17-003961PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Alicia F. King Status: Closed Recommended Order on Thursday, January 25, 2018.

Summary: Pet. proved that Resp. violated ch. 475, by failing to return a deposit to a person entitled; failing to supervise sales associates; & failing to preserve records, warranting an assessment of admin. fines and suspension of her real estate broker license.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION,

DIVISION OF REAL ESTATE,

Petitioner,

vs. Case Nos. 17 - 3961PL

17 - 3989PL

ALICIA F. KING,

Respondent.

_______________________________/

RECOMMENDED ORDER

O n October 20 and 30, 2017 , Hetal Desai , Administrative Law

Judge of the Division of Administrative Hearings , conducted t he

f inal hearing in this matter by video teleconference with sites

in Tallahassee and St. Petersbu rg , Florida.

APPEARANCES

For Petitioner: Maureen Y. White, Esquire

Tabitha Rae Herrera, Esquire

Department of Business

and Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399

For Respondent: Daniel Villazon, Esquire

Daniel Villazon, P.A.

5728 Major Boulevard , Suite 535

Orlando, Florida 32819

STATEMENT OF THE ISSUE S

The issues in these two cases are w hether Respondent violated

provisions of chapter 475, Florida Statutes (2015 ), 1/ regulating

real estate sales brokers, as alleged in the Administrative

Complaint s , by (1) failing to return a rental deposit to a

potential tenant ; (2) serving as the qua lifying broker for

Friendly International Realty, Inc. (ÐFriendlyÑ), but failing to

actively supervise Friendly Ós operations and/or sales associates ;

(3) failing to preserve FriendlyÓs transaction records and escrow

account documents; and (4) acting in a m anner that constitutes

culpable n egligence or a breach of trust . I f there wa s a

violation, an additional issue would be what penalty is

appropriate .

PRELIMINARY STATEMENT

On April 27, 2017, the Department of Business and

Professional Regulation , Division of Real Estate (ÐDepartmentÑ or

ÐPetitionerÑ) , filed two Administrative Complaints against

Alicia Faith King (ÐMs. KingÑ or ÐRespondentÑ). The first

Administrative Complaint alleged violations of chapter 475 , in

connection with a lease agreement involvin g Christian Viton , who

was represented in the transaction by Friendly. The Viton

Administrative Complaint alleges the following:

Count I Î Failure to Deliver Funds

Count II Î Failure to Supervise

Count III Î Failure to Preserve Records

Count IV Î Fraud or Culpable Negligence

On July 14, 2017, the Viton case was referred to the Division of

Administrative Hearings (ÐDOAHÑ) for assignment of an

Administrative Law Judge (ÐALJÑ)(ÐC ase No. 17 - 3961 Ñ or ÐViton

case Ñ).

The second Administrative Complaint alleged vi olations of

chapter 475 , in connection with a rental transaction involving

Cindy Dorestant , who was also represented by Friendly . The

Dorestant Administrative Complaint alleges the following:

Count I Î Failure to Supervise

Count II Î Failure to Preserve R ecords

Count III Î Fraud or Culpable Negligence

On July 17, 2017 , this case was referred to DOAH for assignment of

an ALJ (ÐCase No. 17 - 3989 Ñ or ÐDorestant caseÑ).

On July 25, 2017, DOAH Case No s . 17 - 3961PL and 17 - 3989PL were

consolidated into a single mat ter pursuant to Florida

Administrative Code Rule 28 - 106.108.

After being continu ed at the partiesÓ request, the final

hearing was noticed and he ld on October 20 and 30, 2017. Prior to

the hearing, the parties stipulated to facts, which were accepted

and i ncorporated into the findings of fact below.

Petitioner offered 1 7 exhibits, PetitionerÓs Exhibits 1

through 17, all of which were admitted. Petitioner presented

eight witnesses : Natalie James, a former Sales Associate for

Friendly ; Carlos Rubio, Depart ment Investi gation Specialist II;

Percylla Kennedy, Department Investigator; Sheila Dreher, Sales

As sociate Î TIR Prime Properties (Ð TIR Ñ) ; Lilian a Maldonado,

Property Manager Î TIR ; Marian o Sa al, Qualifying Broker Î TIR ;

Mark Trafton, DepartmentÓs expert witness; and the Respondent .

Respondent offered no exhibits and testified on her own

behalf.

The T ranscript of the proceeding was filed with DOAH on

December 4, 2017. On December 26, 2017, both parties timely

filed proposed recommended orders, which have been considered.

FINDING S OF FACT

Parties

1. The Department is the state agency that regulat es the

practice of real estate pursuant to section 20.165, and

chapters 455 and 475, Florida Statutes.

2. Ms. King is a licensed real estate broker registered

w ith the Department ( license numbers BK 3203595, 3261628,

3293588, 3306619, 3335771, 3354773, and 3363985 ) .

3. Ms. King is registered with the Department as the

qualifying broker for 16 brokerages located throughout the state

of Florida .

4 . At all times relevant to this case, Ms. KingÓs

registered address with the Department was 4430 Park Boulevard

North, Pinellas Park, Florida 33781.

Friendly International Realty, LLC

5 . Friendly was a Florida licensed real estate corporation,

holding license number C Q 1040825. Records reflect that James

Berthelot was the registered agent for Friendly at the time of

incorporation, June 2011.

6 . At all times relevant, Mr. Berthelot was a licensed Real

Estate Sales Associate (license number SL 3226474) registered

with Friendly .

7 . In May 2014, Respondent drafted and entered into a

Limited Qualifying Broker Agreement (ÐBroker AgreementÑ) with

Friendly and its owner, Ivania De La Rocha . 2/

8 . Friendly and Ms. King entered into the Broker Agreement,

Ðin order to comply with the requirements of the Florida

Department of [Business and] Professional Regulation.Ñ

9 . Under the terms of the Broker Agreement, Respondent was

not paid by Friendly per transaction . Rather, Respondent agree d

to serve as the ÐCorporate Broker of R ecord Ñ in exchange for a

payment of $300 a month Ðas a flat fee for any and all real

estate business conducted by [Friendly].Ñ The Broker Agreement

also provided for a Ðlate feeÑ penalty if Friendly was delinquent

in this monthly payment.

