18-002737PL Department Of Financial Services vs. Garry Nelson Savage Status: Closed Recommended Order on Monday, September 30, 2019.

Summary: Dept. failed to prove Resp. violated ? 626.9541(1)(o)2 by earning commissions for annuities and charging srvc. fees as a fincl. planner, but proved Resp. didn't timely report discipline against his securities license, violating ?? 626.536 + 626.621(12).

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES,

Petitioner,

vs. Case No. 18 - 2737PL

GARRY NELSON SAVAGE,

Respondent.

_______________________________/

RECOMMENDED ORDER

The final hearing in th is matter was conducted before

Administrative Law Judge Andrew D. Manko of the Division of

Administrative Hearings (ÐDOAHÑ), pursuant to sections 120.569

and 120.57(1), Florida Statutes (2018), 1/ on November 29 and 30,

2018, and April 18, 2019, by video te leconference between sites

in Tallahassee and Ft. Myers, and May 28, 2019, in Ft. Myers .

APPEARANCES

For Petitioner: David J. Busch, Esquire

Department of Financial Services

Room 612 , Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

For Respondent: Michael Buchholtz, Esquire

The Law Office of Michael Buchholtz

Post Office Box 13015

St. Petersburg, Florida 33777

STATEMENT OF THE ISSUE

Whether Gary Savage committed the statutory violations

alleged in the Amended Administrative Complaint and, if so, what

penalty is authorized for such violations.

PRELIMINARY STATEMENT

On April 19, 2018, the Department of Financial Services

(ÐDepartmentÑ) issued an eight - count Administrative Complaint

against Mr. Savage seeking to revoke his license as an insurance

agent for unlawfully charging fees for selling annuities beyond

the applicable commission for those products. On May 10 , 2018,

Mr. Savage disputed the allegations and requested a hearing

under section 120.57(1) .

On May 25, 2018, the Department referred the Administrative

Complaint to DOAH to conduct a formal administrative hearing.

The final hearing was initially set for August 2, 2018, but was

re set for November 29 and 30, 2018, upon agreement of the

parties.

On September 28, 2018, the Department moved to amend its

Complaint to add a count relating to adverse administrative

action taken against Mr. SavageÓs securities lic ense. On

October 8, 2018, the undersigned granted the DepartmentÓs

request and the hearing proceeding on the Amended Administrative

Complaint (ÐComplaintÑ) .

The final hearing began on November 29 and 30, 2018. After

the Department ind icated it was droppi ng Count IV , the hearing

proceeded on the remaining eight counts. The Department

presented its case - in - chief, but Mr. Savage did not complete his

case - in - chief. The continuation of the hearing was set for

February 8, 2019, but was continued twice based o n Mr. SavageÓs

requests for medical reasons. The continuation of the final

hearing began on April 18, 2019, and concluded on May 29, 2019.

In its case - in - chief and rebuttal case, the Department

presented the testimony of nine witnesses: Marion Albano,

Joseph Cerny, Ernest Blougouras, Kathy Butler, Beverly Wilcox,

Jane DÓAngelo, Eda Flate, and George Flate, all of whom were

clients of Mr. Savage ; and Juanita Midgett, a Department

investigator. PetitionerÓs Exhibits 1 through 103 and 107 were

admitted in to evidence. PetitionerÓs Proposed Exhibits 104,

105, 106, and 108 were not admitted into evidence.

In his case - in - chief, Mr. Savage testified on his own

behalf and presented the testimony of Nelson Villaverde, a

Department investigator. RespondentÓs Exh ibits 1 through 44 and

46 through 53 were admitted into evidence. RespondentÓs

Proposed Exhibit 45 was not admitted into evidence.

A four - volume T ranscript of the final hearing was filed on

June 11, 20 19 . After receiving one 30 - day extension, one 20 - day

extension, and a final two - day extension, the parties timely

filed their Proposed Recommended Orders (ÐPROsÑ), which were

duly considered in preparing this Recommended Order.

FINDING S OF FACT

The Parties and Principle Allegations

1. The Department is the state agency charged with the

licensing of insurance agents in Florida, pursuant to authority

granted in chapter 626, parts I and IX, Florida Statutes, and

Florida Administrative Code Chapter 69B - 231.

2. Mr. Savage is a 75 - year - old registered investment

advisor and financial planner who also is licensed to sell life

insurance in Florida .

3. T he Department Ós Complaint seeks to revoke Mr. SavageÓs

license as an insurance agent . Counts I through III and

V through VIII concern eight clients, whereby Mr. S avage earned

commissions for selling them annuities and, based on agreements

they signed, charg ed them annual one - percent financial planning

service fees tied to the value of their portfolios, including

the annuities. Each of these counts alleged the foll owing

statutory violations:

• Engaging in unfair insurance trade practices for

knowingly collecting an excessive premium or charge.

§ 626.9541(1)(o)2., Fla. Stat.;

• Demonstrating a lack of fitness or trustworthiness to

conduct insurance business. § 626. 611(1)(g), Fla. Stat.;

• Demonstrating a lack of reasonably adequate knowledge and

technical competence to engage in insurance transactions.

§ 626.611(1)(h), Fla. Stat.;

• Engaging in fraudulent or dishonest insurance practices.

§ 626.611(1)(i), Fla. Stat. ; and

• Misappropriating, converting, or unlawfully withholding

moneys belonging to others in conducting insurance

transactions. § 626.611(1)(j), Fla. Stat.

Count IX charged Mr. Savage with two violations concerning

adverse administrative action taken by the Financial Industry

Regulatory Authority (ÐFINRAÑ) against his securities license:

• Failing to timely report final administrative action

taken by FINRA against his securities license.

§ 626.536, Fla. Stat.; and

• Being suspended and fined for v iolating F INRAÓs rules.

§ 626.621(12), Fla. Stat.

4. At the time of the hearing, Mr. Savage was not working

in the financial services industry because FINRA suspended him

for several months. During his suspension, Mr. Savage continued

to meet with his insurance c lients, though he currently has no

appointments with life insurers to sell their products.

Wearing Two Hats - An Investment Advisor and Insurance Agent

5 . Mr. Savage has worked in the investment industry for

over 50 years, initially focusing on securit ies but evolving

into financial advising and estate planning work. He has taken

numerous courses and examinations relevant to securities law,

financial planning, and tax law.

6 . Mr. Savage owns two investment advisor businesses:

Wall Street Strategies , Inc. (ÐWall StreetÑ), is a stock

brokerage firm that handles securities transactions; and

Advanced Strategies, Inc. (ÐAdvanced StrategiesÑ), is a

registered investment advisor firm, offering clients financial

planning, tax management, and estate planning advice.

7 . In order to provide a wide variety of products to his

financial planning clients, Mr. Savage also is licensed as a

nonresident agent in Florida to sell life insurance, including

annuities. 2/ Annuities provide a guaranteed income stream over a

term of years, but also come with substantial penalties if they

are surrender ed or cancelled before the term expires. Fixed

index annuities, like those Mr. Savage sold to the clients at

issue here, offer portfolios of funds tracking stock market

indexe s. Owners choose from around six portfolios and can then

reallocate by choosing different portfolios each year .

