94-005114 Division Of Finance vs. William H. Hughes Mortgage Broker, Inc., And William H. Hughes Status: Closed Recommended Order on Thursday, June 29, 1995.

Summary: Conviction of perjury is grounds for discip. (even revocation) w/o being part of mortgage transaction, but here, lesser penalty was w/in guidelines.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BANKING AND )

FINANCE, DIVISION OF FINANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 94-5114

)

WILLIAM H. HUGHES MORTGAGE )

BROKER, INC., HUGHES, WILLIAM )

H. D/B/A WILLIAM H. HUGHES, A )

SOLE PROPRIETORSHIP, AND )

WILLIAM H. HUGHES, INDIVIDUALLY, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

Upon due notice, this cause came on for formal hearing on April 11, 1995,

in Shalimar, Florida, before Ella Jane P. Davis, a duly assigned hearing officer

of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Elise M. Greenbaum, Chief Counsel

Office of the Comptroller

The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

and

Steven Godwin, Assistant General Counsel

Office of the Comptroller

The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

For Respondent: J. Ladon Dewrell, Esquire

Dewrell, Campbell & Shaw

207 Florida Place Southeast

Fort Walton Beach, Florida 32541

STATEMENT OF THE ISSUE

Whether the mortgage broker registration of Respondents William H. Hughes

Mortgage Broker, Inc.; Hughes, William H. d/b/a William H. Hughes, a sole

proprietorship; and William H. Hughes, individually, should be disciplined

pursuant to Section 494.0041 F.S., and if so, what is the appropriate penalty.

PRELIMINARY STATEMENT

On July 22, 1994, the Department of Banking and Finance (DBF) filed an

amended administrative complaint seeking to revoke the mortgage brokerage

registration of William H. Hughes Mortgage Broker, Inc.; Hughes, William H.

d/b/a William H. Hughes, a sole proprietorship; and William H. Hughes,

individually, based on findings contained in an examination report and based on

Respondent Hughes' conviction for perjury on November 23, 1993, in violation of

18 U.S.C. Section 1623.

On March 28, 1995, DBF filed a Notice of Voluntary Dismissal dismissing

portions the amended administrative complaint based on the examination report

findings, leaving only the circumstances surrounding Respondent Hughes' perjury

conviction at issue in this case.

Formal hearing was convened on April 11, 1995.

Official recognition was taken of Chapter 494 F.S. and the administrative

rules promulgated thereunder.

Petitioner stipulated that, regardless of similarity of name, the

prosecution herein was not directed against the mortgage broker's license also

known as "William H. Hughes Mortgage Broker, Inc." currently in effect for a

corporation of the same name, the entire stock of which is owned solely by James

Etheredge, and which lists its qualifying broker as Janeen Davis. (TR 19-21;

47-48; 50)

Petitioner DBF presented the oral testimony of Robert A. Tedcastle and

Respondent Hughes, and had 12 exhibits admitted in evidence.

Respondent Hughes testified on his own behalf and presented the oral

testimony of John M. McCrory, Jr., Dianne Pyburn-Jessup, Rise' Lamb, Mary

Rebholz, William R. Touchstone, Jr., and J. T. Murphy. Respondent had no

documentary exhibits admitted.

A transcript of proceedings was filed in due course, and all timely-filed

proposed findings of fact have been ruled upon in the appendix to this

recommended order, pursuant to Section 120.59(2) F.S.

FINDINGS OF FACT

1. Respondent William H. Hughes was adjudicated guilty of perjury and

sentenced on November 11, 1993. This adjudication was at least peripherally

related to a mortgage loan he brokered which had closed on June 21, 1989. Mr.

Hughes was deposed concerning the loan on December 20, 1991, in which deposition

he lied. He was indicted on May 27, 1993 and pled guilty to perjury on

September 3, 1993.

2. At all times material, William H. Hughes held individual mortgage

broker license number MB 262740745. He is a Respondent herein because he was

convicted of perjury.

3. DBF was immediately notified concerning Mr. Hughes' perjury conviction.

The agency did not file its amended disciplinary action until July 22, 1994. It

may be inferred that there was an original complaint to amend, but its date is

not of record.

4. The agency's chief witness testified that the agency did not do an

immediate field audit of Mr. Hughes' business upon notification, did not file an

immediate cease and desist order against his mortgage brokerage activities, and

has at no time considered Mr. Hughes continuing to operate as a mortgage broker

to be an imminent threat or danger to consumers. (TR 113-116)

5. Apparently, periodic DBF field audits since the amended administrative

complaint was referred to DOAH also have not caused DBF to move to expedite the

instant case or take any emergency action.

