19-000165 Marika Tolz vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Tuesday, April 30, 2019.

Summary: Petitioner's wire fraud was "in connection with" a real estate transaction because she used the proceeds to mortgage, maintain, or improve her real property. Recommend denial of participation in ELMORE program for mortgage assistance.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARIKA TOLZ,

Petitioner,

vs. Case No. 19 - 0165

FLORIDA HOUSING FINANCE

CORPORATION,

Respondent.

_______________________________/

RECOMMENDED ORDER

Pursuant to notice, a formal ad ministrative hearing was

conducted before Administrative Law Judge Mary Li Creasy by

video teleconference with locations in Miami and Tallahassee,

Florida, on March 6, 2019.

APPEARANCES

For Petitioner: Matthew J. Schlichte, Esquire

Law Of fice of Ray A. Schlichte, Jr., P.A.

2134 Hollywood Boulevard

Hollywood, Florida 33020

For Respondent: Betty Zachem, Esquire

Assistant General Counsel

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

Whether Petitioner was properly denied mortgage assistance

through Florida Housing Finance Corporation's ("Florida

Housing") Hardes t - Hit Fund Elderly Mortgage Assistance

("ELMORE") program based on a conviction for fraud allegedly in

connection with a real estate transaction.

PRELIMINARY STATEMENT

On or about November 8, 2018, Petitioner, Marika Tolz

("Tolz"), submitted an applic ation for mortgage assistance

through Florida Housing's Hardest - Hit Fund. On December 5,

2018, Florida Housing's Director of Homeownership Programs,

David Westcott, issued a letter with an ineligibility

determination to Tolz , which included a Notice of Ri ghts.

Petitioner Tolz timely filed a "Petition for Reconsideration and

Approval of Applicants Eligibility to the State of Florida

Elmore Program" with Florida Housing. On December 21, 2018,

Florida Housing issued an Order Dismissing the Petition with

Lea ve to Amend. Petitioner Tolz tim ely filed an Amended

Petition.

Florida Housing referred the matter to the Division of

Administrative Hearings ("DOAH") on January 9, 2019, for

assignment of an administrative law judge. The final hearing

took place as scheduled on March 6, 2019, via video

teleconference in Miami and Tallahassee, Florida.

During the hearing, Tolz testified on her own behalf.

Florida Housing presented the testimony of David Westcott. Tolz

offered ten exhibits, all of which were ad mitted into evidence

as Petitioner's Exhibits 1 through 10. Florida Housing offered

11 exhibits, all of which were admitted into evidence as

Respondent's Exhibits 1 through 11.

The Transcript was filed with DOAH on March 28, 2019. The

timely filed proposed r ecommen ded o rders have been considered in

the preparation of this Recommended Order. Unless otherwise

noted, all references to the Florida Statutes and the Florida

Administrative Code Rules are to those currently in effect .

FINDING S OF FACT

The Parties

1. Florida Housing is a public corporation created

pursuant to section 420.504, Florida Statutes, to promote the

public welfare by administering the governmental function of

financing or refinancing housing. For purposes of this

proceeding, Flori da Housing is an agency of the State of

Florida.

2. Florida Housing is also considered the state's housing

finance agency which means Florida Housing, at times, conducts

business as if it were a financial institution. Florida Housing

administers the Hard est - Hit Fund , using funds appropriated by

the United States Congress through the Emergency Economic

Stabilization Act to help stabilize housing markets and prevent

foreclosures. The Hardest - Hit Fund come s directly to Florida

Housing from the United States Treasury through a Housing

Finance Agency ("HFA") Participation Agreement.

3. The ELMORE program is one of the programs created under

t he umbrella of the Hardest - Hit F und. The ELMORE program is

designed to assist senior homeowners in Florida who are fac ing

foreclosure due to the inability to pay property charges such as

property taxes, homeowners insurance, and homeowners or condo

association dues after the homeowner was paid all of the equity

under a reverse mortgage.