8 . Mr. Savage considers himself an investment advisor who

is licensed to sell insurance, which is what he tells new

clients. Indeed, his businesses are securities and investment

advis or firms, not insurance agencies.

9 . Mr. SavageÓs client base is diverse. Many have

portfolios with annuities and other investment products. Some

have portfolios with no annuities. Others have portfol ios with

only annuities , like most of the clients at issue.

1 0 . In order to procure new clients, Mr. Savage held

financial planning seminars where diverse speakers discussed

financial and estate planning, and tax management. Mr. Savage

discussed the type s of insurance products he preferred,

including fixed index annuities. Other speakers discussed real

estate, oil, and investment trusts, which were beneficial from a

tax perspective. Most of the clients at issue attended such a

seminar and later met with Mr. Savage to discuss their financial

plans.

1 1 . When Mr. Savage first met with the clients at issue,

he asked them to bring tax returns, investment statements, wills

and/or trusts, and other documents relevant for a financial

planning discussion. T hey completed a new client form with

information about their assets, investments, and objectives. He

often met several times with new clients to develop a plan for

them to reach their financial, estate, and tax management goals.

1 2 . To provide financia l planning services, Mr. Savage ÏÏ

like most investment advisors ÏÏ charge d an annual one - percent fee

based on t he total value of the portfolio. He has reduced or

waived his fee if the clientsÓ situation warranted it or if they

continued to purchase products for which he received commissions

to compensate him for providing financial planning services.

1 3 . Before that are charg ed an annual fee, Mr. Savage Ós

clients sign ed a ÐService Fee AgreementÑ (ÐFee AgreementÑ) ,

which was on ÐAdvanced Strategies, Inc., R egistered Investment

AdvisorÑ letterhead and provided as follows:

Advanced Strategies charges a 1% (one

percent) financial planning retention fee

annually. This fee is based upon the total

combined value of accounts including

annuities, indexed life, mutu al funds,

income products and brokerage accounts that

we manage or provide service for. This

amount is tax deductible as a professional

fee.

14. The Fee Agreement offered to provide several financial

planning services 3/ :

• Address, ownership, and bene ficiary changes;

• Duplicate statements and tax returns;

• Require d minimum distribution and withdrawal

requests, and deposits;

• General account questions;

• One printed analysis per year;

• Annual review;

• A sset rebalancing when applicable;

• Informing cli ent of new tax laws, changes in

estate planning, and new exciting products and

concepts.

The Fee Agreement noted that the non - refundable fee was due on

the service anniversary date and that non - payment would result

in discontinuation of the planning ser vices until paid in full.

1 5 . Mr. Savage confirmed that the Fee Agreement was

voluntary. If clients wanted to purchase a product, but did not

want him to manage their portfolio or provide the outlined

services, they did not have to sign the agreement. In that

event, Mr. Savage would procure the product and not provide

financial planning services.

1 6 . All of the clients at issue here purchased annuities

from Mr. Savage. He helped them complete the application s with

the insurance companies and, if nec essary, assisted them with

transferring or closing out other investments used to pay the

premium s . He ensured that the insurer s received the paperwork

and the premium s. Once the annuities w ere procured, he received

commission s from the insurer s . The Com plaint did not allege

that he acted unlawfully in recommending annuities to the

clients or receiving commissions from the insurers.

1 7 . All of the clients at issue also signed the Fee

Agreement and Mr. Savage provided them with services every

year. 4/ So me of the services were things an insurance agent

technically could handle, such as answering client calls, making

address and beneficiary changes, providing duplicate statements,

assisting with the paperwork for required minimum distributions,

withdrawals , and deposits, and asset reallocation. Other

services were things that an agent could not provide, such as

tax management/credits, duplicate tax forms, assistance with

estates, trusts, and wills, and financial planning advice.

1 8 . But, even as to the services an agent technically

could provide, Mr. Savage used his financial planning expertise

to advise these clients as to a number of decisions relating to

their annuities. For instance, although agents can assist with

reallocation, required minimum dis tributions, and withdrawals,

Mr. SavageÓs securities and financial planning expertise allowed

him to make recommendations that took into account an analysis

of the stock market, the economy, and the clientsÓ financial

circumstances and overall goals. An a gent is not required to

have th at expertise, which is one reason he charged the clients

an annual service fee.

19 . Many of these clients did not recall Mr. Savage

providing most of the services listed in the Fee Agreement, but

the weight of the credible evidence reflects otherwise. He

analyzed asset reallocations for these clients every year and,

when he believed reallocation was appropriate, he undisputedly

made it happen. He provided annual account analyses

consolidating the clientsÓ investment state ments. He met with

some of them every year to conduct an annual review and, for

those he did not meet, he offered to do so in their annual

invoice letter. Whenever the clients asked for assistance with

questions, address , beneficiary, or ownership change s,

withdrawals or required minimum distributions, or deposits,

among others, he performed the task. And, as he confirmed and

some of the clients acknowledged, the Fee Agreement made it

clear that the services were available, even if they did not

need all of them in a particular year or did not think to ask.

2 0 . Although some of the clients testified that Mr. Savage

failed to tell them that his fee was optional, all of them had a

chance to review the Fee Agreement before voluntarily signing

it. The a gre ement noted that the fee was a Ðfinancial planning

retention feeÑ based on the value of the accounts Ðthat we

manage or provide service for,Ñ and that non - payment Ðwill

result in the discontinuation of my/our planning services.Ñ

These clients believed the y hired Mr. Savage as an investment

advisor and many understood that such advisors do charge fees

for providing services.

2 1 . More importantly, no client testified that Mr. Savage

said his annual fee was required to procure the annuities or was

a ch arge for insurance. Nothing in the Fee Agreement gave that

indication either. Mr. Savage credibly confirmed that he did

not charge a fee for insurance; rather, the client paid the fees

for financial planning services. And, if they decided they no

longer wanted Mr. SavageÓs services and stopped paying his fee,

they took over management of their annuities without losing

access to them or the money in them.

2 2 . The Department concedes that Mr. Savage may wear two

hats, as both the agent selling an annui ty and the financial

advisor managing his clientÓs portfolio. It contends, however,

that Mr. Savage violated the insurance code by selling annuities

to these clients and thereafter charging them annual fees ÏÏ tied

to the value of the annuities ÏÏ to provide services that he

should have provided for free after earning commissions on the

sale of those annuities.

2 3 . The DepartmentÓs investigator, Ms. Midgett, testified

about annuities, commissions, and insurance agent services b ased

on her experience in the in dustry as both a former agent and

certified chartered life underwriter. 5/ Ms. Midgett confirmed

that the Department approves both the premiums and commissions

applicable to annuities. Once the premium or deposit is paid,

the commission is earned; if an a dditional deposit is made into

the annuity, the agent would earn another commission.

2 4 . Ms. Midgett testified that it is improper for an agent

to receive a commission and knowingly charge a client any fees

with respect to that annuity under section 62 6.9541(1)(o).

However, she admitted that a financial advisor may charge

service fees on annuities if they did not receive a commission

on the sale. And, if the annuity is ever rolled into a non -

insurance product, that agent could charge service fees on t hat

asset because the y are no longer tied to the annuity.

