94-002094 Florida Real Estate Commission vs. Charles Mckee Status: Closed Recommended Order on Tuesday, October 4, 1994.

Summary: Respondent guilty of transferring funds from business he operated with ex-wife to new business he opened; checks to clients bounced; failed to protect clients.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, DIVISION )

OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 94-2094

)

CHARLES A. MCKEE, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on

September 1, 1994 in Fort Pierce, Florida, before J. Stephen Menton, a duly

designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Steven W. Johnson, Senior Attorney

Department of Business and

Professional Regulation

Division of Real Estate

Hurston North Tower, No. 308A

400 West Robinson Street

Orlando, Florida 32801

For Respondent: No appearance

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent is guilty of the violations

alleged in the Administrative Complaint filed by Petitioner and, if so, whether

Respondent's real estate license should be suspended, revoked or otherwise

disciplined.

PRELIMINARY STATEMENT

In a four count Administrative Complaint filed on March 9, 1994,

Petitioner, the Department of Business and Professional Regulation, Division of

Real Estate, charged Respondent with violating several sections of Chapter 475,

Florida Statutes. Specifically, Petitioner sought to discipline Respondent's

real estate license charging that Respondent (1) was guilty of dishonest dealing

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

transaction in violation of Subsection 475.25(1)(b), Florida Statutes; (2)

failed to maintain an office and office entrance sign as required by Subsection

475.22(1), Florida Statutes and 61J2-10.024, Florida Administrative Code and,

therefore, Respondent had violated Subsection 475.25(1)(e); was guilty of

violating Rule 61J2-10.027, Florida Administrative Code, and Subsection

475.25(1)(e), Florida Statutes, as a result of his use of an identification or

designation of an association or organization having to do with real estate in

such a manner as to lead persons to believe that he was a member in good

standing of such association or organization, when in fact he was not a member

thereof in good standing and was not otherwise entitled to use such

identification or designation; and, (4) was in violation of Subsection

475.25(1)(o), Florida Statutes, because he was guilty for a second time of

misconduct that warrants his suspension or was guilty of a course of conduct or

practices which show that he is so incompetent, negligent, dishonest, or

untruthful that the money, property, transactions, and rights of investors, or

those with whom he may sustain a confidential relation, may not safely be

entrusted to him.

Respondent disputed the charges and requested a hearing pursuant to Section

120.57(1), Florida Statutes. The case was referred to the Division of

Administrative Hearings which noticed and conducted the hearing.

Efforts by a previously assigned Hearing Officer to reach Respondent by

phone during the week preceding the hearing were unsuccessful. Respondent did

not appear at the time and place scheduled for the hearing. A review of the

file confirmed that the Notice of Hearing was sent to Respondent at the address

listed on the Election of Rights form which Respondent filed to request a formal

hearing. There is no indication in the record that Respondent has relocated nor

is there any indication that the Notice of Hearing was returned as

undeliverable. Respondent did not notify Petitioner or the Division of

Administrative Hearings that he was unavailable on the scheduled hearing date

and/or that he wanted a continuance of the hearing. After waiting for

approximately 20 minutes for Respondent to appear, the hearing was commenced and

Petitioner presented its evidence. One of the witnesses at the hearing was

Respondent's former wife who stated that she had seen Respondent earlier in the

week and he was aware of the scheduled hearing. No communications from

Respondent have been received subsequent to the hearing.

At the hearing, Petitioner presented the testimony of three witnesses:

Terry Addleburg, an investigator for the Department; Loretta McKee; and Fran

Annette. Petitioner offered five exhibits into evidence, all of which were

accepted. No transcript of the proceeding has been filed. Only Petitioner

submitted proposed findings of fact and conclusions of law. A ruling on each of

Petitioner's proposed findings of fact is included in the Appendix to this

Recommended Order.

FINDINGS OF FACT

Based upon the oral and documentary evidence adduced at the final hearing

and the entire record in this proceeding, the following findings of fact are

made:

1. Petitioner is a state 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 20.30, Florida Statutes,

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

thereto.