4. The HFA agreement is a summary guideline for the ELMORE

program and its general requirements. The stated goal of the

program is to help senior homeowners remain in their homes. The

Summary Guidelines include certain borrower eligibility

criteria, property/loan eligibility criteria , an d program

exclusions , among other guidelines. The program exclusions

reference the "Dodd - Frank exclusion for having been convicted of

a mortgage - related felony in the past ten years."

5. The Dodd - Frank Act exclusion for criminal applicants is

codified 12 U.S.C. § 5220b , and states in part :

(d) Prevention of qualification for

criminal applicants

(1) In general

No person shall be eligible to begin

receiving assistance from the Making Home

Affordable Program authorized under the

Emergency Economi c Sta bilization Act of 2008

(12 U.S.C. 5201 et seq.), or any other

mortgage assistance program authorized or

funded by that Act, on or after 60 days

after July 21, 2010, if such person, in

connection with a mortgage or real estate

transaction, has been convicte d, within the

last 10 years, of any one of the following:

(A) Felony larceny, theft, fraud, or

forgery.

(B) Money laundering.

(C) Tax evasion.

6. On or about February 27, 2017, Betty Baldwin, Power of

Attorney for Tolz, submitted an applica tion for mortgage

assistance through Florida Housing's Hardest - Hit Fund for ELMORE

benefits. On or about May 11, 2017, the application was denied.

7. On or about November 8, 2018, Tolz submitted another

application for mortgage assistance from the ELMORE program. On

December 5, 2018, Florida Housing's Director of Homeownership

Programs, David Westcott, issued a letter with an ineligibility

determination to Tolz , which included a Notice of Rights. 1/

Mr. Westcott is ultimately responsible for the fi nal eligibility

determinations on Hardest - Hit F und mortgage assistance

applications.

The Denial of ELMORE Program Benefits

8. Mr. Westcott denied Tolz's application for ELMORE

program funds because she had , what Mr. Westcott determined to

be , a disqu alifying felony conviction in connection with a real

estate transaction in violation of the Dodd - Frank Act provision.

Mr. Westcott testified that pursuant to the HFA agreement with

the United States Treasury, Florida Housing is prohibited from

using ELMOR E funds to assist applicants that have a

disqualifying Dodd - Frank Act conviction.

9. During the period of 2003 through 2010, Tolz used her

position as a fiduciary in the role of bankruptcy trustee,

receiver, and personal represent ative to misappropri ate millions

of dollars from bankruptcy estates, receiverships, and other

matters, by writing or causing the writing of unauthorized

checks from a variety of fiduciary accounts which contained

funds she was appointed to safeguard.

10. Tolz then used the misappropriated money for her own

benefit and to conceal her previous misappropriations by

restoring the balances of other fiduciary accounts from which

she had previously taken funds in a Ponzi scheme framework. To

conceal this theft, Tolz falsified documents and used a

fictitious bank account.

11. On or about December 12, 2011, Tolz was convicted in

Broward County Circuit Court of grand t heft in the first d egree.

Tolz was convicted on or about July 27, 2011, in the United

States District C ourt for the Southern District of Florida of

conspiracy to commit wire fraud in violation of 18 U.S.C.

§ 1349 .

12. To secure a plea deal and in order to bolster her

claim that her sentence should be reduced from the federal

guidelines, prior to sentencin g, Tolz surrendered five real

estate properties , which she owned , to the United States

government. The value of these properties was then used to

offset and lessen Tolz's restitution obligation to her victims.

Tolz understood that these properties would not be accepted to

satisfy her restitution obligation unless they were purchased,

mortgaged, or improved with the assets of her victims.

13. In the federal criminal case, Tolz executed a Factual

Basis Supporting Change of Plea ("Factual Basis") on or about

April 15, 2011. Tolz agreed not to contest the information in

the Factual Basis. Further, Tolz agreed that it provided a

sufficient factual basis for her plea of guilty in the case, and

had the case proceeded to tria l, that the United States would

have proven the facts beyond a reasonable doubt.