2 5 . Ms. Midgett also testified about the services agents

are expected to provide. Once an agent sells a product, he or

she becomes the agent of record and does Ðthings such as answer

questions, beneficiary changes, address changes, yearly reviews,

anything to keep that client and to help them in any way they

can.Ñ According to her, ÐitÓs basic 101 insurance that an agent

services their clients,Ñ which is Ðextremely important if you

want to buil d your book of business and to keep a client happy.Ñ

2 6 . Importantly, however, Ms. Midgett conceded that no

statute or rule specified what services agents were required to

provide once they sold an annuity. Ð ItÓ s just understood when

youÓre an insuranc e agent that youÓ re going to service your

clients. ItÓs pa rt of the sale of the product.Ñ She believed

a gents learned this in the course study to obtain a license.

2 7 . Although Ms. Midgett testified that Mr. Savage should

have provided most of the servi ces listed in the Fee Agreement

for free once he earned commissions on the sale of the

annuities, she conceded that at least two of them ÏÏ duplicate tax

forms and informing the client of new tax laws ÏÏ were not

services agents would do. She also agreed that agents could not

advise clients as to taking money from an annuity and investing

in stocks, mutual funds, real estate trusts, or other

investment - related options as Ðthose are all investment advisor

functions.Ñ

2 8 . Ms. Midgett initially admitted hav ing no knowledge of

whether insurance agents were trained in asset reallocation,

though she Ðwould assume soÑ because Ð[i]f you have a license to

sell the product, then obviously you have to have the knowledge

of how to be able to service that product and make the

allocations.Ñ When she testified several months later in the

DepartmentÓs rebuttal case, she stated that the manual used to

obtain a license in Florida had a chapter on annuities that

Ðtouched onÑ reallocation. But, she admitted she was not an

expert on reallocation or analyzing market conditions , and she

had only previously worked with one agent who sold annuities ,

though he did advise his annuity clients on reallocation.

29 . In sum, the Department conceded that no statute or

rule articulated the services an agent is required to provide

upon receiving a commission. The appointment contracts between

the agents and the insurance companies, two of which are in the

record, apparently do not specify the services agents are

expected to provide. At best, the evidence established what a

good agent should do to build a book of business; the evidence

did not establish what services an agent, like Mr. Savage, was

legally required to provide for receiving a commission.

Count I Î Kathy Butler

3 0 . Ms. B utler met Mr. Savage while working at a yacht

club. In February 2011, they met at his office and she filled

out a new client form with financial information.

3 1 . In March 2011, Mr. Savage assisted M s . Butler with the

application for a fixed index annu ity for $50,000. On that same

day, she signed the Fee Agreement, which she understood to be

paying for his services as an investment advisor to manage the

annuity and ensure it was being invested correctly; she believed

he received income from the insuran ce company. In January 2012,

she purchased another fixed index annuity for $8,000.

Mr. Savage procured both annuities.

3 2 . Between 2012 and 2015, Ms. Butler received annual

invoices from Mr. Savage and paid about $3,265 in service fees .

At this poin t, Ms. Butler deals directly with the insurance

companies, though Mr. Savage is still listed as her agent.

3 3 . The weight of the credible evidence shows that

Mr. Savage answered general account questions, made a

beneficiary change, conducted annual revi ews when requested,

sent annual account statements, analyzed reallocation each year

and, when he recommended reallocation in 2014 and 2015, he

handled the paperwork. Ms. Butler knew she could avail herself

of the services in the Fee Agreement, even though she chose not

to request many of them.

Count II Î Beverly Wilcox

3 4 . Ms. Wilcox met Mr. Savage at a seminar in early 2009.

In February 20 0 9, they met at his office , she completed a new

client form, and she signed the Fee Agreement. She believed he

was a financial advisor and that she would owe him money, but

she did not read the Fee Agreement before signing it.

3 5 . In March 2009, Mr. Savage assisted Ms. Wilcox with the

application to purchase a fixed index annuity for $120,000. He

procured the annuity , as requested.

3 6 . Between 2010 and 2016, Ms. Wilcox received yearly

invoices from Mr. Savage and paid about $6,500 in fees, after

which she decided to deal with the annuity company directly.

37 . The weight of the credible evidence shows that

Mr. Savage answered questions when asked, offered to conduct

annual reviews each year, sent annual account statements,

analyzed reallocation each year and, when he recommended

reallocation in 2010 and 2012, he handled the paperwork.

Count III Î Joseph Cerny

38 . Mr. Cerny met Mr. Savage while working at a yacht club

and knew he was a financial advisor.

39. Mr. Cerny purchased several fixed index annuities and

other investments from Mr. Savage, who helped him complete the

paperwork and procured the policies. Betwe en 2003 and 2004, he

bought two annuities for $100,000 each and two mutual funds for

about $30, 000 each. In 2008, he bought an annuity for $10,000.

In 2010, he bought another annuity for $119,400.

40 . Mr. Savage did not charge fees for the first few

yea rs. Mr. Cerny believed he received compensation from the

companies. However, in March 2010, Mr. Cerny signed the Fee

Agreement . Between 201 1 and 2012, he received two invoices,

paying the first for $1,266.84 but refusing to pay the second.

Mr. Cerny an d Mr. Savage ended their relationship at that point.

4 1 . The weight of the credible evidence shows that

Mr. Savage answered questions, provided annual statements,

assisted with making withdrawals when requested, met with

Mr. Cerny yearly, analyzed realloc ation each year and, when he

recommended reallocation in 2010 and 2011, he handled the

paperwork.

Count V Î Marion Albano

4 2 . Ms. Albano met Mr. Savage at a retirement seminar in

early 2007. In February 20 0 7, they met at his office to go over

her investm ents, including several annuities. Based on his

recommendation, she surrendered her old annuities and purchased

a fixed index annuity for about $1.6 million. He assisted her

with the application and procured the annuity.

43 . In February 2007, Ms. Albano also signed the Fee

Agreement. Mr. Savage told her there was a service charge to

manage the annuity and she agreed because her brother pays the

same rate on his managed brokerage account. She was never

worried about losing the annuity if she failed to p ay the fee.

4 4 . Ms. Albano received invoices from Mr. Savage every

year from 2008 through 2015 and testified that she had paid

between $110,000 and $120,000 in fees during that time. She had

to pay some of th e fees out of her distributions .

4 5 . The weight of the credible evidence shows that

Mr. Savage answered account questions, corresponded with her

daughter about his recommendations, provided her with an account

analysis each year, met with her annually to review her account,

and assisted her with require d minimum distributions and

withdrawals. He analyzed reallocation each year and, when he

recommended reallocation in 2010 and 2011, he handled the

paperwork.

Count VI Î Jane DÓAngelo

4 6 . Ms. DÓAngelo and her late husband, whose son - in - law

was an insurance agent, met Mr. Savage at an estate planning

seminar in early 2003; they believed he was an investment

advisor. In March 2003, he came to their home and they

completed a new client form, indicating they had several types

of investments, including annuities.

47 . Between 2003 and 2016, the DÓAngelos invested with

Mr. Savage. In 2003, they purchased a tax credit investment for

$10,000. In 2005, they purchased a similar investment for

$19,000, which resulted in tax credits totaling $17,174.