10 . Section 1.1 of the Broker Agreement outlined

RespondentÓs duties to Friendly , requir ing her to : (1) keep her

and Friendly Ós licenses active and in good standing under Florida

law ; (2) keep her other business interests separate from those

involving Friendly Ós interes ts; and (3) provide Friendly notice

of any governmental inquiry involving her serving as FriendlyÓs

broker.

11 . There was no mention in the Broker Agreement of either

RespondentÓs or FriendlyÓs responsibilities regarding oversight

of transactions, trainin g for sales associates , or day - to - day

operations.

12 . Regarding document retent ion, the Broker Agreement

provided :

Section 9.0 AUDIT & REVIEW RIGHT : Broker

shall have the right to enter [FriendlyÓs]

offices upon reasonable advance written

notice to veri fy compliance with the real

estate laws of the State of Florida.

13 . There was no evidence that Ms. King ever provided

Friendly with the kind of notice described in section 9.0 of the

Broker Agreement.

14 . Although the Broker Agreement did not prohibit Friendly

from hold ing funds or a ssets on behalf of third parties,

section 10.0 ( Miscellaneous ) explicitly prohibited Friendly from

opera ting an escrow account.

( g) Escrow and Ernest Money Accounts .

[Friendly] shall not be permitted to hold any

escrow a ccount(s).

15 . O n July 31, 2014, Ms. King was registered with the

Florida Department of State, Division of Corporations , as

Ð manager Ñ of Friendly .

16 . Ms. King was the qualifying broker for Friendly ( license

number BK3303898 ) from August 6, 2014 , throu gh September 30, 2015,

and November 4, 2015 , through January 13, 2016. 3/

17 . During the time Ms. King served as the qualifying

broker, Friendly operated from a number of addresses in Miami -

Dade County , including 11900 Biscayne Boulevard, Suite 292,

Miami, Florida 33181 ; and 2132 Northeast 123 rd Street, Miami,

Florida 33181 .

18 . The office door of the Friendly office located on

Northeast 123rd Street was painted in large letters, ÐFRIENDLY

INTERNATIONAL REALTYÑ and ÐALICIA KINGÑ painted underneath.

19 . At the hearing, when asked about Friendly Ós address,

Ms. King could only confirm that when she became the broker the

office was Ðon Biscayne.Ñ The Biscayne Boulevard address is the

one listed on the Broker Agreement.

20 . At the hearing , Ms. King was wro ng about when the

Friendly office had moved from the Biscayne Boulevard to the

Northeast 123 rd Street location, insisting it was over the

Christmas holidays in 2015 .

21. Records establish Friendly moved from the Biscayne

Boulevard location to the North east 123rd Street location

sometime between April and July 2014.

22 . In January 2016, Ms. King believed the office was still

on Biscayne Boulevard. In reality, it had been over a year since

the office had relocated to that location.

23 . At the hearing , when asked by her own counsel how many

transactions a month Friendly handled, Ms. King replied, ÐThatÓs

hard to say. It was not many at all. Ten, maybe.Ñ

24 . Respondent could not give the exact number of employees

or sales associates affiliated with F riendly; when asked, she

stated she could not remember the exact amount, but knew it was

Ðvery limited.Ñ

25 . Respondent did not have any agreements or documentation

related to how many sales associates were registered under her

brokerÓs license.

26 . Res pondent could not name any other sales associates

affiliated with Friendly while she was the qualifying broker ,

except for Mr. Berthelot.

27 . While she was FriendlyÓs qualifying broker, Respondent

did not perform any of the training for the sales associa tes at

Friendly.

28 . R espondent did not have any face - to - face meetings with

any Friendly sales associates , except for Mr. Berthelot.

29 . Respondent did not have phone or e - mail contact with

any of the Friendly sales assoc iates , except for Mr. Berthelot.

30 . Respondent did not have copies of any forms, handbooks,

reports or files related to Friendly . A ll of these documents

were in paper form and kept in the Friendly office.

31 . Respondent had no access or signatory authority for any

of FriendlyÓs bank accounts.

32 . Natalie James was a registered r e al e state s ales

a ssociate affiliated with Friendly f or approximately five months,

from November 2015 through March 2016.

33 . Ms. James worked out of the Friendly office and was

physically present at the of fice at least three or four times a

week.

34 . Ms. James was involved in several rentals and one sales

transaction while at Friendly. For each transaction she

assembled a file , which was kept in the Friendly office.

35 . For rental transactions, Ms. Jam es would negotiate and

facilitate lease agreements. When she represented poten tial

tenants , she received deposit funds that she deposited with

Friendly.

36 . Ms. James attended meetings at Friendly ; Ms. King was

not present at any of them.

37 . Ms. James never had any telephonic, electronic,

personal , or other contact with Respondent.

38 . While at Friendly, neither Mr. Berthelot nor any of

Ms. JamesÓ co - workers mentioned Ms. King to Ms. James .

39 . Although Ms. KingÓs name was on the door of FriendlyÓs

office, Ms. James was unaware Ms. King was FriendlyÓ s broker .

40 . There was conflicting testimony as to how often

Respondent visited the Friendly office. Ms. KingÓs testimony at

the hearing was at odds with the DepartmentÓs evidence and

testimony regard ing this issue. Ms. King insisted that while she

was FriendlyÓs broker, she would travel from Pinellas Park to the

Friendly offi ce once or twice a week . This was not believable for

a number of reasons . First, had Ms. King visite d Friendly Ós

office as of ten as she stated, she would h ave known about the

change in location ; she did not. Second, Ms. King could not give

one concrete date or detail about her travels to the Friendly

office. Third, and most compelling, was the testimony of

Ms. James ( who work ed at Friendly for at least two months while

Ms. King was its broker ) that she had never seen, communicated

with, or heard mention of Ms. King while at Friendly . Ms. JamesÓ

unbiased and compelling testimony alone supports a finding that

Ms. King did not v isit the Friendly office as frequently as she

indicated .

