9, 2015, at which counsel for the parties

appeared and presented argument on the motions.

On October 9, 2015, OFR filed an unopposed motion to allow

two out - of - state witnesses to testify at the hearing by

telephone. On October 9, 2015, the undersigned entered an Order

granting OFRÓs motion to allow the two out - of - state witnesses to

testify at the hearing by telephone.

On October 12, 2 015, the undersigne d entered Order s denying

OFRÓs motions to relinquish jurisdiction and to issue order of

confidentiality ; granting RespondentsÓ Motion for Leave to File

Amended Request for Administrative Hearing; and denying

RespondentsÓ Motion to Stay. RespondentsÓ Amend ed Request for

Administrative Hearing was deemed filed on October 12, 2015.

On October 12, 2015, OFR filed a Motion to Enter Deposition Into

Evidence as Testimony. On October 13, 2015, Respondents filed

RespondentsÓ Motion in Limine Seeking to Exclude T D Bank Records .

The final hearing was held on October 14 and 15, 2015, as

scheduled. At hearing, a representative of OFR appeared along

with its counsel. Respondents did not appear at the final

hearing, but they were represented at the hearing through t heir

counsel.

At the commencement of the hearing, the undersigned granted

the unopposed Motion to Enter Deposi tion into Evidence as

Testimony and the deposition of Nicole Gentry, who was

unavailable for the hearing, was received into evidence as OFRÓs

Ex hibit 18 . After hearing argument from counsel for the parties

on the Motion in Limine , the undersigned denied the motion .

At hearing, OFR presented the live testimony of Alex Toledo

and B randon Sli s z , and Rosa Saenz by telephone . OFRÓs Exhibits

1A , 1B, 2 through 5, 6A, 6B, 7, 8, 9 (pages 3 through 10 only),

10 (pages 3 through 11 only), 11 (pages 3 through 11 only), 13

(pages 3 through 11 only), 14 (pages 7 through 14 only), 16, 17B,

18, and 19 were received into evidence. 1/ Respondents did not

present any witness testimony , and they did not offer any

exhibits into evidence.

At the conclusion of the hearing, RespondentsÓ counsel

requested that the partiesÓ proposed recommended orders be filed

45 days after the filing of the final hearing trans cript at DOAH.

OFR d id not oppose this request and the undersigned granted the

request. The three - volume final hearing Transcript was filed at

DOAH on November 5, 2015. The parties timely filed proposed

recommended orders, which were considered in the p reparation of

this Recommended Order.

Unless otherwise indicated, all references to the Florida

Statutes are the 2014 version.

FINDING S OF FACT

1. OFR is responsible for the administration and

enforcement of chapter 687, Florida S tatutes.

2. On December 13, 2010 , First Solutions, Inc. (ÐFirst

SolutionsÑ), was incorporated in the state of Florida. At all

times material hereto, Andrew Mangini has been the sole

officer/director of First Solutions . The mailing address of

First So lutions and Mr. Mangini are the same: 830 Hawthorn

Terr ace , Weston , Florida 33327.

3. At all times material hereto, First Solutions has been

the sole owner of the fictitious name, Credit One. Credit One

was registered as a fictitious name with the State of Florida,

Department of State, on December 22, 2010. The mailing address

for the fictitious name of Credit One is 830 Hawthorn Terr ace ,

Weston, Florida 33327 .

4. On July 20, 2010, Unsecured Loan Source II, Inc. , was

incorporated in the state of F lorida. At all times material

hereto, Michael Puglisi ha s been the sole officer/director of

Unsecured Loan Source II, Inc. The mailing address of Unsecured

Loan Source II, Inc. , is 5340 North Federal Highway , Suite 201,

Lighthouse Point, Florida 33064.

5 . On January 22, 2009, Internet Transaction Center, Inc. ,

was incorporated in the s tate of Florida. At all times material

hereto, Mr. Mangini and Mr. Puglisi have been officers/directors

of Internet Transaction Center, Inc. The mailing address of

Intern et Transaction Center, Inc. , is 830 Hawthorn Terr ace ,

Weston, Florida 33327 . During the time in which Mr. Puglisi was

an officer/director of Internet Transaction Center, Inc., his

mailing address was 5340 North Federal Highway, Lighthouse Point,

Florida 3 3064.