48 . Between 2005 and 2011, they purchased eight fixed

index annuities from Mr. Savage. He assisted them with the

applications, informing them that the companies paid him

directly. He procured the following annuities, some of which

were purchased by transfer ring money from their existing

annuities: In April 2005, they bought an annuity for $250,000;

in May 2007, they bought an annuity for $32,789.78; in May 2008,

they bought an annuity for $29,510; in March 2009, they bought

three annuities for $337,554, $55 0,000, and $6,000; in May 2011,

they bought two annuities, one for $40,715 and another for

$150,889; and, in June 2011, they bought an annuity for $24,667.

49 . Prior to 2010, they paid no service fees. However, in

April 2010, they signed the Fee Agreemen t. Although they were

surprised and felt like they had to sign, Ms. DÓAngelo agreed

they were not coerced or told the annuities would lapse if th ey

failed to do so. Indeed, she never lost access to the annuities

even after she stopped paying Mr. SavageÓs fees in 2015.

5 0 . Mr. Savage sent them annual invoices from 2010 through

2015, totaling $54,000 in fees. Mr. Savage agreed to waive the

2010 fee and, ultimately, they only paid about $14,511 total .

In 2016, Ms. DÓAngelo informed Mr. Savage that she n o longer

needed his services . S he had been dealing directly with the

insurance companies herself , though they have provided her with

names of individuals if she wanted someone to advise her.

5 1 . The weight of t he credible evidence shows that

Mr. Savage provided numerous services to the DÓAngelos on the

investments he managed for them. 6/ He had discussions with them,

sent them annual statements , and assisted them with deposits and

transfers between annuities, required minimum distributions and

withdrawa ls, income riders, and beneficiary and ownership

changes. He analyzed reallocation every year and handled the

paperwork when he felt it was appropriate. He also offered to

meet annually and held those meetings in years in which they

were requested.

Cou nt VII Î Ernest Blougouras

5 2 . Rev. Ernest Blougouras, a Greek Orthodox priest,

attended several financial planning seminars with Mr. Savage.

They met privately in February 2005, at which he completed a new

client form listing his investments , which incl uded fixed

annuities, CDs, mutual funds, bonds, and stocks.

5 3 . Rev. Blougouras purchased fixed index annuities and

other investments from Mr. Savage. He told Rev. Blougouras that

he received commissions for selling the annuities. Mr. Savage

assisted wi th the applications and procured the policies.

5 4 . Over the last 14 years, Rev. Blougouras purchased nine

fixed index annuities. In March 2005, he bought an annuity for

$347,003; in April 2005, he bought an annuity for $229,458; in

August 2005, he bo ught an annuity for $102,227; in June 2006, he

bought an annuity for $8,300; in May 2007, he bought an annuity

for $41,143; in June 2009, he bought an annuity for $50,000; in

July 2009, he bought an annuity for $14,308; and, though the

record is unclear as to the date, he bought another annuity that

was worth $40,572 in 2010. Since 2011, he bought an additional

annuity and several non - insurance investments, such as real

estate trusts and energy funds.

5 5 . Prior to 2010, Mr. Savage did not charge

Rev. Blo ugouras service fees because he continued to purchase

annuities . However, in 2010, Mr. Savage decided to start

charging an annual service fee and sent Rev. Blougouras the Fee

Agreement. Rev. Blougouras believed that Mr. SavageÓs services

would be cancell ed if he failed to pay the fee and he would have

to hire another advisor. H e signed the Fee Agreement and

continues to use Mr. Savage Ós services .

5 6 . Mr. Savage has sent annual invoices to Rev. Blougouras

every year since 2010. T he record only contain s the 2010

invoice for $9,883 and Rev. Blougouras could not recall how much

he paid overall . However, he confirmed that he has paid every

invoice he has received either himself or with distribution

checks he received from the annuities.

5 7 . The weight of the credible evidence shows that

Mr. Savage provided numerous services to Rev. Blougouras. He

prepared paperwork and documents for required minimum

distributions and withdrawals, held meetings to review and

organize his tax paperwork, copied documents requested, and made

address changes when requested. He analyzed asset reallocation

every year and, when he recommended reallocation in 2010 and

2011 , he completed the necessary paperwork.

Count VIII Î George Flate

58 . Mr. Flate and his wife met Mr. S avage at a financial

planning seminar in 2010. In February 2010, they met Mr. Savage

and completed their new client form listing their investments,

including fixed annuities, CDs, mutual funds, and stocks. They

also signed the Fee Agreement, which Mr. Fl ate believed was a

standard service agreement. They thought they hired Mr. Savage

as an investment advisor and never believed they would lose

access to the annuities if they stopped paying his fees.

59 . Based on Mr. SavageÓs recommendation, the Flates

pu rchased two fixed index annuities: one annuity was issued in

April 2010 for approximately $22,000 , and the other annuity was

issued in May 2010 for approximately $22,500. Mr. Savage

assisted them with filling out the applications and handled the

paperwor k to ensure the annuities were issued.

60 . Between 2012 and 2015, Mr. Savage sent the Flates

invoices for his annual service fees every year. In total, they

paid approximately $1,506 in service fees. In 2015, the Flates

terminated their relationship wit h Mr. Savage. They have worked

with two financial advisors since then, neither of whom charged

them service fees relating to the annuities.

61 . The weight of the credible evidence shows that

Mr. Savage provided numerous services to the Flates. Each ye ar,

he met with them to go over their account, provided them with

a ccount analyses, analyzed reallocation and, the two to three

times they agreed with his recommendations, he handled the

paperwork. He handled withdrawals and address changes for them

when requested, and he provided them with information as to

changes in tax law and estate planning, though they did not

believe that was necessary since they had tax and estate

lawyers. The Flates understood that Mr. Savage was available to

answer their questi ons and provide the services if they asked.

Count IX Î FINRA Disciplinary Proceeding

6 2 . On July 14, 2016, two former clients of Mr. SavageÓs

filed a Statement of Claim with FINRA alleging that he had

recommended investments that were not suitable for them . Over

Mr. SavageÓs objections to proceeding with the hearing as

scheduled, the arbitration panel awarded the clients over

$725,000 in damages, fees, and costs.

6 3 . The clients filed a petition in Florida circuit court

to approve the arbitration awar d. Mr. Savage responded in

opposition and moved to vacate the arbitration award on grounds

that it violated his due process rights. On November 9, 2017,

the circuit court issued a final judgment awarding over

$769,000. On December 4, 2017, Mr. Savage ap pealed the circuit

courtÓs order to the Second District Court of Appeal.

6 4 . O n June 12, 2018, w hile the appeal was pending,

Mr. Savage signed a Letter of Acceptance, Waiver and Consent

(ÐAWCÑ) with FINRA. The AWC stated that Mr. Savage accepted and

co nsented, without admitting or denying , the following findings :

(1) Wall Street failed to apply for a material change in

its business operations, i.e. , to sell oil and gas

interests, private placements, and non - traded real

estate investment trusts, before engag ing in more than

50 such transactions, many of which were consummated

by Mr. Savage;

(2) Mr. Savage failed to timely update his FINRA Form U4

within 30 days of the Statement of Claim being filed

against him in July 2016;

(3) Mr. Savage failed to timely respond t o FINRAÓs

requests for information relating to an upcoming

examination of Wall Street ; and

(4) Wall Street failed to maintain the minimum net capital

requirements of $5,000 while engaging in securities

transactions.