41 . Ms. King was aware that Friendly and Mr. Berthelot

provided rental or Ðtenant placement Ñ services. 4/

42 . Friendly collected security deposits and other move - in

funds from potential renters a nd held them in a n escrow account .

43 . Ms. King was not aware Friendly had an escrow account

until January 2016 when she was contacted by the Department in an

unrelated case .

44 . On January 13, 2016, Respondent resigned with the

Department as the qualify ing broker for Friendly effective that

same day .

45 . On January 14, 2016, Respondent filed a complaint with

the Department agai nst Mr. Berthelot for operating an escrow

account and collecting deposit funds without her knowledge .

Facts R elated to the Viton Case

46 . I n November 2015, d uring the time Ms. King was

FriendlyÓs qualifying broker, Christian Viton signed a lease

agreement to rent an apartment located in Miami at 460 Northeast

82nd Terrace, Unit 8 (ÐViton transaction Ñ). Th e Viton lease

agreement l isted Friendly as the holder of the deposit monies and

required Friendly to transfer the deposit and move - in funds to the

owner of the property .

47 . Pursuant to the terms of the Viton lease agreement,

Mr. Viton remitted an initial deposit of $500, and r eceived a

written receipt from Friendly dated November 2, 2015.

48 . Mr. Viton gave Friendly a second deposit of $380, and

received a written receipt dated November 4, 2015.

49 . Mr. Viton never moved into the apartment and demanded a

refund of his depos it from Friendly.

50 . O n December 8, 2015 , Friendly issued a check to

Mr. Viton in the amount of $530 .

51 . Three days later , Friendly issued a stop - payment order

on the $530 check to Mr. Viton .

52 . On February 29, 2016, Mr. Viton filed a complaint with

the Department seeking a return of the $880 he had given to

Friendly. As a result, the Department initiated an investigation

into Mr. VitonÓs complaint and contacted Respondent .

53 . Upon learning about the Viton complaint, Ms. King

contacted Mr. Ber thelot who admitted Friendly had stopped payment

on the $530 refund check, but had reissued the full amount of the

deposit to a third - party not named on the lease.

54 . There is no evidence Mr. Viton ever received a refund of

his $880 deposit.

Facts R ela ted to Dorestant Case

55 . I n June 2015, d uring the time Ms. King served as

FriendlyÓs qualifying broker, Cindy Dor e stant entered into a lease

agreement to rent a condominium located at 1540 West 191 Street,

U nit 110 (ÐDorestant transaction Ñ). In the leas e, Friendly was

listed as the ÐbrokerÑ and holder of the deposit; TIR Prime

Properties (ÐTIRÑ) was listed as the ownerÓs agent.

56 . Th e Dorestant lease agreement required Friendly to

transfer the deposit and move - in funds collected from

Ms. Dorestant t o TIR.

57 . Pursuant to the terms of the Dorestant lease agreement,

Ms. Dorestant gave Friendly $1 , 050 as an initial deposit , and

received a written receipt dated June 24, 2015.

58 . I n late July 2015, Ms. Dorestant contacted TIRÓs

property manager and sales a gent to ask for information about the

status of her move into the condominium. TIR explained to

Ms. Dorestant that Friendly had not conveyed any of monies

collected from Ms. Dorestant to TIR.

59 . Both Ms. Dorestant and TIR attempted to contact

F riendly, but Friendly was non - responsive . The TIR sales

associate relayed this information to TIRÓ s broker, Mariano Saal,

who in turn tried to reach Friendly to resolve the issue.

60 . Eventually, TIR was told by Mr. Berthelot that Friendly

would release the move - in funds to TIR and that Mr. Berthelot

would schedu le the move - in .

61 . TIR did not receive any funds from Friendly , nor did

Mr. Berthelot facilitate Ms. DorestantÓs move into the

condominium .

62 . On August 31, 2015, Mr. Saal contacted Mr. Bert h elot and

informed him that if TIR did not receive the move - in funds for the

Dorestant transaction by 5:00 p.m. that day , it would b e required

to find another tenant .

63 . Ms. Dorestant did not move into the condominium and

demanded a refund from Friendly and TIR .

64 . On September 14, 2015, Mr. Saal sent an e - mail to what

he believed was Respondent Ós address , demanding the $1,050 from

Friendly because it considered Ms. DorestantÓs failure to move

into the property a default of the lease agreement . Resp ondent,

however, did not have access to FriendlyÓs e - mails. The e - mail

was also sent to Mr. Berthelot , and Ms. De La Rocha .

65 . TIR did not receive any funds from Friendly for the

Dorestant transaction .

66 . A fter discovering she could not move into th e

condominium because Friendly had not transferred the deposit to

TIR, Ms. Dorestant demanded a refund of her deposit monies from

Friendly . She did not receive it.

67 . On February 10, 2016, Mariano Saal, TIRÓs qualifying

broker, filed a complaint against Mr. Berthelot and Friendly with

the Department regarding the Dorestant transaction.

68 . Ms. Dorestant initially did not receive a refund from

Friendly and , therefore, filed a police report against

Mr. Berthelot and sued him in small claims court.

69 . Eventually, Mr. Berthelot re funded Ms. Dorestant her

deposit mon ies.

Department Investigations of Friendly

70 . Upon receiving the Viton complaint, the Department

assigned the case (DPBR Case No. 2016018731) to Erik Lluy, an

Investiga tor Specialist II i n the Miami f ield office.

71 . Similarly, on or around the same time the Department

received the Dorestant complaint ; it was also assigned to Mr. Lluy

(DPBR Case No. 2016018069).

72 . On April 25, 2016, Mr. Lluy officially notified Ms. King

of each of the complaints.

73 . On May 25, 2016, the Depar t ment transferred both the

Viton and Dorestant complaints from Mr. Lluy to P ercylla Kennedy.

