93-006591 Division Of Real Estate vs. Christopher Chillemi, Michael F. Chillemi, T/A Century 21 Chillemi Enterprises Status: Closed Recommended Order on Friday, April 8, 1994.

Summary: Broker failed to properly reconcile trust account as prescribed by rule but was not guilty of an impropriety with regard to funds.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 93-6591

)

CHRISTOPHER CHILLEMI, and )

MICHAEL F. CHILLEMI, t/a )

CENTURY 21 CHILLEMI ENTERPRISES, )

)

Respondents. )

_________________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly

designated Hearing Officer, William J. Kendrick held a formal hearing in the

above-styled case on March 3, 1994, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Senior Attorney

Department of Business and

Professional Regulation

Division of Real Estate

400 West Robinson Street

Post Office Box 1900

Orlando, Florida 32801-1772

For Respondents: Christopher Chillemi, pro se

Michael F. Chillemi, pro se

3615 Lake Worth Road

Lake Worth, Florida 33461

STATEMENT OF THE ISSUE

At issue in this proceeding is whether respondents committed the offenses

alleged in the administrative complaint and, if so, what disciplinary action

should be taken.

PRELIMINARY STATEMENT

By administrative complaint dated August 19, 1993, petitioner charged that

respondents, licensed real estate brokers in the State of Florida, violated

certain provisions of Section 475.25, Florida Statutes. Specifically, with

respect to the receipt and retention of a security deposit of $375.00 for the

rental of an apartment, the complaint charges that Christopher Chillemi (Count

I) and Michael Chillemi (Count II) violated Section 475.25(1)(b), Florida

Statutes, by engaging in an act of "misrepresentation, concealment, false

promises, false pretences, dishonest dealing by trick, scheme or device,

culpable negligence, or breach of trust in any business transaction," and that

Michael Chillemi (Count III) violated Section 475.25(1)(e), Florida Statutes,

and Rule 61J2-10.032, Florida Administrative Code, by "failure to notify the

Florida Real Estate Commission of a deposit dispute and failure to implement

remedial action." Finally, Count IV (mistakenly designated as Count III)

charges that Michael Chillemi violated the provisions of Section 475.25(1)(e),

Florida Statutes, and Rule 61J2-14.012(2) and (3) based on an audit of June 24,

1993, which petitioner contends revealed that he "failed to reconcile the escrow

accounts by comparing the total trust liability with the reconciled bank

balances of all trust accounts," and therefore was "guilty of failure to prepare

and sign the required written monthly escrow statement-reconciliations."

At hearing, petitioner called Rose M. Bocek and Terry Gills- Addleburg as

witnesses, and its exhibits 1-7 were received into evidence. Respondents

Christopher Chillemi and Michael Chillemi testified on their own behalf, but

offered no additional exhibits.

The transcript of the hearing was filed March 24, 1994, and the parties

were accorded ten days from that date within which to file proposed findings of

fact. Neither party elected to file such proposals within the allotted time,

and as of the date of the entry of this recommended order no proposals have been

filed.

FINDINGS OF FACT

The parties

1. Petitioner, Department of Business and Professional Regulation,

Division of Real Estate, is a state government licensing and regulatory agency

charged with the responsibility and duty to prosecute administrative complaints

pursuant to the laws of the State of Florida, in particular Section 20.165,

Florida Statutes, Chapters 120, 455, and 475, Florida Statutes, and the rules

promulgated pursuant thereto.

2. Respondent, Christopher Chillemi (Christopher), is now and was at all

times material hereto a licensed real estate broker in the State of Florida,

having been issued license number 0136243. The last license issued to

Christopher was as a broker- salesperson with Michael F. Chillemi, 3615 Lake

Worth Road, Lake Worth, Florida 33460.

3. Respondent, Michael F. Chillemi (Michael), is now and was at all times

material hereto a licensed real estate broker in the State of Florida, having

been issued license number 0014678. The last license issued was as a broker t/a

Century 21 Chillemi Enterprises, 3615 Lake Worth Road, Lake Worth, Florida

33460.

Counts I-III, the rental transaction

4. On May 18, 1993, Christopher, while licensed and operating as a broker-

salesperson for Michael F. Chillemi, showed a rental unit on which they had a

listing, located at 752 Lori Drive, Palm Beach County, Florida, to Ms. Rose M.

Bocek.

5. Ms. Bocek liked the apartment, but since she was currently under a

lease at another residence, advised Christopher that she could not take the unit

unless the owner agreed to start the lease in August 1993. Christopher advised

Ms. Bocek that he would present her offer to the owner, who lived out of state,

and requested a deposit check should the owner agree. Thereupon, Ms. Bocek

issued her check, dated May 18, 1993, payable to "C-21 Chillemi Escrow" in the

sum of $375.00, as a deposit on the apartment, and delivered it to Christopher.