65 . Mr. Savage agreed to three sanction s: (1) a five -

month suspension from associating with any FINRA registered

firm; (2) a three - month suspension from association with any

FINRA registered firm in a principal capacity, to be served

following the five - month suspension; and (3) a $30,000 fine.

66 . The AWC confirmed that Mr. Savage waived his

procedural rights relating to these alleged violations and made

clear that it would become part of his permanent disciplinary

record that could be considered in future actions brought by

FINRA or other regulators. He was precluded from taking

position s inconsistent with the AWC in proceeding s in which

FINRA was a party, but was not precluded from taking

inconsistent positions in litigation if FINRA was not a party.

67 . The five - month suspension began o n June 13, 2018, and

ended on November 17, 2018. The three - month suspension began on

November 18, 2018, and ended on February 17, 2019.

68 . In the interim, on August 16, 2018, FINRA notified

Mr. Savage by letter that it was suspending his securities

li cense indefinitely for his Ðfailure to comply with an

arbitration award or settlement agreement or to satisfactorily

respond to a FINRA request to provide information concerning the

status of compliance.Ñ This letter is not in the record and, as

such, it is unclear whether Mr. Savage had an avenue to

challenge that suspension directly. Mr. Savage had challenge d

the underlying arbitration award, which remained pending on

appeal in the Second District Court of Appeal .

69 . On November 7, 2018, the Second District affirmed the

circuit courtÓs arbitration order.

70 . On November 20, 2018, Mr. Savage put the Department on

notice of the FINRA disciplinary actions, including the AWC from

June 2018 and the decision of the Second District affirming the

arbitra tion award.

CONCLUSIONS OF LAW

7 1 . DOAH has jurisdiction over the parties and the subject

matter of this case pursuant to sections 120.569 and 120.57(1) .

7 2 . It is well settled under Florida law that determining

whether alleged misconduct violates a stat ute or rule is a

question of ultimate fact to be decided by the trier - of - fact

based on the weight of the evidence. Holmes v. Turlington ,

480 So. 2d 150, 153 (Fla. 1985); McKinney v. Castor , 667 So. 2d

387, 389 (Fla. 1st DCA 1995); Langston v. Jamerson , 65 3 So. 2d

489, 491 (Fla. 1st DCA 1995). D etermining whether the alleged

misconduct violates the law is a factual, not legal, inquiry.

7 3 . The Department has the burden to prove its allegations

against Mr. Savage by clear and convincing evidence. Dep Ó t of

Banking & Fin. v. Osborne Stern & Co. , 670 So. 2d 932, 934 (Fla.

1996); AvalonÓ s Assisted Living, LLC v. Ag . for Health Care

Admin . , 80 So. 3d 347, 348 - 49 (Fla. 1st DCA 2011) (citing Ferris

v. Turlington , 510 So. 2d 292, 294 - 95 (Fla. 1987) ) . As the

Flori da Supreme Court has stated:

Clear and convincing evidence requires that

the evidence must be found to be 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 a 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 He nson , 913 So. 2d 579, 590 (Fla. 2005) (quoting Slomowitz

v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983)).

7 4 . ÐWhere a statute imposes sanctions and penalties in

the nature of denial or revocation of a license to practice for

violating its proscriptio ns, such a statute Òmust be strictly

construed and no conduct is to be regarded as included within it

that is not reasonably proscribed by it.ÓÑ McCloskey v. Dep Ó t

of Fin. Servs. , 115 So. 3d 441, 444 (Fla. 5th DCA 2013) (citing

Lester v. Dep Ó t of Prof Ó l & Occ . Regs. , 348 So. 2d 923, 925

(Fla. 1st DCA 1977)); accord Elmariah v. DepÓt of Prof Ól Reg. ,

574 So. 2d 164, 165 (Fla. 1st DCA 1990) (holding that a statute

imposing Ðsanctions or penaltiesÑ is Ðpenal in nature and must

be strictly construed, with any a mbiguity interpreted in favor

of the licenseeÑ); see also Djokic v. Dep Ó t of Bus. & Prof Ó l

Reg. , 875 So. 2d 693, 695 (Fla. 4th DCA 2004) (same).

Counts I through III and V through VIII

7 5 . Because Mr. SavageÓs alleged conduct and the

violations charged in Counts I through III and V through VIII

are materially almost identical, the findings of ultimate fact

and conclusions of law below apply equally to those counts.

76 . The Department alleged in the Complaint that

Mr. Savage sold his clients annuities , had them sign the Fee

Agreement, did not tell them that the fee was optional (only as

to Counts I and II), and thereafter charged them annual one -

percent service fees based on the value of their portfolios,

including the annuities, in violation of sectio ns

626.9541(1)(o)2. and 626.611(1)(g) - (j).

77 . As to section 626.9541(1)(o)2., the Department argues

that Mr. Savage knowingly collected excess premiums by charging

his clients fees tied to the value of annuities he sold them.

78 . Section 626.9541(1)(o )2. defines the following as an

unfair or deceptive act: ÐKnowingly collecting as a premium or

charge for insurance any sum in excess of or less than the

premium or charge applicable to such insurance, in accordance

with the applicable classifications and rates as filed with and

approved by the office, and as specified in the policy.Ñ

Neither Ð premium Ñ nor Ð knowingly Ñ are defined in this provision,

though definitions of both are critical to determining whether

Mr. Savage violated this provision.

79 . Pr emium is defined in section 627.041(2), Florida

Statutes, as Ðthe consideration paid or to be paid to an insurer

for the issuance and delivery of any binder or policy of

insurance.Ñ Accord § 627.403, Fla. Stat. (defining premium as

Ð the consideration for insurance, by whatever name called ,Ñ or

any ÐÒserviceÓ or similar fee or charge in c onsideration for an

insurance contract is deemed part of the premium Ñ).

80 . Knowingly is not defined in the statute, so its plain

and ordinary meaning can be ascertained from a dictionary. Sosa

v. Safeway Premium Fin. Co. , 73 So. 3d 91, 104 (Fla. 2011).

Knowing is defined as Ð[h]aving or showing awareness or

understanding; well - informedÑ or Ð[d]eliberate; conscious.Ñ

BlackÓs Law Dictionary at 876 (7th ed. 1999). In th e insurance

context, knowingly means a deliberate violation with Ðawareness

and understanding of its actions.Ñ Sosa , 73 So. 3d at 104.

8 1 . Based on the plain and ordinary meaning of the

statute, agents are precluded from collecting from the insured

more money than the rate set by the Department and provided for

in the policy to purchase or obtain an insurance product. If

agents do so with awareness that such actions are unlawful, they

violate section 626.9541(1)(o)2.

8 2 . Based on the findings of fact ab ove, the Department

failed to prove by clear and convincing evidence that Mr. Savage

violated this provision. The weight of the credible evidence

shows that Mr. Savage did not charge the clients more than the

applicable premium to procure the annuities; r ather, he charged

them annual fees to provide financial planning services, as

investment advisors routinely do.