74 . Ms. King provided a written response to both complaints

via e - mail to Mr. Lluy on May 26 , 2016 . At that time , Mr. Lluy

indicated the case had been transferred to Ms. Kennedy and copied

Ms. Kennedy o n the response .

75 . Ms. Kennedy was familiar with Friendly, Mr. Berthelot

and Ms. King . I n January 5, 2016, s he had conducted an

investigation of Friendly in an unre lated complaint filed against

Friendly by Borys Bilan (ÐBilan complaintÑ).

76 . As part of the investigation into the Bilan complaint,

Ms. Kennedy arrived at the Friendly office address regi stered with

the Department on Biscayne Boulevard to conduct an of ficial office

inspection . When she arrived, however, she found the office

vacant .

77 . As a result, that same day Ms. Kennedy contacted the

registered qualifying broker for Friendly Î - Ms. King - Î by phone.

78 . During that call, M s. Kennedy as ked Ms. King where

FriendlyÓs office was located, but Ms. King did not know .

79 . Eventually, Ms. Kennedy determined the Friendly office

had relocated to the Northeast 123 rd Street location.

80 . Ms. Kennedy testified that during this call, Ms. King

admitted to her th at she had not been to the Northeast 123 rd

Street location . Respondent testified she did not tell

Ms. Kennedy this and as proof insisted that the January call was

inconsequential and Ða very short call . Ñ The undersigned reject s

RespondentÓs version of e vents and find s Ms. KennedyÓs testimony

and report regarding the January 2016 interview more reliabl e.

First, although Ms. King describes the conversation as occurring

on January 7, 2016, both Ms. KennedyÓs testimony and the

Inspection Report establish th e conversation occurred on

January 5 , 2016 . Second, RespondentÓs characterization of the

call as in consequential contradicts her own May 26, 2016 , written

response to the Department in which Ms. King outlines a number of

substantive issues discussed duri ng this phone conversation,

including: the nature of FriendlyÓs practice, whether Friendly

had an escrow account, the type of payment accepted by Friendly ,

and the address of FriendlyÓs office .

81 . After speaking with Ms. King about the Bilan complaint ,

Ms. Kennedy conducted the inspection at FriendlyÓs Northeast

123 rd Street location . Respondent was not present when

Investigator Kennedy conducted the office inspection.

Ms. Kennedy then e - mailed the Office Inspection form to

Respondent .

82 . As a res ult of the January 5 , 2016, phone conversation

with Ms. Kenned y, Ms. King contacted Mr. Berthe lot about the

Bilan complaint.

83 . On January 13, 2016, Mr. Berthelot provided Ms. King

with the transaction file related to the Bilan complaint. When

Ms. Kin g reviewed the lease agreement, she realized that Friendly

was holding deposit funds in escrow .

84 . As a result, on December 13, 2016, Ms. King filed a

resignation letter with the Department explaining she was no

longer the qualifying broker for Friendly .

85 . Ms. King did not ask Mr. Berthelot or anyone else at

Friendly for any other transaction records at this time, nor did

she make any effort to review any of FriendlyÓs transaction files

to determine whether Friendly had obtained other deposit funds or

conducted other transactions similar to the one that was the

subject of the Bilan complaint.

86 . After having knowledge of the Bilan complaint and

transaction, and suspecting Friendly had been operating an escrow

account, Ms. King made no immediate e ffort to access the

operating or escrow ba nk accounts or reconcile the escrow

account.

87 . After resigning as FriendlyÓs qualifying broker with

the Department, Ms. King filed a complaint with the Department

against Mr. Berthelot for unlicensed activity i nvolving an escrow

deposit. 5/

88 . Despite no longer being FriendlyÓs qualifying broker, o n

January 21, 2016 , Ms. King executed and sent back to Ms. Kennedy

the Inspection Report related to the Bilan complaint .

89 . Five months later, o n or around May 25, 2016 ,

Ms. Kennedy notified Ms. King she was taking over the

investigation into the Viton and Dorestant cases.

90 . Ms. Kennedy testified that as part of her investigation

into the Viton and Dorestant complaints , she interviewed

Respondent again . Responde nt denies she was interviewed by

Ms. Kennedy regarding the Viton and Dorestant complaints, and

instead insists she was only interviewed in Jan uary 2016 in

connection with the Bilan complaint. Ms. King testified she

believed Ms. Kennedy lied about intervi ew ing her more than once

because Ms. Kennedy was Ðlazy.Ñ The undersigned reject s this

assertion. Ms. KennedyÓs testimony was specific, knowledgeable,

and credible, unlike Ms. KingÓs testimony , which was

intentionally vague. Moreover, Ms. Ken nedy specifi cally

attributes her findings to specific sources such as Ms. KingÓs

written response, her interview with Ms. King relating to the

Viton and Dorestant transactions, and to her previous

conversation with Ms. King during the Bil an investigation. The

citatio ns to information gleaned from the January 5, 2016 , call

were marked by the following sub - note.

SUBJECT was previously interviewed by this

Investigator in January 2016 for the

unrelated complaint and was unaware that

FRIENDLY INTERNATIONAL REALTY LLC had m oved

from license location 11900 Biscayne Blvd. [,]

Suite 292 Miami, FL 33181 to 2132 NE 123ST [,]

Miami, FL 33181 ( See Ex. 9). At that time,

SUBJECT was unable to provide the transaction

file.

91 . Ms. Kennedy would have no r eason to fabricate the

sour ce of the conclusions she reached in her report or the number

of times she contacted Ms. King .

92 . Ms. Kennedy submitted her original investigative report

to the Department for the Viton complaint on October 31, 2016.

Per the DepartmentÓs request, Ms. Ke nnedy interviewed Mr. Viton

and submitted a supplemental report on December 13, 2016 . In

this report , Ms. Kennedy determined that on February 25, 2016 ,

Friendly issue d a check in the amount of $875 to a person who was

not listed on either the lease agreem ent , the receipts F riendly

issued to Mr. Viton , or any other paperwork .