1/

6. That evening, Christopher spoke with the owner and he agreed to lease

the apartment to Ms. Bocek starting in August 1993. Ms. Bocek's check for $375

was duly deposited into the Century 21 Chillemi Enterprises' escrow account on

May 19, 1993.

7. Notwithstanding that the owner had agreed to lease the premises to her

as she had requested, Ms. Bocek called Christopher on May 19, 1993, and told him

she had changed her mind and did not want to rent the apartment. Christopher,

after checking with the owner, advised Ms. Bocek that, under the circumstances,

the owner had advised him not to return her deposit.

8. After speaking with friends, Ms. Bocek contacted the Florida Real

Estate Commission to see if it could assist her in retrieving her money and, on

June 24, 1993, an investigator went to Century 21 Chillemi Enterprises' office

pursuant to that complaint.

9. Subsequently, by letter of June 24, 1993, Ms. Bocek made a written

demand on Michael Chillemi, Century 21 Chillemi Enterprises, for the return of

her $375.00. After speaking with the owner by phone, and receiving his

permission, Michael Chillemi did, on June 25, 1993, release from his escrow

account and deliver to Ms. Bocek her deposit of $375.00, and by letter of the

same date notified the Florida Real Estate Commission of the disposition of the

deposit.

The audit of June 24, 1993

10. While at the premises of Century 21 Chillemi Enterprises on June 24,

1993, petitioner's investigator conducted an audit inspection of Michael

Chillemi's escrow account. That audit revealed that although Michael's escrow

account balanced perfectly with the sums he should have in escrow, as it had on

every prior audit of his office accounts, Michael did not have a written monthly

statement-reconciliation document or form upon which was included the date the

reconciliation was undertaken, the date used to reconcile the balances, the name

of the bank, the name of the account, the account number, the account balance

and date, deposits in transit, outstanding checks identified by date and check

number, and which was signed and dated by the broker, as required by Rule 61J2-

14.012, Florida Administrative Code. Rather, Michael's practice was to utilize

the back of his bank statement, together with a list of all pending contracts

(which included the names of the parties, the date the transaction was to close,

and the amount in escrow) and his check stubs, to reconcile his trust liability.

These sources of information supplied the basic information required by Rule

61J2- 14.012, Florida Administrative Code, but the method employed to account

for his trust liability did not result in one document reflecting the required

information, and the reconciliation Michael did was not dated and signed. But

for such failing, Michael's banking and accounting practices were deemed sound

by petitioner's investigator.

CONCLUSIONS OF LAW

11. The Division of Administrative Hearings has jurisdiction over the

parties to, and the subject matter of, these proceedings. Sections 120.57(1)

and 120.60(7), Florida Statutes.

12. At issue in this proceeding is whether Christopher's conduct violated

the provisions of Section 475.25(1)(b), Florida Statutes, and whether Michael's

conduct violated the provisions of Section 475.25(1)(b) and (e), Florida

Statutes, and Rules 61J2-10.032 and 61J2-14.012(2) and (3), Florida

Administrative Code. In cases of this nature, the petitioner bears the burden

of proving its charges by clear and convincing evidence. See Ferris v.

Turlington, 510 So.2d 292 (Fla. 1987). The nature of clear and convincing

evidence has been described in Slomowitz v. Walker, 429 So.2d 797, 800 (Fla. 4th

DCA 1983), as follows:

We therefore hold that clear and convincing

evidence requires that the evidence must be

found to be credible; the facts to which the

witnesses testify must be distinctly remember-

ed; the testimony must be precise and explicit

and the witness 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 convic-

tion, without hesitancy, as to the truth of

the allegations sought to be established.

See also Smith v. Department of Health and Rehabilitative Services, 522 So.2d

956 (Fla. 1st DCA 1988), which quotes with approval the above-quoted language

from Slomowitz.

13. In establishing the foregoing standard, the court in Ferris v.

Turlington, supra, noted at page 293:

. . . the revocation of a professional li-

cense is of sufficient gravity and magnitude

to warrant a standard of proof greater than a

mere preponderance of the evidence . . . The

correct standard for the revocation of a pro-

fessional license such as that of a lawyer,

real estate broker, or, as in this instance,

a teacher, is that the evidence must be clear

and convincing. We agree with the district

court in Reid v. Florida Real Estate Commis-

sion, 188 So.2d 846, 851 (Fla. 2d DCA 1966),

that:

The power to revoke a license should be

exercised with no less careful circum-

spection than the original granting of

it. And the penal sanctions should be

directed only toward those who by their

conduct have forfeited their right to the

privilege, and then only upon clear and

convincing proof of substantial causes

justifying the forfeiture.