2. At all times pertinent to this proceeding, Respondent Charles A. McKee

was a licensed real estate broker in Florida having been issued license no.

0335079 in accordance with Chapter 475, Florida Statutes. The last license

issued to Respondent was c/o McKee Realty, 10157 S. Federal Hwy., Port St.

Lucie, Florida 34952-5607 (the "Federal Highway Office").

3. On November 23, 1992, the Florida Real Estate Commission (the

"Commission") entered a Final Order finding Respondent guilty of failing to

timely notify the Commission of an escrow deposit dispute and, based on that

violation, assessing a fine of $500 against Respondent and placing him on

probation for one year with a requirement that he complete a 30 hour broker

management course.

4. Respondent's former wife, Loretta McKee, is also a licensed real estate

broker, and she was a partner with Respondent in McKee Realty. McKee Realty

began operating as a Century 21 franchise in approximately 1986 at the Federal

Highway Office.

5. McKee Realty maintained four separate bank accounts: a general

operating account; a general escrow account; a property management operating

account; and a property management escrow account. Both Respondent and Loretta

McKee were signatories on all of the accounts.

6. In January of 1993, Respondent and Loretta McKee separated. Divorce

proceedings were initiated in June. During the summer of 1993, Respondent and

Loretta McKee engaged in mediation in an effort to resolve the property issues

between them, including the distribution of the business.

7. While the parties were attempting to finalize a property settlement

agreement, they divided their time in the office. As part of their

negotiations, Respondent and Loretta McKee discussed an arrangement whereby

Respondent would continue the property management portion of the business and

his former wife would take over the general real estate business.

8. Sometime in the fall of 1993, Respondent transferred all of the funds

in the McKee Realty general operating account and both property management

accounts to a new "property management escrow account" which he opened.

Respondent transferred the funds and opened the new escrow account without the

knowledge or consent of Loretta McKee, one of the brokers for McKee Realty. As

a result of Respondent's actions, approximately twenty checks written to clients

by McKee Realty on the old accounts were returned for insufficient funds.

9. On November 16, 1993, Respondent, without the knowledge or consent of

broker Loretta McKee (his wife), removed the property management files and

office equipment from the McKee Realty Federal Highway Office and took them to

the new office opened by Respondent at 1926 Port St. Lucie Boulevard in Port St.

Lucie. Many of the files he removed were open or pending and his actions

resulted in a great deal of confusion and uncertainty for clients.

10. On January 10, 1994, Petitioner's Investigator Terry Addleburg

inspected Respondent's new office located at 1926 Port St. Lucie Boulevard and

audited the escrow/trust accounts.

11. The audit confirmed that on November 12, 1993, Respondent closed the

Century 21 McKee Realty property management escrow account #2274025969

maintained at Barnett Bank of Port St. Lucie. Respondent then reopened a new

escrow account bearing the name Century 21 McKee Realty Property Management

Escrow Account #3388673741 at Barnett Bank.

12. The audit also revealed that Respondent intermingled trust funds by

combining $24,227.30 from the Century 21 McKee Realty property management

operating account #2274025951 with money deposited in the new property

management escrow account #338867341.

13. The new property management escrow account had a total trust liability

of $44,299.35 and a reconciled bank balance of $43,498.43 indicating a shortage

of approximately $800.92.

14. Petitioner's auditor also noted that Respondent had failed to maintain

the required office entrance sign at the 1926 Port St. Lucie Boulevard location.

In addition, Respondent failed to register this location with the Petitioner

until after Petitioner's auditor pointed out that the location had to be

registered.

15. The evidence established that a Century 21 franchise is purchased for

a specific location. A franchisee is not permitted to open a new location

unless it is purchased and cleared through the franchisor. Respondent opened

his new office and placed a Century 21 sign on the door of that location without

the authority of the franchisor. Accordingly, it is concluded that Respondent

incorrectly represented he was a Century 21 franchisee at the 1926 SE Port St.

Lucie Boulevard location.