6. At all times material hereto, R espondents operated and

conducted business as Unsecured Loan Source and Credit One Total.

7 . On December 24, 2010, Mr. Mangini opened a business bank

checking account at TD Bank, N.A., in the name of First

Solutio ns, Inc. , d/b/a Credit One.

8 . In early 2012, Nicole Gentry sought to obtain an

unsecured personal loan over the internet.

9 . Ms. GentryÓs internet search led her to Unsecured Loan

Source.

1 0 . Ms. Gentry contacted Unsecured Loan Source by telephone

a nd spoke with a representative named ÐEdÑ about securing an

unsecured personal loan. Ms. Gentry provid ed ÐEdÑ with c ertain

personal, credit, and bank account information to withdraw a loan

fee of $499.00 . Ms. Gentry p aid the $499.00 loan fee in order to

obtain a personal loan from Unsecured Loan Source .

1 1 . The $499.00 fee was debited from Ms. GentryÓs bank

account shortly after she submitted her online application for

the loan , and the fee was deposited directly into the TD business

bank checking accou nt of First Solutions , Inc., d/b/a Credit One .

Subsequently, Ms. Gentry received an email requesting additional

information, and she provided the information requested .

However, Ms. Gentry never received a loan.

1 2 . In August 2011, Rosa Saenz of Taft , California ,

attempted to obtain an unsecured personal loan.

1 3 . Ms. Saenz Ós internet search led her to Credit One

Total.

1 4 . Ms. Saenz contacted Credit One Total and spoke with a

representative named ÐNickÑ about securing an unsecured personal

loan in the amount of $5,000 . Ms. Saenz completed a form titled

ÐCredit One Total Paym ent by Check Authorization Form Ñ and faxed

it to Credit One Total . The form reflects that Credit One Total

is located at Ð 5340 North Federal Hwy #201 Lighthouse Point , FL

3 33064 Ph. 312 - 554 - 5980 Fax 954 - 531 - 1440.Ñ

1 5 . In the form, Ms. Saenz provided Credit One Total with

c ertain personal, credit, and bank account information , s o that

Credit One Total could withdraw a n initial installment loan fee

of $ 267.00 . Ms. Saenz ma de the initial installment fee payment

of $267.00, and , w ithin a couple of weeks, she m ade a second

installment fee payment to Credit One Total . Ms. Saenz did not

specify the amount of the second installment.

1 6 . No direct evidence was presented that the two payments

made by Ms. Saenz were , in fact, deposited into the First

Solutions business bank checking a ccount at TD bank . The bank

records received in evidence do not include records from the year

2011, and begin with the year 2012.

1 7 . However, t h e business checking account of First

Solutions was utilized by Credit One Total . The TD bank records

reflect that checks made payable to Credit One Total were

deposited directly into the business bank checking account of

First Solutions , Inc., d/b/a Credi t One .

1 8 . Both payments were made by Ms. Saenz as an advance fee

in order that she would obtain the loan from Credit One Total ,

and so that Credit One would repair her credit report . The

credit repair , however, was ancillary to Ms. Saenz Ós principal

re ason for making the advance fee payments -- to obtain a personal

loan .

19 . Although Ms. Saenz paid the two installment fee

payments to Credit One Total for a loan , she never received a

loan.

2 0 . The persuasive and credible evidence adduced at he aring

clearly and convincingly establishes that Respondents assessed or

collected advance fee payment s from two borrower s , Ms. Gentry and

Ms. Saenz .

2 1 . The clear and convincing evidence adduced at hearing

establishes that Respondents acted as a loan b roker by assessing

or collecting advance fee payments from Ms. Gentry and Ms. Saenz .

Respondents did not have an exempt ion from section 687.14 in

order to be considered a loan broker .

2 2 . OFR failed to prove by persuasive, credible, and clear

and convincing evidence that Respondents acted as a loan broker

with regard to anyone other than Ms. Gentry and Ms. Saenz . 2/

CONCLUSIONS OF LAW

2 3 . DOAH has jurisdiction over the parties and subject

matter of this proceeding pursuant to sections 120.569 an d

120.57(1), Florida Statutes (2015) .