93 . Similarly, Ms. Kennedy submitted her original

investigative report to the Department for the Dorestant

complaint on October 31, 2016. Per the DepartmentÓs request,

Ms. Kennedy i nterviewed Ms. Dorestant and submitted a

supplemental report on December 13, 2016, indicating

Ms. Dorestant did eventually receive a refund.

94 . During the course of the Viton investigation , Mr. Lluy

and Ms. Kennedy requested that Respondent provide the Department

with the file related to the Viton transaction, and documentation

for FriendlyÓs escrow account.

95 . Although Respondent provided the Department a response

(consisting of a written explanation with a copy of the Bilan file

and some communicati ons between Mr. Berthelot and herself from

May 2016 ) , she did not provide the Department with the transaction

file related to the Viton transaction or FriendlyÓs escrow account

documentation.

96 . During the course o f the Dorestant investigation

Mr. Llu y and Ms. Kennedy requested that Respondent provide the

Department with the file related to the Viton transaction, and

documentation for FriendlyÓs escrow account.

97 . Although Respondent provided the Department a response

(consisting of a written explana tion with a copy of the Bilan file

and some communications between Mr. Berthelot and herself from

May 2016), she did not provide the Department with the transaction

file related to the Dorestant transaction or FriendlyÓs escrow

account documentation.

Pr ofessional Standards

98 . Mr. Saal, TIRÓs qualifying broker, testified he had

served as a broker for approximately ten years. As TIRÓs

qualifying broker , he kept the documentation related to the

transactions handled by TIR Ós six sales associates . The tes timony

of the TIR sales associate and property manager established that

they relied on Mr. Saal for advice and to resolve issues. For

example, when Ms. Dorestant began contacting TIRÓs sales associate

and property manager regarding the move - in and then fo r a refund

of her deposit, the sales associate went to Mr. Saal to discuss

the situation. Mr. Saal then attempted to resolve the issue by

attempting to communicate with Friendly, Mr. Berthelot and

Ms. King.

99 . Mrafton, an experienced real estate br oker and

expert in brokerages, reviewed the DepartmentÓs investigative

fil es and reports relating to the Viton and Do restant complaints,

as well as applicable Florida Statutes and rules.

100 . Mr. TraftonÓs testimony and report established that in

Florida the usual and customary standard applicable to brokers is

that they must promptly deliver funds in possession of the

brokerage that belong to others.

101 . Petitioner show ed that Mr. Viton was entitled to a

refund of his deposit from Friendly and that Res pondent erred in

not ensuring he received this refund.

102. Mrafton also testified that the standard of care

applicable to a broker in supervising sales associates requires

active supervision. ÐActive supervisionÑ is not defined by

statute or rule, but by usual and customary practices exercised

statewide .

103 . ÐActive supervisionÑ requires a broker to :

• have regular communications with all sales associates,

not just communicating when there is a complaint ;

• be aware of problems, issues and procedures in the

office and among sales associates ;

• have access to and signatory power on all operating and

escrow accounts;

• hold regular scheduled office/ sales meetings ;

• condu ct in Î person training meetings;

• provide guidance and advice for sales associates;

• b e intimately involved in how transaction forms and

other documents are stored and retrieved ; and

• be available to provide advice and direction on short

notice.

In other words, a broker should set the tone at the brokerage by

overseeing her sales associate s Ó conduct of transactions.

10 4 . Ms. King failed to manage, direct, and control her real

estate s ales a ssociate, Mr. Berthelot, to the standard expected of

a qualifying broker in both the Viton and Dore s tant transactions,

if not all of FriendlyÓs transact ions . She did not actively

supervise M r. Berthelot as a sales associate.

105 . Mrafton also testified that a broker, not the

brokerage , is ultimately responsible for preserving transaction

files, forms related to transactions , and other related docum ents.

10 6 . Although less certain than Mrafton about whether a

broker or the brokerage firm is responsible for preservation of

transaction files , Mr. Saal testified Ðthe broker is responsible

for the . . . transactions . It Ó s [the brokerÓs] client at the end

of the day.Ñ

107 . Ms. King failed to preserve accounts and records

relating to FriendlyÓs accounts, the files related to the Viton

and Dorestant rental transactions, or any other documents related

to Friendly.

108 . Petitioner also clearly establ ished that Respondent was

guilty of either Ðculpable negligenceÑ or Ðbreach of trustÑ in the

Viton or Dorestant transaction.

109 . As Investigator Kennedy testified, and as corroborated

by cost summary reports maintained by the Department, from the

start o f the investigation of the Viton complaint through

September 14, 2017, the Department incurred $1,625.25 in costs,

not in clud ing costs associated with an attorneyÓs time.

110 . As Investigator Kennedy testified, and as corroborated

by cost summary reports maintained by the Department, from the

start of the investigation of the Dorestant complaint through

September 14, 2017, the Department incurred $1,6 08 .25 in costs,

not in clud ing costs associated with an attorneyÓs time.

CONCLUSIONS OF LAW

1 11 . DOAH has j urisdiction over the subject matter and the

parties to this proceeding pursuant to sectio ns 120.569 and

120.57(1) , Florida Statutes (2017) .

112 . The Department seeks to take disciplinary action

against RespondentÓs real estate brokerÓs license . A proceed ing

to impose discipline against a professional license is penal in

nature, and Petitioner bears the burden to prove the allegations

in the Administrative Complaint s by clear and convincing

evidence. See Fla. DepÓt of Child. & Fams. v. Davis Fam. Day

Care Home , 160 So. 3d 854, 856 (Fla. 2015) .

113 . Clear and convincing evidence has been said to require:

[T]hat the evidence must be found to be

credible; the facts to which the witnesses

testify must be distinctly remembered; the

testimony must be precise an d 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 so ught to be

established.

S. Fla. Water Mgm t . Dist. v. RLI Live Oak, LLC , 139 So. 3d 869,

872 - 73 (Fla. 2014 ) (citations omitted) .