And, in Brod v. Jernigan, 188 So.2d 575 (Fla. 2d DCA 1966), the court noted, at

page 581:

Chapter 475 vests in the Florida Real Estate

Commission a broad discretionary power and

authority to supervise the privileged business

of real estate broker and to deal firmly with

those engaged in it, even to the point of ta-

king away their means of livelihood by revo-

cation or suspension of license. But such

potent administrative weapons must always be

reasonably and cautiously, and even sparingly,

utilized. The administrative process of the

Commission should be aimed at the dishonest

and unscrupulous operator, one who cheats,

swindles, or defrauds the general public in

handling real estate transactions. (Emphasis

added)

14. Pertinent to this case, Section 475.25(1), Florida Statutes, provides

that the Florida Real Estate Commission may:

. . . place a licensee . . . on probation;

may suspend a license . . . for a period not

exceeding 10 years; may revoke a license . . .

may impose an administrative fine not to ex-

ceed $1,000 for each count or separate offense;

and may issue a reprimand, and any or all of

the foregoing, if it finds that the

licensee . . .

* * *

(b) Has been guilty of . . . misrepresen-

tation, concealment, false promises, false

pretenses, dishonest dealing by trick, scheme,

or device, culpable negligence, or breach of

trust in any business transaction. . . .

* * *

(e) Has violated any of the provisions of

. . . any . . . rule made . . . under the

provisions of this chapter or chapter 455.

15. First, with regard to Christopher, the sole charge in the

administrative complaint (Count I) is that his conduct with regard to Ms. Bocek

violated the provisions of Section 475.25(1)(b), Florida Statutes. Such charge

has not, however, been sustained. Indeed, there is nothing of record that would

raise even the slightest credible suggestion that Christopher's conduct

evidenced a "misrepresentation, concealment, false promise, false pretense,

dishonest dealing by trick, scheme or device, culpable negligence or breach of

trust in any business transaction." Rather, Christopher conducted himself most

appropriately, and assured that the deposit check was immediately delivered to

his broker and deposited to his broker's escrow account as required by law.

Rules 61J2-14.008, 61J2-14.009, and 61J2-14.010, Florida Administrative Code.

At that point, whether and upon what terms the deposit should be released from

escrow was the responsibility of the broker, Michael Chillemi.

16. Second, with regard to the charge in the administrative complaint

(Count II) that Michael's conduct violated the provisions of Section

475.25(1)(b), Florida Statutes, there is likewise not one scintilla of credible

proof that his conduct with regard to Ms. Bocek could be characterized as a

"misrepresentation, concealment, false promise, false pretense, dishonest

dealing by trick, scheme, or device, culpable negligence or breach of trust in

any business transaction." Indeed, the only meaningful issues presented in this

case are Counts III and IV of the administrative complaint which allege that

Michael violated the provisions of Section 475.25(1)(e), Florida Statutes, by

failing to comply with Rules 61J2-10.032 and 61J2-14.012(2) and (3), Florida

Administrative Code.

17. Pertinent to Count III, Rule 61J2-10.032 places certain notice

requirements upon a real estate broker who receives conflicting demands for any

trust funds being maintained in the broker's escrow account, as well as certain

mandated remedial actions. The rule prescribes the following:

(1) A real estate broker, upon receiving

conflicting demands for any trust funds being

maintained in the broker's escrow account,

must provide written notification to the Com-

mission within 15 business days of the last

party's demand and the broker must institute

one of the settlement procedures as set forth

in s. 475.25(1)(d)1., Florida Statutes, within

15 business days after the date the notifica-

tion is received by the Division. A broker,

who has a good faith doubt as to whom is en-

titled to any trust funds held in the broker's

escrow account, must provide written notifica-

tion to the Commission within 15 business days

after having such doubt and must institute one

of the settlement procedures as set forth in

s. 475.25(1)(d)1., Florida Statutes, within 15

business days after the date the notification

is received by the Division.

(2) . . . Upon final disposition of the

matter, the broker shall notify the Commission

within 10 business days of the final account

and disbursement of the trust funds.

18. Here, while Michael did not provide the Commission with written notice

of the conflicting demands he received to the deposit within 15 business days of

May 19, 1993, he did resolve the demands to the deposit amicably, and refunded

the deposit to Ms. Bocek within one day of receipt of her written demand of June

24, 1993, and so notified the Commission, as required by law. Accordingly,

while Michael failed to comply strictly with rule 61J2-10.032, Florida

Administrative Code, and therefore may be deemed in violation of Section

475.25(1)(e), Florida Statutes, his failing warrants, at most, a reprimand.