6. Mr. Hughes operated as a sole proprietorship, license number MBB

591623417, from 1968 until May 17, 1993. The loan at issue was closed June 21,

1989. The deposition that gave rise to the perjury occurred on December 20,

1991. The plea was September 3, 1993. The adjusdication of guilt was November

11, 1993. The sole proprietorship license was current until August 31, 1994.

The sole proprietorship is a Respondent in this cause because its license was in

effect at all times material.

7. On May 17, 1993, Respondent Hughes converted his sole proprietorship to

a corporation in which he was sole stockholder, President, and qualifying broker

with license number MB 262740745. Janeen Davis was Vice President. This

corporate entity was known as, "William H. Hughes Mortgage Broker, Inc.,"

license number MBB 593113739. On May 27, 1993, Respondent Hughes was indicted.

On September 3, 1993, he entered a guilty plea to perjury. The corporation of

which he was sole principal continued to operate until September 23, 1993, when

the stock was transferred to James Etheredge as sole stockholder, with

Respondent Hughes as qualifying broker. Corporate mortgage brokerage license

MBB 593113739, continued in effect until January 12, 1994. This corporation is

a Respondent herein because its license was in effect at the time of Mr. Hughes'

guilty plea and adjudication of guilt.

8. On November 17, 1993, James Etheredge applied for a corporate mortgage

brokerage license in the name of the "new" corporation, "William H. Hughes

Mortgage Broker, Inc.," owned exclusively by Etheredge, with Janeen Davis as

qualifying broker instead of Respondent Hughes. On November 23, 1993,

Respondent Hughes was adjudicated guilty of perjury and sentenced. On January

12, 1994, a new corporate mortgage broker license, number MBB 593113739-001, was

issued to the new corporate entity. Respondent Hughes continued to work for the

new firm as a mortgage broker. This corporate license, number MBB-593113739-

001, was renewed September 1, 1994 and is current through August 31, 1996. That

licensed corporation is not a Respondent herein and DBF has stipulated that it

has no charges or evidence against it. (TR 19-21; 47-48; 50).

9. In 1989, William Neufeld had come to Respondent Hughes seeking a

mortgage loan for a condominium located at B-801 Grand Mariner, Destin, Florida.

Sugar Sands Development Corporation was purportedly selling the condominium to

Neufeld. The purported purchase price was approximately eight hundred thousand

dollars ($800,000). Appraisals were provided to Respondent Hughes by the Seller

to verify the value of the property.

10. Respondent Hughes forwarded Neufeld's mortgage loan application to

Carteret Savings Bank, which then accepted the loan. During this period of

time, Carteret regularly called for a review appraisal for every loan,

regardless of who did the original appraisal. Carteret regularly ordered a

review from a different appraisal company to make sure that property valuation

was true and accurate. It is inferred that Carteret performed its own separate

appraisal on the B-801 Grand Mariner condomimium as it did in every other case.

11. The parties to the loan brokered by Respondent Hughes were Sugar Sands

Development Corporation as Seller, William Neufeld as Purchaser, and Carteret

Savings Bank as Lender.

12. Carteret Savings Bank funded the mortgage for the condominium after

its own investigation and upon agreed terms.

13. Respondent Hughes personally brokered the mortgage loan between

William Neufeld and Sugar Sands Development Corporation, which was funded by

Carteret Savings Bank. He received a $20,475 commission therefor. His

commission amount was based upon points, which was in no way remarkable in the

mortgage business.

14. William Neufeld subsequently defaulted on the loan.

15. At the time of the transaction, Respondent Hughes knew that the

condominium was owned by an entity named Altus Bank prior to its transfer to

Sugar Sands Development Corporation.

16. On December 20, 1991, Respondent Hughes was deposed in a civil action

resulting from Neufeld's default, Case No. 91-30398-RV, Carteret Savings Bank,

F.A., v. First American Title Insurance Co., Inc., et al., in the United States

District Court for the Northern District of Florida, Pensacola Division.

17. In his deposition, Respondent Hughes testified as follows:

Q: When, if ever, did you find out an entity

by the name of Altus Bank was involved in

these transactions?

A: I don't know if -- to my knowledge, I did

not know -- Altus wasn't involved in our

transaction. We never dealt with Altus at

all. So, to my knowledge, I don't know if I

knew Altus was even involved in this unit

until after this had already closed, because

here again we were presented a contract of

sale, we dealt directly with our customer,

the buyer and really never had an occasion

to even deal with the seller.