Failure to Return Funds - - Viton

114 . Section 475.25(1)(d)1. p rovides the Department may

discipline a licensee who :

Has failed to account or deliver to any

person . . . upon demand of the person

entitled to such accounting and delivery, any

personal property such as money, fun d ,

deposit, . . . or other document or thing of

value . . . which has come into the licenseeÓs

hands and wh ich is not the licenseeÓs property

or which the licensee is not in law or equity

entitled to retain under the circumstances.

115 . Petitioner established by clear and convincing evidence

that Friendly failed to return the deposit amount demanded by

Mr. V iton and due to him . In fact, Friendly essentially admitted

it was not entitled to retain this deposit when it issued a refund

check to Mr. Viton .

116 . Although Mr. Berthelot certainly had an obligation to

deliver the funds , this obligation was not exc lusive to him. A s

FriendlyÓs broker, Respondent also had a clear legal

responsibility to promptly deliver the funds to Mr. Viton. As the

Department established , this is the customary practice and

standard applicable to licensed brokers. Failure to do so

v iolates section 475.25(1)(d)1.

117 . While it may be true that Friendly issued a second

check after stopping payment on Mr. VitonÓs refund check (albeit

to a person not a party to the Viton lease agreement and for an

amount not equivalent to the amount o wed to Mr. Viton ) , this fact

does not diminish R espondentÓs obligation to deliver the proper

amount of funds to the person who was entitled to them :

Mr. Viton . Respondent knew or should have known t hat the

provisions of chapter 475 require d Friendly to deliver funds to

the person who provided them and then demanded them . See White v.

DepÓt of Bus. & ProfÓl Reg. , 715 So. 2d 1130 (F l a. 5th DCA

1998)( affirming order imposing discipline where broker failed to

return buyerÓs money when transaction failed , in viola tion of

section 475.25(1)(d)1.) .

118 . Petitioner proved by cl ear and convincing evidence

Respondent violated section 475.25(1)(d)1.

Failure to Supervise Î - Viton and Dorestant

119 . A real estate broker violates section 475.25(1)(u) when

s he fails to Ð to direct, control, or manage a broker associate or

sales associate employed by such broker. Ñ § 475.25(1)(u), Fla.

Stat.; Smith v. Fla. DepÓt of Bus. & ProfÓ l Reg. , 182 So. 3d 767,

768 (Fla. 1st DCA 2015) .

120 . Section 475.01 (1)(j) defines Ðsales assoc iateÑ as Ð a

person who performs any act specified in the defin i ti on of

Ò broker, Ó but who performs such act under the direction, control,

or management of another person. Ñ There is no question

Mr. Berthelot was a sales associate s working under the managem ent

of Respondent.

121 . At the hearing, Petitioner presented both expert

report s and testimony (Mrafton) and lay testimony (Mr. Saal)

establishing that a broker must engage in active supervision over

her brokerage to meet the statutory requirem e nts. As established

by the lack of knowledge about FriendlyÓs operations, Respondent

did not meet that standard with respect to Friendly.

122 . Respondent argues she cannot be at fault because

Mr. Berthelot violated the Broker A greement by op ening an escrow

ac count and deceived her. This contention is rejected.

123 . In Department of B usiness and Professional Regulation

v. Murata , Case No. 17 - 3959 PL , 2018 F la. Div. Adm. Hear. LEXIS 1

( Fla. DOAH Jan. 1, 2018) , Petitioner made similar allegations

against the sam e brokerage (Friendly) and sales associate

(Mr. Berthelot) , but with another broker. As Respondent does

here, t he broker in Murata raised the same defense that she should

not be held respon sible for the bad acts of Mr. Berthelot, a sales

associates opera ting under her brokerÓs license. As in Murata ,

this argument is rejected. There, ALJ Boyd explained:

It is beyond dispute that Mr. Berthelot acted

inappropriately, but Respondent could not, by

either written agreement or consistent

practice, ever shift h er own statutory

responsibility to manage onto the managed.

The argument that either the withholding of

information by an employee or the delegation

of authority to the very persons a broker is

supposed to be controlling absolves the broker

of responsibil ity is completely inconsistent

with the burden the statutory scheme places

upon a broker. This is not to say that a

broker has absolute liability for the actions

of her sales associates, but the statutory

duty to direct, control, and manage cannot be

less ened or contracted away.

Murata , 2018 F la. Div. Adm. Hear. LEXIS 1, at * 16 .

124 . T he Department proved clear ly and convincingly that

Respondent did not actively supervise Mr. Berthelot in either the

Viton and Dorestant transactions, which violated secti on

475.25(1)(u).

Preservation of Records - - Vito n and Dorestant

125 . Respondent argued that Friendly (as the brokerage ) , not

she (as the broker ) , is responsible for maintaining the required

documentation related to FriendlyÓs escrow accounts and real

estate transactions. The law clearly states otherwise.

Section 475.5015 provides , in relevant part:

Each broker shall preserve at least one

legible copy of all books, accounts, and

records pertaining to her or his real estate

brokerage business for at least 5 years from

the date of receipt of any money, fund,

deposit, check, or draft entrusted to the

broker or, in the event no funds are entrusted

to the broker, for at least 5 years from the

date of execution by any party of any listing

agreement, offer to pu rchase, rental property

management agreement, rental or lease

agreement, or any other written or verbal

agreement which engages the services of the

broker. (Emphasis added ).

126 . The Department established Respondent did not preserve

any records relatin g to Friendly . Specifically, she did not

preserve , nor was she able to provide , any records for FriendlyÓs

escrow or operating account or the records relating to the Viton

and Dorestant transactions . In fact , she admitted she did not

have any of Friendly Ós records as they were all kept in the

office.

127 . Respondent also argues she cannot be held responsible

for the failure to preserve FriendlyÓs records because

Mr. Berthelot acted surreptitiously . Even assuming RespondentÓs

ignorance of the escrow acc ount excused her from her obligations

to keep escrow records under the st at ute -- which it does not -- this

argum ent cannot reasonably be extended to documentation for the

Viton and Dorestant transactions. Ms. King knew Friendly was

conducting rental transact ions; she should have known she would

need to preserve records relating to these transactions .