19. Pertinent to Count IV (mistakenly denoted as Count III in the

administrative complaint), Rule 61J2-14.012, Florida Administrative Codes,

provides:

(2) At least monthly, a broker shall cause

to be made a written statement comparing the

broker's total liability with the reconciled

bank balance(s) of all trust accounts. The

broker's trust liability is defined as the sum

total of all deposits received, pending and

being held by the broker at any point in time.

The minimum information to be included in the

monthly statement-reconciliation shall be the

date the reconciliation was undertaken, the

name of the bank(s), the name(s) of the ac-

count(s), the account number(s), the account

balance(s) and date(s), deposits in transit,

outstanding checks identified by date and

check number, and any other items necessary to

reconcile the bank account balance(s) with the

balance per the broker's checkbook(s) and other

trust account books and records disclosing the

date of receipt and the source of the funds.

The broker shall review, sign and date the

monthly statement-reconciliation.

(3) Whenever the trust liability and the

bank balances do not agree, the reconciliation

shall contain a description or explanation for

the difference(s) and any corrective action

taken in reference to shortages or overages of

funds in the account(s). Whenever a trust bank

account record reflects a service charge or

fee for a non-sufficient check being returned

or whenever an account has a negative balance,

the reconciliation shall disclose the cause(s)

of the returned check or negative balance and

the corrective action taken. (Emphasis added)

20. Here, there is no proof that Michael violated subsection (3), of Rule

61J2-14.012, Florida Administrative Code. Indeed, as noted in the findings of

fact, Michael's escrow account on June 24, 1993, as it had on every previous

audit, balanced precisely with his trust liability. Rather, the only substance

to petitioner's charge here is a perceived violation of subsection (2) of Rule

61J2-14.012, Florida Administrative Code, for Michael's failure to have signed

and dated a monthly statement-reconciliation in a form preferred by the

petitioner.

21. While petitioner has apparently adopted as a guideline a form that it

prefers its brokers use for their monthly statement-reconciliation, Rule 61J2-

14.012(2), Florida Administrative Code, prescribes no specific "form" and no

form has been adopted by rule. Accordingly, the issue is not whether Michael

utilized the petitioner's preferred form, but whether the method adopted by

Michael conformed with the minimum requirements of Rule 61J2-14.012(2), Florida

Administrative Code. In this regard it must be concluded that the method

employed by Michael did not conform with the requirements of the rule since he

did not prepare a "written statement" that included the minimum information

required by the rule within one document and, moreover, did not sign and date

any review he did conduct. Notwithstanding, Michael did routinely reconcile his

escrow account, and his trust liabilities have consistently been in balance.

Under such circumstances, Michael's failure warrants, at most, a reprimand.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that a final order be rendered finding Christopher Chillemi not

guilty of the allegations set forth in Count I of the Administrative Complaint,

Michael Chillemi not guilty of the allegations set forth in Count II of the

administrative complaint, and Michael Chillemi guilty of the allegations set

forth in Counts III and IV of the administrative complaint. For the violations

set forth in Counts III and IV of the administrative complaint it is recommended

that Michael Chillemi receive a reprimand, and that he be directed to comply

with the provisions of Rule 61J2-14.012(2), Florida Administrative Code, with

regard to all future reconciliations.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 8th day of

April 1994.

_________________________________

WILLIAM J. KENDRICK

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 8th day of April 1994.

ENDNOTE

1/ At hearing, Ms. Bocek testified that when she gave the check, clearly marked

"deposit," to Christopher that he assured her "if anything happened" she could

get it back. Christopher denied this, and testified that he told her if the

owner refused her offer that she would receive her deposit back but not if he

accepted the offer. Christopher's testimony is more credible than that of Ms.

Bocek and his version is accepted.

COPIES FURNISHED:

James H. Gillis

Senior Attorney

Department of Business and Professional Regulation

Division of Real Estate

Post Office Box 1900

Orlando, Florida 32801-1772

Christopher Chillemi

Michael F. Chillemi

3615 Lake Worth Road

Lake Worth, Florida 33461

Jack McRay

General Counsel

Department of Business and Professional Regulation

Suite 60

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Darlene F. Keller

Division Director

Division of Real Estate

Department of Professional Regulation

400 West Robinson Street

Post Office Box 1900

Orlando, Florida 32802-1900

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended

order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this recommended order. Any exceptions to this recommended order should be

filed with the agency that will issue the final order in this case.