CONCLUSIONS OF LAW

16. The Division of Administrative Hearings has jurisdiction over the

parties to and the subject matter of this proceeding. Section 120.57(1),

Florida Statutes.

17. The parties were duly noticed of the hearing.

18. Pursuant to Section 475.25, Florida Statutes, the Florida Real Estate

Commission is authorized to suspend a license for up to ten years, revoke a

license, impose an administrative fine not to exceed $1,000 for each count or

separate offense, impose a reprimand, or any or all of the foregoing, if it

finds that a licensee has violated any of the provisions of that Statute. In

this case, the Administrative Complaint charges Respondent with violating

Sections 475.25(1)(b), (e) and (o), Florida Statutes.

19. Section 475.25(1)(b), Florida Statutes, proscribes dishonest dealing

and culpable negligence, as well as breach of trust. Section 475.25(1)(e),

Florida Statutes, includes violations of the Florida Administrative Code,

specifically Rules 61J2-10.024 and 61J2-10.027, which require the maintenance of

an office sign and prohibits the use of an organizational designation in a

manner that is misleading. Section 475.25(1)(o), Florida Statutes, proscribes

being found guilty a second time of misconduct that warrants suspension or being

found guilty of a course of conduct showing incompetence, dishonesty or

negligence such that the money and/or property of others may not safely be

entrusted to the licensee.

20. Petitioner has the burden of proof in this license disciplinary

proceeding and, since Petitioner has requested revocation or suspension of

Respondent's license, the allegations against Respondent must be proven by clear

and convincing evidence. See Ferris V. Turlington, 510 So.2d 292 (Fla. 1987);

Pic N' Save v. Department of Business Regulation, 601 So.2d 245 (Fla. 1st DCA

1992); Munch v. Department of Professional Regulation, 592 So.2d 1136 (Fla. 1st

DCA 1992); Newberry v. Florida Department of Law Enforcement, 585 So.2d 500

(Fla. 3d DCA 1991). "The evidence must be of such weight that it produces in

the mind of the trier of fact a firm belief or conviction, without hesitancy, as

to the truth of the allegations sought to be established." Slomowitz v. Walker,

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

21. Disciplinary action may be based only upon the violations specifically

alleged in the administrative complaint. See Kinney v. Department of State, 501

So.2d 129, 133 (Fla. 5th DCA 1987); Hunter v. Department of Professional

Regulation, 458 So.2d 842, 844 (Fla. 2d DCA 1984).

22. As a real estate licensee in Florida, Respondent occupies a status

under law with recognized privileges and responsibilities. Zichlin v. Dill, 25

So.2d 4 (Fla. 2d DCA 1946). "The law specifically requires that a person, in

order to hold a real estate license, must make it appear that he is honest,

truthful, trustworthy, of good character, and that he bears a good reputation

for fair dealing." McKnight v. Real Estate Commission, 209 So.2d 199 (Fla. 2d

DCA 1967). Anyone who deals with a licensee should be able to assume he is

dealing with an honest and ethical person. Shelton v. Real Estate Commission,

120 So.2d 191 (Fla. 2d DCA 1960).

23. The clear and convincing evidence presented in this case established

that Respondent was guilty of culpable negligence and breach of trust as alleged

in Count I of the Administrative Complaint. Respondent neglected the duties

manifest in his office as broker by closing the operating account and property

management accounts without Loretta McKee's knowledge and without making

arrangements to insure that all clients were notified and necessary steps were

taken to protect their interests.

24. The evidence also established that Respondent was guilty of the

violations alleged in Count II and III of the Administrative Complaint.

Respondent failed to register his new office with the Florida Real Estate

Commission until the failure was brought to his attention by Petitioner. More

significantly, Respondent used the Century 21 tradename at his new office

without authority and in violation of the company's policy.