2 4 . Sec tion 687.141 provides in pertinent part as follows :

687.141 Loan brokers; prohibited acts. Ï No

loan broker shall:

(1) Assess or collect an advance fee from a

borrower to provide services as a loan

bro ker.

2 5 . Ð Loan brokerÑ is defined in section 687.14(4) as

follows :

(4) ÐLoan brokerÑ means any person, except

any bank or savings and loan association,

trust company, building and loan association,

credit union, consumer finance company,

retail instal lment sales company, securities

broker - dealer, real estate broker or sale

associate, attorney, federal Housing

Administration or United States Department of

Veterans Affairs approved lender, credit card

company, installment loan licensee, mortgage

broker o r lender, or insurance company,

provided that the person excepted is licensed

by and subject to regulation or supervision

of any agency of the United States or this

state and is acting within the scope of the

license; and also excepting subsidiaries of

lic ensed or chartered consumer finance

companies, banks, or savings and loan

associations; who:

(a) For or in expectation of consideration

arranges or attempt to arrange or offers to

fund a loan of money, a credit card, or line

of credit;

(b) For or in expectation of consideration

assists or advises a borrower in obtaining or

attempting to obtain a loan of money, a

credit card, a line of credit, or related

guarantee, enhancement, or collateral of any

kind or nature;

(c) Acts for or on behalf of a loan broker

for the purpose of soliciting borrowers; or

(d) Holds herself or himself out as a loan

broker.

2 6 . ÐAdvance feeÑ is defined in section 687.14(1) to mean

Ðany consideration which is assessed or collected, prior to the

closing of a loan, by a l oan broker.Ñ

2 7 . ÐBorrowerÑ is defined in section 687.14(2) to mean Ða

person obtaining or desiring to obtain a loan of money, a credit

card, or a line of credit.Ñ

2 8 . Section 687.142 provides as follows:

687.142 Responsibility of principals. Ï Each

pri ncipal of a loan broker may be sanctioned

for the actions of the loan broker, including

its agents or employees, in the course of

business of the loan broker.

2 9 . ÐPrincipalÑ is defined in section 687.14(5) to mean

Ðany officer, director, partner, j oint venture, branch manager,

or other person with similar managerial or supervisory

responsibilities for a loan broker .Ñ

30 . OFR has the burden of proving its allegations by clear

and convincing evidence. Ferris v. Turlington , 510 So. 2d 292

(Fla. 1987) . The "clear and convincing evidence" standard

requires that the evidence be found credible, the facts to which

the witnesses testify must be distinctly remembered, the

testimony must be precise and explicit, and the witnesses must be

lacking in confusion as to the facts in issue. The evidence must

be of such weight that it produces in the mind of the trier of

fact a firm belief or conviction, without hesitancy, as to the

truth of the allegations sought to be established. In re Davey ,

645 So. 2d 398, 404 (Fla. 1994); Slomowitz v. Walker , 429 So. 2d

797, 800 (Fla. 4th DCA 1983).

3 1 . As detailed above, OFR proved, by clear and convincing

evidence , that Respondents acted as a loan broker by assessing or

collecting advance fee payments from two borrow ers, Ms. Gentry

and Ms. Saenz. OFR failed to prove, however, by clear and

convincing evidence, that Respondents acted as a loan broker by

assessing or collecting advance fee payments from any other

persons. 3/

32. Pursuant to section 687.143(2), OF R may impose and

collect an administrative fine of up to $5,000 for each violation

against any person found to have violated any provision of this

act, any rule of the commission, order of the office, or written

agreement entered into with the office.

33. Pursuant to section 687.143(2), OFR may also order a

loan broker to cease and desist when ever the office determines

that the loan broker has violated or is violating or will violate

any provision of this act, any rule of the commission, order of

th e office, or written agreement entered into with the office.

34. At $5,000 per instance, the two proven instances equal

a total administrative fine of $10,000 .

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that Petitioner, Office of Financial

Regulation, enter a final order finding Respondent s operated as a

Ðloan brokerÑ by assess ing or collect ing advance fees in two

instances in violation of section 687.141(1), Florida Statutes ;

imposing a total fine not to exceed $10,000; and ordering

Respondents to cease and desist from all such activity.