8 3 . The Department nevertheless argues that Mr. Savage

violated the provision by charging his clients fees to provide

the same services he i s obligated to provide after receiving

commissions on the sale of the annuities. However, a s just

discussed, the clear language of the statute does not proscribe

the type of fee charged by Mr. Savage to service the annuity

once it has been issued. 7 / A nd, section 626.9541 does not

prohibit a practice which is not specifically delineated as

Ð unfair Ñ in the act or in the insurance code . Whitaker v. Dep Ót

of Ins. & Treasurer , 680 So. 2d 528 , 531 (Fla. 1st DCA 1996)

(citations omitted); accord Un ited Wis. Lif e Ins. Co. v. Off . of

Ins. Reg . , 849 So. 2d 417 , 420 (Fla. 1st DCA 2003).

8 4 . Moreover, the Department conceded that there is no

statute or rule delineating the services an agent is required to

provide in exchange for the commission. The appointment

c ontracts in the record do not articulate those services either.

At best, the evidence showed what services good agents provide

to build their book of business, which is distinct from the

services agents are legally required to provide.

8 5 . Due process requires regulated entities to be put on

notice of the conduct proscribed, which is absent here. See

Breesmen v. DepÓt of ProfÓl Reg. , 567 So. 2d 469, 471 (Fla. 1st

DCA 1990) (ÐBasic due process requires that a professional or

business license not be susp ended or revoked without adequate

notice to the licensee of the standard of conduct to which he or

she must adhere.Ñ) . The lack of notice also undermines the

argument that Mr. Savage acted knowingly in this regard .

8 6 . Regardless, the weight of the cre dible evidence shows

that Mr. Savage provide d a number of services for his clients

that agents are not permitted to handle . Moreover, as to those

services agents are permitted to handle, agents would lack the

financial planning expertise Mr. Savage used t o advise his

clients, which is the main reason he charged for his services.

87 . Under section 626.611(1), the Department shall suspend

or revoke an agentÓs license if any of the following exist s :

( g) Demonstrated lack of fitness or

trustworthiness to en gage in the business of

insurance.

(h) Demonstrated lack of reasonably

adequate knowledge and technical competence

to engage in the transactions authorized by

the license or appointment.

(i) Fraudulent or dishonest practices in

the conduct of business under the license or

appointment.

(j) Misappropriation, conversion, or

unlawful withholding of moneys belonging to

. . . insureds . . . and received in conduct

of business under the license or

appointment.

88 . As to section 626.611(1)(g), the Departme nt argued in

its PRO that Mr. Savage demonstrated a lack of fitness or

trustworthiness by having his clients sign the Fee Agreement,

which suggested that his fees were necessary to pay for services

routinely provided by insurance agents. 8/

89 . Based on the findings of fact above, the Department

failed to establish by clear and convincing evidence that

Mr. Savage violated section 626.611(1)(g). The weight of the

credible evidence shows that t he clients believed they were

hiring Mr. Savage as an investmen t advisor and voluntarily

signed the Fee Agreement for financial planning services. That

some of the services could have been provided by an insurance

agent for free does not establish that Mr. Savage lacked fitness

or trustworthiness to engage in insuran ce transactions. Indeed,

Mr. Savage provide d many services that agents either were not

permitted to handle or, even if they were, lacked the financial

planning expertise he used to advise his clients.

90 . As to section 626.611(1)(h) and (i), the Depart ment

argued in its PRO that Mr. Savage knew he was precluded from

charging the service fees, which means he engaged in fraudulent

and dishonest insurance practices under subsection (1)(i), or,

if he did not know, he lacked knowledge or competency to engage

in such transactions under subsection (1)(h).

9 1 . Based on the findings of fact above, the Department

failed to establish by clear and convincing evidence that

Mr. Savage violated section 626.611(1)(h) or (i). The weight of

the credible evidence shows that the clients hired him as an

investment advisor and voluntarily signed the Fee Agreement. He

then charged them annual financial planning service fees that

were not precluded by a statute or rule cited in the Complaint.

9 2 . As to section 626.611(1) (j), the Department argued in

its PRO that Mr. Savage misappropriated premium monies of his

clients by charging them fees tied to the value of their

annuities, which were not Ðplainly expressed in the policyÑ as

required by section 627.474, Florida Statute s.

9 3 . Based on the findings of fact above, the Department

failed to establish by clear and convincing evidence that

Mr. Savage violated section 626.611(1)(j). The weight of the

credible evidence shows that the fees were neither premiums nor

charges for procuring the annuities . T he fees were for

providing financial planning services and were invoiced long

after the ann uities were procured, as agreed to by the clients

when they signed the Fee Agreement. The validity of the

annuities and the clientsÓ acc ess thereto were unaffected by the

service fees or the failure to pay them.

Count IX

94 . The Department alleged that Mr. SavageÓs failure to

timely notify it of two disciplinary actions taken by FINRA

against his securities license on June 13, 2018, and A ugust 16,

2018, violated sections 626.611(1)(g), 626.536, and 626.621(12).

95 . Based on the findings of fact above, the Department

failed to establish by clear and convincing evidence that

Mr. SavageÓs actions that led to suspension of his FINRA licens e

violated section 626.611(1)(g).

96 . As to section 626.536, that provision provides as

follows:

Within 30 days after the final disposition

of an administrative action taken against a

licensee or insurance agency by a

governmental agency or other regula tory

agency in this or any other state or

jurisdiction relating to the business of

insurance, the sale of securities, or

activity involving fraud, dishonesty,

trustworthiness, or breach of a fiduciary

duty, the licensee or insurance agency must

submit a co py of the order, consent to

order , or other relevant legal documents to

the department. The department may adopt

rules to administer this section.

(Emphas i s added) .

97 . The parties disagree as to when the Ðfinal

dispositionÑ of the Ðadministrative acti onÑ occurred. The

Department claims that two final dispositions occurred: (1) on

June 12, 2018, when Mr. Savage signed the AWC and gave up his

right to challenge th e findings; and (2) on August 16, 2018,

when FINRA suspended his license for failing to co mply with the

arbitration order. Mr. Savage contends that the AWC did not

give rise to a duty to report and that final disposition of the

August 2018 suspension did not occur until the Second District

affirmed the arbitration award on November 7, 2018 .

98 . The terms Ðfinal disposition of an administrative

actionÑ are not defined in section 626.536, so their plain and

common meaning can be ascertained from a dictionary.

Sosa , 73 So. 3d at 104 . ÐFinalÑ is defined as Ð not to be

altered or undone Ñ or Ð of o r relating to a concluding court

action or proceeding .Ñ Merriam - Webster Dictionary , available at

https://www.merriam - webster.com/dictionary/final (last visited

Sep. 2 6 , 2019 ) ; see also BlackÓs Law Dictionary at 644 (defining

Ðfinality doctrineÑ as Ð[t]he rule that a court will not

judicially review an administrative agencyÓs action until it is

finalÑ). ÐDispositionÑ is defined as Ð[a] final settlement or

determination .Ñ BlackÓs Law

Dictionary at 484. ÐActionÑ is defin ed as Ðany judicial

proceeding, which, if conducted to a determination, will result

in a judgment or decree,Ñ BlackÓs Law Dictionary at 28 - 29, and

Ðadministration,Ñ of which administrative is a listed verb, is

defined as Ðthe practical management and direc tion of the

executive department and its agencies.Ñ Id. at 44.