14. Paragraph 11 of the Factual basis states:

MARIKA TOLZ, directly or indirectly,

utilized funds obtained through the

fraudulent scheme to purchase, maintain and

improve real properties, including, but not

limited to the following real properties:

a) 2344 North Federal Highway, Hollywood,

Florida;

b) 1804 Sherma n Street, Hollywood, Florida;

c) 704 SE 3rd Avenue, Hallandale, Florida;

d) 815 SW 30th Street, Ft. Lauderdale,

Florida; and

e) 30 31 North Ocean Blvd, Apartment 403,

Fort Lauderdale, Florida 33308.

15. In making the ineligibility determination on Tolz's

application for ELMORE program funds, Mr. Westcott determined

that Tolz's conviction was in connection with a real estate

tra nsaction because Tolz agreed in the Factual Basis that she

used funds obtained through the fraud to "purchase, maintain and

improve real properties."

16. Florida Housing determined that Tolz's conviction

disqualified her from receiving mortgage assis tance from the

ELMORE program because:

a) As part of the Hardest - Hit F und, the ELMORE program

funds are authorized by the Emergency Economic Stabilization

Act of 2008;

b) Tolz was convicted of the enumerated offense of a

"fraud;"

c) The c onviction occurred on or about July 21, 2011,

which is within the last ten years; and

d) The conviction was in connection with a real estate

transaction because Tolz used funds obtained through the fraud

to "purchase, maintain and improve real proper ties."

"In Connection With" A Mortgage or Real Estate Transaction

17. Tolz contends that her crimes were not "in connection

with a mortgage or real estate transaction." At both her

sentencing hearing in federal court and at the final hearing in

this proceeding, Tolz stated that she owned these surrendered

properties for 30 or 40 years. Tolz now argues that because she

owned these properties well before the fraud of which she was

convicted occurred, no mortgage or real estate transaction was

involved in the crime and , therefore, she should not be

disqualified from ELMORE benefits.

18. Tolz now claims she surrendered these properties to

facilitate the forfeiture on the advice of counsel, that she was

heavily medicated at the time of sentencing, a nd that the

prosecutor and the court knew that these properties were not

associated with her underlying crimes. Tolz admitted at final

hearing that she surrendered these properties to do an end - run

around the system to reduce the more than two million dol lars

she owed in restitution.

19. However, in that same sentencing hearing, the

prosecutor repres enting the United States stated "I'll also

indicate, although it's clear from the record, that

notwithstanding the picture that she's somehow a pauper, o r was

a pauper, the fact of the matter is the forfeiture properties

indicated in the forfeiture which she agreed to were her

properties, at least partially paid for by the offense." 2/ An

impartial reading of the sentencing transcript demonstrates that

dur ing sentencing the United States believed that the properties

involved in the criminal forfeiture were, in part, paid for by

the crime for which Petitioner was convicted.

20. The undersigned finds the facts, as offered by Tolz in

her 2011 "Factual Ba sis" offered in support of a sentence

reduction and reduction of her restitution obligation, to be

more credible than her denial at final hearing that these

properties were not purchased, improved, or mai ntained with the

funds from her crimes.

CONCLUSIONS OF LAW

21. The Division of Administrative Hearings has

jurisdiction pursuant to sections 120.569 and 120.57(1), Fla.

Stat.

22. Tolz, as the party asserting the affirmative, bears

the burden of proof to go forward with the evidence. See

Florida Dep't of Transp. v. J.W.C. Co., Inc. , 396 So. 2d 778,

788 (Fla. 1st DCA 1981); E nvtl. T rust v. State, Dep't of Envtl.

Prot . , 714 So. 2d 493, 497 (Fla. 1st DCA 1998) ("A party who

asserts a disputed claim before an administrative agency

generally has the burden of going forward with the evidence as

well as the ultimate burden of establishing the basis for the

claim.") .

23. Tolz argues that although she was convicted of a

conspiracy to commit wire f raud within ten years of her

application for ELMORE p rogram benefits , there was no evidence

that said conspiracy was in any way related to, or in connection

with, a transaction related to a mortgage or a transaction

related to the purchase or sale of real estate. According to

the Petition, the offense was "wire fraud" and dealt with trust

account checks which were never involved in any mortgage

transactions.