25. The evidence did not establish that Respondent was guilty of the

violation alleged in Count IV of the Administrative Complaint. The prior

disciplinary action taken against Respondent did not result in the suspension of

his license. Furthermore, it can not be concluded based on the evidence

presented that Respondent engaged in a course of conduct which demonstrates

that the money and property of others can not be entrusted to him. It appears

that all of Respondent's actions in this case were related to his on-going

marital problems. Those problems apparently prompted him to exercise extremely

poor judgment, but it cannot be concluded that Respondent is dishonest or has

deliberately schemed to defraud any clients.

26. While Respondent was apparently experiencing a great deal of stress in

his personal life at the time of the instances alleged in this case, his

personal problems do not excuse his failure to handle his responsibilities nor

was Respondent justified in unilaterally closing the bank accounts and

transferring the files from the business he operated with his estranged wife.

Respondent was obligated to place the interests of the clients first and to

await a proper legal distribution of the jointly owned business.

27. Rule 61J2-24.001, Florida Administrative Code, sets forth the

disciplinary guidelines adopted by the Commission for Violations of Section

475.25, Florida Statutes. Subsection (3), of Rule 61J2-24.001, Florida

Administrative Code, provides that the normal range of penalties for violations

of Section 475.25(1)(b), Florida Statutes, is "[u]p to 5 years suspension or

revocation." Subsection (4)(a) of Rule 61J2.21.001 provides the Commission

authority to impose a penalty outside the normal range where there are

mitigating and aggravating circumstances. The mitigating or aggravating

circumstances that may warrant such a deviation are described in Subsection

(4)(b) of Rule 61J2-24.001, Florida Administrative Code, which provides as

follows:

Aggravating or mitigating circumstances may

include, but are not limited to, the following:

1. The severity of the offense.

2. The degree of harm to the consumer or public.

3. The number or counts in the Administrative

Complaint.

4. The number of times the offenses previously

have been committed by the licensee.

5. The disciplinary history of the licensee.

6. The status of the licensee at the time the

offense was committed.

7. The degree of financial hardship incurred by

a licensee as a result of the imposition of a

fine or suspension of the licensee.

8. Violation of the provision of Chapter 475,

Florida Statutes, where in a letter of guidance

as provided in Section 455.225(3), Florida

Statutes, previously has been issued to the

licensee.

28. In this case, Respondent's actions have caused some harm to consumers

who received the checks issued by McKee Realty which were returned for

insufficient funds. The evidence indicates that some of the clients who

received these checks have still not been paid the money owed to them.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a Final Order be entered finding Respondent guilty of the

allegations alleged in Counts I, II and III of the Administrative Complaint and

dismissing Count IV. As a penalty for the violations, an administrative fine of

$1,500 should be imposed against Respondent, his real estate license should be

suspended for 1 year followed by a two year probationary period with such terms

and conditions as may be imposed by the Commission.

DONE and ENTERED this 4th day of October, 1994, at Tallahassee, Florida.

___________________________________

J. STEPHEN MENTON

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 4th day of October, 1994.

APPENDIX TO RECOMMENDED ORDER

Only Petitioner submitted a proposed recommended order. The following

rulings are made with respect to the proposed findings of fact submitted by

Petitioner.

Petitioner's proposed findings of fact

1. Adopted in substance in Findings of Fact 1.

2. Adopted in substance in Findings of Fact 2.

3. Adopted in substance in Findings of Fact 10.

4. Adopted in substance in Findings of Fact 11.

5. Adopted in substance in Findings of Fact 12.

6. Adopted in substance in Findings of Fact 8.

7. Adopted in substance in Findings of Fact 8 and 9.

8. Adopted in substance in Findings of Fact 14.

9. Adopted in substance in Findings of Fact 13.

10. Adopted in substance in Findings of Fact 15.

11. Adopted in substance in Findings of Fact 3.

COPIES FURNISHED:

Steven W. Johnson, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

Hurston North Tower #308A

400 West Robinson Street

Orlando, Florida 32801

Charles A. McKee, pro se

772 SW Hibiscus Street

Port St. Lucie, Florida 34983

Darlene F. Keller, Director

Division of Real Estate

400 West Robinson Street

Orlando, Florida 32802-1900

Jack McRay, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

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.