99 . Based on the plain meaning of the text, final

disposition of an administrative action occurs when the

proceeding of an agency has concluded and is no longer subject

to challenge or appeal . As the Florida Supreme Court has held ,

Ða judgment becomes final . . . if an appeal is taken, upon the

appeal being affirmed and either the expiration of the time for

filing motions for rehearing or a denial of the motions for

rehearing . Ñ Silvestrone v . Edell , 721 So. 2d 1173, 1175 n.2

(Fla. 1998) ; see also Kipnis v. Bayerische Hypo - Und Vereinsbank ,

202 So. 3d 859, 860 (Fla. 2016) (holding that tax court Ðaction

became final ninety days after the tax court Ó s judgment, at the

expiration of the time perio d for an appeal of that judgmentÑ).

100 . The Department established by clear and convincing

evidence that Mr. Savage failed to timely submit a copy of the

AWC within 30 days of its issuance on June 13, 2018. The AWC

finally disposed of FINRAÓs administra tive action against Mr.

Savage for the three alleged violations and precluded him from

appealing those findings. That is the very essence of a final

disposition.

10 1 . Mr. SavageÓs arguments to the contrary are rejected.

The fact that the AWC was a settl ement without admi tting the

findings is of no consequence, as section 626.536 makes clear

that orders reached by consent must be reported. And, though

one of the AWCÓs findings concerned the Statement of Claim that

led to the arbitration award, that findi ng only related to

Mr. SavageÓs failure to timely report that Statement to FINRA.

That finding was not at issue in Mr. SavageÓs appeal, which

concerned only the propriety of the arbitration award itself.

102 . The Department failed to establish by clea r and

convincing evidence that Mr. Savage failed to timely submit a

copy of FINRAÓs suspension for failing to comply with the

arbitration order within 30 days of August 16, 2018. The

Department presented no evidence as to how FINRA handled this

suspension , except for a FINRA report that noted the suspension

was initiated by letter on August 16, 2018. The letter was not

introduced. No evidence was presented as to whether Mr. Savage

had a right to appeal the suspension or whether it was subject

to a stay g iven the pending appeal of the arbitration award on

which the suspension for failing to comply therewith was based.

That evidence is critical to determining whether the suspension

was a final disposition of an administrative action.

1 0 3 . As to section 626.621(12), that provision authorizes

the Department to suspend or revoke an agentÓs license if he or

she:

Has been the subject of or has had a

license, permit, appointment, registration,

or other authority to conduct business

subject to any decision, finding,

injunction, suspension, prohibition,

revocation, denial, judgment, final agency

action, or administrative order by any court

of competent jurisdiction, administrative

law proceeding, state agency, federal

agency, national securities, commodities, or

option exchange, or national securities,

commodities, or option association involving

a violation of any federal rule or

regulation of any national securities,

commodities, or options exchange or national

securities, commodities, or options

association.

104 . This provision plainly and unambiguously Ð means that

the agency is authorized to revoke a license, if the licensee has

been the subject to any decision by a national securities

association such as FINRA .Ñ Turbeville v. DepÓt of Fin. Servs. ,

248 So . 3d 194 , 199 (Fla. 1st DCA 2018) ; see also Wojnowski v.

Off . of Fin . Reg. , 98 So. 3d 189, 191 (Fla. 1st DCA 2012)

(finding agency authorized to discipline investment advisor under

section 517.161(1)(m), Florida Statutes, which has nearly

identical languag e to section 626.621(12), based on FINRA

arbitration award finding violations of state securities law).

105 . The Department established by clear and convincing

evidence that it has discretion to discipline Mr. Savage under

section 626.621(12) because FI NRA suspended his securities

license for violating its rules. Although Mr. Savage neither

admitted nor denied the findings in the AWC, he agreed to a

consent order that found he violated several FINRA rules and

suspended him from selling securities for fi ve months and from

serving as a principal in an agency that sells securities for

three months. Mr. Savage also was suspended indefinitely on

August 16, 2018, for failing to comply with the arbitration award

or respond to a request for information from FIN RA about the

arbitration.

Recommended Penalty

106 . Based on the findings of fact and conclusions of law

above, the Department established that Mr. Savage violated

section s 626.536 and 626.621(12), as alleged in Count IX.

107 . To determine the approp riate penalty, the undersigned

must first calculate the penalty per count. Fla. Admin. Code

R. 69B - 231.040(1). 9/ Where the Department proves two violations

in a single count, as in Count IX, Ðonly the violation

specifying the highest stated penalty will be considered for

that count . . . regardless of the number or nature of the

violations established in a single count.Ñ Id. at R. 69B -

231.040(1)(a) & (b).

108 . Under Florida Administrative Code Rule 69B -

231.090(12), Ðthe following stated penalty shall apply:

(12) Section 626.621(12), F.S. - suspension six months.Ñ 10/

Under Florida Administrative Code Rule 69B - 231.110 (5), a

violation of section 626.536 is subject to an Ð administrative

fine of not less than $500 for the first violation and

suspension o f 2 months for the second and subsequent

violations. Ñ This is Mr. SavageÓs first violation of section

626.536. Because a six - month suspension is the highest stated

penalty between these two violations, that is the maximum

allowable penalty for Count IX.

109 . Once the penalty for Count IX is calculated, the

final penalty is determined by considering the following

aggravating and mitigating factors: Ð(a) Willfulness of

licenseeÓ s conduct; (b) Degree of actual injury to victim;

(c) Degree of potential i njury to victim; (d) Age or capacity of

victim; (e) Restitution to victims; (f) Motivation of licensee;

(g) Financial gain or loss to licensee; (h) Financial loss to

victim; (i) Vicarious or personal responsibility; (j) Related

criminal charge; disposition ; (k) Existence of secondary

violations in counts; (l) Previous disciplinary orders or prior

warning by the Department; and (m) Violation of any part of

sections 626.9541 and 627.4554 , F.S., in relation to the sale of

a life insurance policy or annuity to a senior citizen. Ñ Fla.

Admin. Code R. 69B - 231.160 (1) & 69B - 231.040(3)(a).

110 . Based on the findings of fact and conclusions of law

above, the weight of the credible evidence shows that Mr. Savage

willfully violated section 626.536 by failing to notify the

Department within 30 days of the AWC, particularly where the

appeal of the arbitration award had no impact on the other

violations found and suspensions imposed in the AWC. The

Department has never before disciplined Mr. Savage.

111. T he violation o f section 626.611(12) proven in

Count IX concern s discipline he received from FINRA, including

suspensions, $30,000 in fines, and a final judgment after

arbitration of over $7 69 ,000 in damages. Although the lack of

notice to the Department of the AWC did not impact any victims,

germane to the violation of section 626.536, the substance of

the arbitration award and resulting FINRA discipline involve d

financial loss to elderly clients , which are aggravating

circumstance s germane to the violation of section 6 26.611(12).

The undersigned finds that Mr. SavageÓs testimony , namely, that

the underlying offenses did not occur and that FINRA was

essentially out to get him , lack s credibility , particularly in

the context of mitigating and aggravating circumstances .