24. Essentially, Tolz contends that the underlying crime

of wire fraud associated with misappropriating funds had nothing

to do with a mortgage or real estate transac tion. Tolz suggests

that what she did with the funds after the crime does not make

the underlying crime "in connection with a mortgage or real

estate transaction."

25. Florida Housing argues that the wire fraud of which

Tolz was convicted necessarily was "in connection with" a

mortgage or real estate transaction because, as stated in Tolz's

Factual Basis, the proceeds of her crime were used to purchase,

improve, or maintain her real property.

26 . This dispute turns on the meaning of the phrase "in

connec tion with." This phrase is not defined within the Dodd -

Frank Act exclusion for criminal applicants.

27 . "Where, as here, a statute does not define t he phrase

'in connection with, " the word s " should be accorded with their

customary meaning.'" U.S. v. Cos tas - Torres , 2016 U. S. Dist.

LEXIS 179469 , at *7 (D. P.R July 18, 2016) ( citing U.S. v.

Thompson , 32 F.3d 1, 5 (1st Cir. 1994) ) . In Thompson , the First

Circuit Court of Appeals held that, under the "plain meaning" of

that phrase, an act is committed "in conn ection with" another

act whenever the first act "somehow aids or facilitates, or has

the potential to aid or facilitate, the commission of [the other

act]." Id. at 6.

28 . Merriam - Webster's Collegiate Dictionary , 12th e d.

( 2016) , defines "connection" as a "causal or logical relation or

sequence." The critical inquiry is whether there is a

facilitative nexus between the crime and a mortgage or real

estate transaction. See Smith v. United States , 113 S. Ct.

2050, 2059, 124 L. Ed. 2 d 138 (1993).

29 . Tolz's Factual Basis statement that she, "utilized

funds obtained through the fraudulent scheme to purchase,

maintain and improve real properties" demonstrates that her

crime facilitated a mortgage or real estate transaction.

Despite Tolz's testimony that she o wned these properties for

many years prior to the crime, she failed to present evidence at

the final hearing that the five surrendered properties were not,

in fact, mortgaged, maintained, or improved by the proceeds of

her crime. Securing a second mortgag e, maintaining, or

improving these real properties would constitute a real estate

transaction.

30 . In light of this nexus between the fraud and a real

estate transaction, Tolz failed to demonstrate by a

preponderance of the evidence an entitlem ent to part icipate in

the ELMORE program and Florida Housing properly denied T olz's

eligibility to participate .

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that Florida Housing enter a final order

dismissing Peti tioner's Amended Petition.

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

Tallahassee, Leon County, Florida.

S

MARY LI CREASY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalac hee 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 30th day of April , 2019 .

ENDNOTE S

1/ Other denial letters were sent to Petit ioner from Florida

Housing's advisors, but it was Florida Housing's denial letter

that provided Petitioner with c hapter 120 , Florida Statutes,

rights.

2/ See Petitioner's attachment to her Petition of Transcript of

Sentencing Hearing in the United States District Court, Southern

District of Florida, Miami D ivision, dated July 27, 2011,

page 38. Although this document was not admitted into evidence,

it is part of the record because it is incorporated by reference

in the Petition and was relied upon by bot h parties in the

presentation of their cases at final hearing.

COPIES FURNISHED:

Betty Zachem, Esquire

Assistant General Counsel

Florida Housing Finance Corporation

227 North Bronough Street , Suite 5000

Tallahassee, Florida 32301

(eServed)

Matthew J. Sc hlichte, Esquire

Law Office of Ray A. Schlcihte, Jr., P.A.

2134 Hollywood Boulevard

Hollywood, Florida 33020

(eServed)

Hugh R. Brown, General Counsel

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301 - 1 329

(eServed)

Corporation Clerk

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301 - 1329

(eServed)

NOTICE OF RIGHT TO FILE OBJECTIONS

All parties have the right to sub mit written objections within

5 days from the date of this Recommended Order. Any objections

to this Recommended Order should be filed with the agency that

will issue the final order in this case and shall be filed and

served exclusively by email. Fla. Admin. Code R. 67 -

60.009(3)(b).