128 . Furthermore, i n the realm of c hapter 475, ignorance is

no excuse . As explained in Murata ,

Respondent had a duty to actively seek out

information about Fr iendly and the operations

of the brokerage. A broker cannot hide behind

a curtain of ignorance and leave herself

completely dependent for information on those

she has the responsibility to control. A

broker has an ongoing duty to inform herself

as to the conduct of the brokerage. . . . The

apparent absence of any transaction documents

is certainly a circumstance that should have

compelled Respondent to further inquiry.

Murata , 2018 Fla. Div. of Adm. Hear. LEXIS 1, at *18 - 19 .

129 . Based on the facts that (1) Ms. King allowed all of

FriendlyÓs transactions records to be kept as paper copies,

(2) these records were all kept at the Friendly office , and

(3) Respondent had not vi sit ed the Frie ndly office si n c e at least

July 2014 , the Department clearly a nd convincingly established

RespondentÓs failure to preserve the transaction files as required

by section 475.5015 .

130 . Also troubling is the fact that at no time after

January 2016, when Respondent had a suspicion or actual knowledge

that Friendly had a n escrow account or was collecting deposit

funds, did she ever direct Mr. Berthelot or Friendly that she be

given access to all of FriendlyÓs e - mails , files or escrow

accounts ; or that Friendly preserve all its records . Respondent

also never attempt ed to perform reconciliation on the escrow

accounts or resolve the Viton or Dorestant disputes. In fact , she

did the exact opposite . W hen she realized Friendly was receiving

deposit funds and holding them, she sought to limit her liability

and shed herself of her statutory obligations rather than perform

them. Although this may have been a reasonable response to her

suspicion that Mr. Berthelot may have breached the Broker

Agreement , it did nothing to meet her responsibility to preserve

the records related to the Viton and Dorestant transactions.

131 . Petitioner proved by clear and convincing evidence that

Respondent violated sections 475.5015 and 475.25(1)(e) in both the

Viton and Dorestant transactions .

Fraud or Culpable Neglect - Î Viton and Dorestant

132 . Section 475.25(1)(b) provides discipline may be imposed

against a real estate licensee , if he or she is found guilty of

Ð fraud, misrepresentation, concealment, false promises, false

pretenses, dishonest dealing by trick, scheme, or device, culpable

negli gence, or breach of trust in any business transaction in this

state . Ñ

133 . A violation of s ection 475.25(1)(b) requires a finding

of wrongful intent. See DepÓ t of Prof Ó l Reg. , Div . of Real Estate

v. Fiorello , Case No. 14 - 4147 PL, 2015 Fla. Div. Adm. Hear . LE XIS

235 (Fla. DOAH June 11, 201 5, Fla. DBPR Sept. 10, 2015), at *24

and 29 ; Munch v. DepÓt of Pro f Ól Reg., Div. of Real Estate , 592

So. 2d 1136, 1143 Î 44 (Fla. 1st DCA 1992 ) .

134 . In the administrative context, Ðculpable negligenceÑ

requires a showing of more than simple negligence, it must be

gross and flagrant. Culpable negligence has been described as

Ð consciously doing an act or following a course of conduct that a

respondent must have known, or reasonably should have known, was

likely to cause gre at injury, and must be determined upon the

facts and the totality of the circumstances in each particular

case.Ñ Fiorello , 2015 Fla. Div. Adm. Hear. LEXIS 235, at *25 .

135 . Respondent knew Friendly handled real estate

transactions, but made no effort to determine how Friendly

handled these transactions, handled funds collected from or on

behalf of clients, or managed its bank accounts. According to

the Broker Agreement, which she had drafted, RespondentÓs

primary focus was to ensure Friendly had no righ t to her other

business ventures, and that she be notified of any

investigations. By all accounts, Respondent acted as the

qualifying broker only so that Friendly could Ð comply with

requirements of the Florida Department of Professional

Regulation,Ñ witho ut any intention of do anything more than

receiving her monthly fee.

136 . Unlike Murata , where the broker was found guilty of

chapter 425 violations wit hout being found culpably neglig ent ,

Respondent made no efforts to shut down the escrow account or

rei mburse the victims of her sales associate . S uch b ehavior has

been found to be intentional and ha ve a detrimental effect on

the public .

Respondent fai l ed to supervise and control

[the sales associate] or any other

professional empl o yees of [the brokerage]

during RespondentÓ s brief t e nure as its

qualifying broker. As to this matter too,

Respondent's failure was intentional, not

merely negligent and reckless. Respondent's

sole record activity in connection with

[brokerage] appears to have been to have

f iled the necessary documentation to serve as

its qualifying brok er, to have cashed a

couple of [] checks, and to have filed the

necessary documentation to resign as []

qualifying broker . . . . Through

R espondentÓ s intentional disregard of his

professional ob ligations, as well as

negligence and recklessness, Respondent

helped [the brokerage] defraud three persons

of their $5500 deposit -- in return for

paymen ts of an unspecified amount of Ð rent Ñ

for his broker Ó s license. The public has

been damaged, and Respond ent has failed to

make restitution on his violations. . . .

Dep Ó t. of Prof Ól . Reg., Fla. Real Estate Comm. v . Meraz , Case

No. 13 - 1834PL , RO at 15 - 16 (Fla. DOAH September 10, 2013 ;

Fla. DBPR Feb. 12, 2014 ) ; see also Fiorello , 2015 Fla. Div. Adm.

Hear. L EXIS 235, at *25 - 26 (noting the lack of proper

documentation and attention to legal requirements demonstrated by

the real estate professional pervasively establishes a calculated

and intentional pattern of behavior).

137 . Petitioner prove d by clear and co nvincing evidence

that Respondent was culpably negligent in violat ion of

section 475.25(1)(d) in both the Viton and Dorestant cases .