DONE AND ENTERED this 15th day of February, 2016 , in

Tallahassee, Leon County, Florida.

S

DARREN A. SCHWARTZ

Administrativ e 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 February , 2016 .

ENDNOTE S

1/ At the hearing, counsel for OFR provided the undersigned with

a DVD - R containing most of its proposed hearing exhibits. Some

of the proposed exhibits on the DVD - R, however, were n ot received

into evidence at the hearing . Following the hearing, the

undersigned transferred onto a TDK CD those exhibits from the

DVD - R that were received into evidence at the final hearing.

With the exception of Exhibits 18 and 19, the TDK CD contains all

of the exhibits received int o evidence at the final hearing.

2/ In an effort to prove additional instances of Respondents

acting as a loan broker, OFR attempted to solicit testimony

regarding various purported complaints by 44 other alleged

borrowers who did not testify . In preparation for the hearing,

Mr. Slisz reviewed documents contained in OFRÓs investigative

file collected or compiled by others. The investigative file

purportedly contained individual consumer complaints that were

either lodged with OFR or with law enfo rcement agencies that also

received complaints from citizens of various states.

Mr. Slisz testified at length regarding his review and

analysis of the TD bank records and the bank records show that

there were, in fact, a large number of deposits m ade into the TD

bank account maintained by First Solutions in the approximate

amount of $499.00, plus change. However, the fact that numerous

deposits were made into the account does not prove by clear and

convincing evidence that the monies were assessed or collected

from a borrower as an advance fee for a loan. Mr. Slisz lacks

personal knowledge with respect to what the deposits were given

in exchange for.

In an attempt to connect his review of the bank records to a

particular borrower, Mr. Slisz testified he reviewed information

from the complaints and tied the information from the complaints

back to the TD bank records. By OFRÓs own admission, t he

complaints were a key part of the chain of evidence necessary to

Ðfollow the moneyÑ and prove the significant number of instances

alleged in t he Administrative Complaint.

However, no ne of the purported complaints were offered into

evidence at the hearing, and no purported borrowers other than

Ms. Gentry and Ms. Saenz testified at the hearing.

The undersigned rejects Mr. Slisz Ós testimony with regard to

the complaints as u npersuasive and makes no factual findings

regarding the contents of any such alleged complaints.

3/ Notably, e ven if the complaints were offered and received i nto

evidence at the hearing, however, that does not mean the

undersigned would have been required to use the complaints in

resolving a factual issue. As conceded by OFR in its proposed

recommended order, any reference to the complaints is hearsay .

Theref ore, t he complaints themselves, or any reference to the

complaints, cannot be used as the sole basis to support a finding

of fact, because the complaints do not fall within an exception

to the hearsay rule. See § 120.57(1)(c), Fla. Stat. ("Hearsay

eviden ce 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.").

Contrary to OFRÓs position, the complaints do not supplement

or explain other non - hearsay evidence. Rather, the complaints

are a substantial missing l ink to the agencyÓs chain of evidence

upon which it seeks to prove the additional violations.

Finally, e ven if the testimony reg arding the complaints

could be used by the undersigned, however, for the reasons stated

above, the undersigned would not find any additional violations

b ased on the testimony because it is not credited or persuasive .

COPIES FURNISHED:

Melinda Hilto n Butler, Esquire

Office of Financial Regulation

The Fletcher Building, Suite 550

101 East Gaines Street

Tallahassee, Florida 32399 - 2202

(eServed)

William G. McCormick, Esquire

Gray Robinson, P.A.

Suite 1000

401 East Las Olas Boulevard

Fort Lauderdale, F lorida 33301

(eServed)

Miriam S. Wilkinson, Esquire

Florida Office of Financial Regulation

Fletcher Building, Suite 550

101 East Gaines Street

Tallahassee, Florida 32399 - 0379

(eServed)

Drew J. Breakspear, Commissioner

Office of Financial Regulation

200 E ast Gaines Street

Tallahassee, Florida 32399 - 0350

(eServed)

Colin M. Roopnarine, General Counsel

Office of Financial Regulation

The Fletcher Building, Suite 118

200 East Gaines Street

Tallahassee, Florida 32399 - 0370

(eServed)

NOTICE OF RIGHT TO SUB MIT 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.