11 2 . Upon consideration of all of the relevant factors,

the undersigned recommends that the final penalty for the

violations proven in Count IX be increased from a six - month

suspension to a 12 - month suspension.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Financial Services

issue a final order suspending Mr. SavageÓs license as an

insurance agent for twelve months.

DONE AND ENTERED this 30th day of September , 2019 , in

Tallahassee, Le on County, Florida.

S

ANDREW D. MANKO

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.d oah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 30th day of September , 2019 .

ENDNOTE S

1/ All statutory references are to Florida Statutes (2018),

unless otherwise noted. The conduct underlying the alleged

statutory violations in Counts I through VIII occurred between

2008 and 2016. Because the statutory provisions did not

materially change during those years, the 2018 versions are

cited for ease of reference .

2/ At the hearing, Mr. Savage testified that he h as primarily

reside d in Florida for the last five or six years, but also has

a home in Ohio. He acknowledged that he should have changed his

licensure to that of a Florida resident agent, but had not yet

done so. The Department did not charge Mr. Savage with any

violation of Florida law for failing to make that change, so it

is not discussed herein.

3/ In or around 2011, Mr. Savage revised the Fee Agreement ,

though most of it remained materially unchanged. Except for

Ms. Butler, all of the clients at issue signed the prior version

of the Fee Agreement , which is the one described here.

4 / Most of th e clients signed the Fee Agreement at the beginning

of their relationship with Mr. Savage, the anniversary date was

set for the next year, and he sent t hem an invoice every year on

that date for the services provided the preceding year. Three

established clients, Dr. and Mrs. DÓ A ngelo and Rev. Blougouras,

received his services without an annual fee for several years

because they consistently purchased ne w investments. In 2010,

Mr. Savage requested that they too sign the Fee Agreement and

they did, even though their agreements listed their anniversary

dates as being only one month beyond the date of execution.

Upon receiving their first invoice about a m onth later, the

DÓAngelos objected and Mr. Savage agreed to waive the 2010 fee;

Rev. Blougouras paid the invoice without objection.

5 / The Department tendered Ms. Midgett as an expert on the

subject of annuities, commissions thereon, agent services, an d

the propriety of charging service fees tied to the value of

annuit ies . The undersigned agreed that Ms. MidgettÓs

qualifications rendered her an expert in those areas, but that

she lacked expertise to offer opinions as to the financial

services industry. The undersigned gave Ms. MidgettÓs testimony

the weight he deemed appropriate.

6 / Though most of the exhibits were admitted without objection,

some were admitted over objections, including hearsay.

C onsistent with section 120.57(1)(c), the undersigned has not

based any finding of fact on hearsay evidence alone, unless it

would be admissible over objection in a civil action . The

hearsay evidence was used, however, to supplement or explain

other admissible evidence. For instance, Mr. SavageÓs database

telemagic notes were admitted over the DepartmentÓs hearsay

objection, but they supplement and explain admissible testimony

from Mr. Savage, the clients, and Ms. Midgett as to the services

Mr. Savage provided and the types of services insurance agents

do n ot provide.

7 / Although unnecessary given the clear and unambiguous language

of section 626.9541(1)(o)2., it should be noted that s ection

626.593, Florida Statutes, prohibits insurance agents from

charging fees over the applicable premium for offering advice or

information relating to health insurance plans, unless a written

contract providing for such fees is executed with the customer.

Had the legislature intended to preclude the types of fees

charged by Mr. Savage in relation to annuities , it certai nly

could have expressly done so in section 626.593, section

626.9541(1)(o)2 . , or in another provision in chapter 626.

8 / The Department did not allege in the Complaint that

Mr. Savage failed to inform his clients that he was an insurance

agent or tha t annuities were life insurance, n or did the

Department charge him with violations of sections 626.9531(1) or

626.99(5) , Florida Statutes, which require such disclosures.

The Department also did not allege that Mr. Savage sent the

clients investment state ments with inflated rates of return or

charge him with a statutory violation based thereon. T he

undersigned rejects the DepartmentÓs belated attempt to argue in

its PRO that Mr. Savage violated section s 626.611(1)(g) - (i) by

engaging in those actions. See , e.g. , Delk v. DepÓt of ProfÓ l

Reg. , 595 So. 2d 966, 967 (Fla. 5th DCA 1992) (holding that due

process means that Ðthe proof at trial or hearing be that

conduct charged in the accusatorial documentÑ).

Regardless, the Department failed to establish by clear and

convincing evidence that these belated allegations against

Mr. Savage proved he lacked fitness or trustworthiness, engaged

in fraudulent or dishonest insurance practices, or lacked the

knowledge or competence to engage in such transactions.

Although the clients testified that they were unaware that

Mr. Savage was an insurance agent or that they were purchasing

life insurance, they reviewed and signed applications with life

insurance companies to purchase the annuities , which listed the

insura nce company names repeatedly in the header, specified that

they were purchasing a life insurance product , inquired as to

whether the annuities were replacing a prior life insurance

product , and noted that Mr. Savage was the agent. Several of

the clients a lso owned annuities when they met Mr. Savage.

Mr. Savage testified that he informed attendees at his seminars

and new clients that he was a financial planner with a n

insurance license, he went over annuities as being insurance

products to explain how they worked , and the clients all

received statements on life insurance company letterhead . The

weight of the credible evidence shows that these clients either

knew or should have known that Mr. Savage was an insurance agent

and that annuities were life insura nce products.

9 / The statutory violations at issue in Count IX occurred in

2018. Thus, the 2019 versions of any disciplinary sanction

rules, some of which were materially revised in 2019, do not

apply. See Brewer v. Fla. Dep Ó t of Health , 268 So. 3d 871 , 873

(Fla. 1st DCA 2019 ) (applying version of sanctions rule

Ðapplicable to the date of BrewerÓs alleged violationsÑ).

Rather, the 2018 versions of these rules are applicable.

10/ The undersigned notes that section 626.621 was amended in

2017. Prior to the amendment, the substance of subsection (12),

which is at issue here , had been contained in subsection (13).

Although the statutory subsections were renumbered in 2017, the

Department did not revise the correlating penalty provisions

outlined in rul e 69B - 231.090 until July 2019. Thus, under the

rule in effect at the time of the alleged violation in 2018, a

violation of section 626.611(12) was subject to a suspension of

six months. The undersigned is required to apply the clear and

unambiguous versi on of the rule in effect at the time of the

alleged violation giving rise to the penalty. Brewer , 268 So.

3d at 873 . The undersigned notes that the DepartmentÓs PRO

correctly cited the 2018 version of rule 69B - 231.100 as to the

penalty for section 626.53 6, but incorrectly cited the 2019

version of rule 69B - 231.090 as to the penalty for section

626.621(12).

COPIES FURNISHED:

David J. Busch, Esquire

Department of Financial Services

Room 612, Larson Building

200 East Gaines Street

Tallahassee, Florida 32 399 - 0333

(eServed)

Michael Buchholtz, Esquire

The Law Office of Michael Buchholtz

Post Office Box 13015

St. Petersburg, Florida 33777

(eServed)

Julie Jones, CP, FRP, Agency Clerk

Division of Legal Services

Department of Financial Services

200 East Gain es Street

Tallahassee, Florida 32399 - 0390

(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.