Penalty

138 . The Florida Real Estate Commission adopted disciplinary

guidelines for the imposition of penalties authoriz ed by

section 475.25(1) in Florida Administrative Code Rule 61J 2 -

24.001.

139 . For the Viton case, r ule 61J 2 - 24.001(3)(e) provides

the following appropriate range of penalty f o r the first offense

of failing to account or deliver escrowed property to any p erson

as required by agreement or law in violation of

section 475.25(1)(d) :

(1) A $250.00 to $1,000.00 administrative fine ; and

(2) lic ense suspension to revocation .

140 . For both the Viton and Dorestant cases, r ule 61J 2 -

24.001(3)(u) provides the appropriate ra nge of penalty for the

first offense of failing to direct, control, or manage a sales

associate in violation of section 475.25(1)(u) :

(1) A $250.00 to $1,000.00 administrative fine ; and

(2) license suspension to revocation.

141 . For both the Viton and Dorestant cases, r ule 61J 2 -

24.001(3)(f ) provides the appropriate range of penalty for the

first offense of violating any rule or provision under chapter 475

in violation of section 475. 25(1)(e), including the failure to

preserve brokerage records pursuant to section 475.5015 :

(1) A $250.00 to $1,000.00 administrative fine ; and

(2) license suspension to revocation.

142 . For both the Viton and Dorestant cases, r ule 61J 2 -

24.001(3)( c ) provides the appropriate range of penalty for the

first offense of culpable negligence or bre ach of trust in

violation of s ection 475.25(1)( b ) :

(1) A $1,000.00 to $2,500 administrative fine ; and

(2) 30 - day suspension to revocation.

143 . Section 455.227(3)(a) provides , in addition to a ny

other discipline, the Florida Real Estate Commission may assess

cos ts related to the investigation and prosecution of the case,

excluding costs associated with an attorne y Ós time.

144 . Rule 61J 2 - 24.001(4) provides the demonstration of

aggravating or mitigating circumstances can warrant deviation from

the penalty guidelin es.

145 . N either party demonstrated aggravating or mitigating

circumstances warrant ing deviation from the standard penalties

stated i n the guidelines.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a final order be entered by the

Florida Real Estate Commission:

A. Case No. 17 - 3989

1 . Finding Respondent Alicia Faith King in violation of

sections 475.25(1)(d)1., 475.25(1)(u), 475.25(1)(e) , and

475.25(1)( b), as charged in Counts I through IV of the

A dministrative Complaint in the Viton c ase .

2. I mposing an administrative fine totaling $ 2,5 00 ($500

fine per count for Counts I, II and III; and $1,000 fine for

Count IV).

3. I mposing license suspension for a total period of nine

months (one - month susp ension s each for Counts I, II, and III; and

a six - month suspension for Count IV) .

4. I mposing costs related to the investigation and

prosecution of the case in the amount of $1,625.25 .

B. Case No. 17 - 3961

1. Finding Respondent Alicia Faith King in viola tion of

sections 475.25(1)(u), 475.25(1)(e) , and 475.25(1)( b), as charged

in Counts I through III of the Administrative Complaint in the

Dorestant c ase .

2. I mposing an administrative fine totaling of $ 2 , 0 00 ($500

fine per count for Counts I and II ; and $1,000 fine for

Count III).

3. I mposing license suspension for a total period of eight

months to be imposed consecutive to t he suspension in Case

No. 17 - 3989 (one - month suspension s each for Counts I and II; and a

six - month suspension for Count III).

4. I mposing costs related to the investigation and

prosecution of the case in the amount of $1,6 08 . 7 5 .

DONE AND ENTERED this 25 th day of January , 2018 , in

Tallahassee, Leon County, Florida.

S

HETAL DESAI

Administrative La w 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 25 th day of January , 2018 .

ENDNOTE S

1/ Unless otherwise noted, references to the Florida Statutes ,

Florida Administrative Code , and other rules are to the 2015

version , which w ere in effect at the time of the conduct alleged

in the underlying Viton and Dor estant Complaints.

2/ Ms. De La RochaÓs signatur e block in the Broker Agreement

indicates she is the ÐPresident/OwnerÑ of Friendly ; her signature

block on her e - mail s indicate she is the ÐOffice Manager.Ñ

According to Respondent, Ms. De La Rocha and Mr. Berthelot are

married.

3/ The time gap in October 2015 was caused by Ms. King allowing

her broker license to lapse for non - renewal effective October 1,

2015 , and then reinstating it on November 4, 2015.

4/ Although , Ms. King repeatedly used the term Ð tenant placement Ñ

services, Ms. James stated she was unfamiliar with this term, and

she and other real estate professionals referred to the

transactions for obtaining rental property and entering into a

lease agreement as Ðrental s Ñ or Ðproperty management. Ñ

Regardless, it is clear tha t Ms. James and Mr. Berthelot -- in

their capacity as licensed sales associates -- represented clients

in transac tions involving the rental of real property.

5/ Ms. King did not cite to a specific regulation which she

believed Mr . Berthelot v iolated , but presumably she intended to

allege a violation of section 475.42(1)(d ), which states in

pertinent part, Ð [a] sales associate may not collect any money in

connection with any real estate brokerage transaction, whether as

a commissio n, deposit, payment, rental, or otherwise, except in

the name of the employer and with the express consent of the

employer.Ñ There was n o evidence presented regarding t he outcome

of Ms. KingÓ s complaint.

COPIES FURNISHED:

Daniel Villazon, Esquire

Da niel Villazon, P.A.

5728 Major Boulevard , Suite 535

Orlando, Florida 32819

(eServed)

Maureen Y. White, Esquire

Department of Business

and Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399

(eServed)

Tabitha Rae Herrera, Esquire

Department of Business

and Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399

(eServed)

Katy McGinnis, Director

Division of Real Estate

Department of Business

and Professional Regulation

400 West Robinson Street, Suite N801

Orl ando, Florida 32801

(eServed)

Jason Maine, General Counsel

Department of Business

and Professional Regulation

Capital Commerce Center

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.