* * *

Q: You did not know, you had not heard any rumors,

you had no indication whatsoever that Altus

Bank had any interest in this unit at any

time prior to the FBI coming to talk to you a

year ago?

A: No. I think that's the first time I knew that

Altus was involved.

18. Respondent Hughes was subsequently indicted on May 27, 1993 in Case

No. 93-03069-01/RV, United States v. William H. Hughes, in the United States

District Court for the Northern District of Florida, Pensacola Division. The

indictment contained nine felony counts relating to an alleged "flip

transaction" on the subject condominium involving Altus Bank, Sugar Sands

Development Corporation as "straw man", and William Neufeld, the purpose of

which was to artificially inflate the condominium's real property value and

obtain an inflated loan amount of approximately $800,000 in loan proceeds for

property truly valued at only approximately $385,000.

19. The indictment alerted Carteret Savings Bank, which has since gone out

of business, and other lending institutions to audit Respondent Hughes'

transactions with them and to otherwise institute quality control reviews of

loans he had placed with them. No discrepancies or dishonest dealings of any

kind were uncovered by these institutions.

20. On September 3, 1993, Respondent Hughes pled guilty to one count of

engaging in perjury in violation of 18 U.S.C. Section 1623, based exclusively

upon his deposition testimony quoted supra.

21. The remaining eight felony counts were dismissed. These counts were

the counts alleging that Mr. Hughes knew of the "flip transaction" aspects of

the loan.

22. Exhibit P-9 shows the foregoing to have been a plea bargain which

encompassed evidentiary factors. It was not merely a "plea of convenience."

23. At formal hearing herein, Respondent Hughes admitted that knowing the

question in the deposition, he gave the wrong answer. He has accepted

responsibility for that wrong answer. However, he credibly denied any knowledge

that a flip transaction was intended. He explained that he had understood that

the loan amount was determined upon independent evaluations and appraisals which

included projected renovation costs to be expended to conform the condominium to

the needs of the Purchaser, Mr. Neufeld.

24. On November 23, 1993, a federal judgment was entered against

Respondent Hughes. Pursuant to that judgment, Respondent Hughes was adjudicated

guilty of violating 18 U.S.C. Section 1623 by engaging in perjury. He was

ordered to pay a special assessment of $50.00; to pay $1,724.50 in juror fees;

was placed on probation for a term of three years; and was placed on home

detention for a period of six months. Respondent Hughes' probation is not

scheduled to end until November 1996.

25. Respondent Hughes has continued to practice as a mortgage broker

without interruption during the eighteen months since his conviction and is

currently employed as a mortgage broker by William H. Hughes Mortgage Broker,

Inc., the firm reconstituted with Mr. Etheredge as the sole stockholder and

Janeen Davis as its qualifying agent as of January 12, 1994. See, supra.

26. Respondent Hughes has practiced his profession since 1968 (27 years)

with only this one bad incident on his record.

27. Respondent Hughes continues to enjoy a good reputation in his wider

mortgage brokerage business community, although the reputation testimony herein

is diminished by the fact that many of those who have dealt with him and who

have expressed reputation opinions to the witnesses who testified were not aware

of his perjury conviction or its circumstances.

28. Respondent Hughes' reputation for truth and veracity and for fair

dealing in the mortgage brokerage community as it currently exists within the

Florida Panhandle has remained "good" and "very good" since knowledge of his

perjury conviction has become known in that community.

29. Two mortgage brokers, two employees of lending institutions, one

attorney and one bank officer testified as fact witnesses that they were willing

to deal with Mr. Hughes as a mortgage broker in the future, despite their

knowledge of his perjury conviction. Two of these persons were formerly

employed by Carteret Savings Bank and were fully aware of all circumstances of

his criminal case.

30. DBF's only expressed reason for requesting license revocation instead

of other permissible disciplinary penalties was its perception that the perjury

in this case was directly related to the transaction of mortgage brokerage

business.

CONCLUSIONS OF LAW

31. The Division of Administrative Hearings has jurisdiction over the

parties and subject matter of this cause, pursuant to Section 120.57(1), F.S.

32. The duty to go forward in this case is upon Petitioner DBF. Its

burden of proof is that of clear and convincing evidence that the Respondents

have engaged in the violation as set forth in DBF's amended administrative

complaint. See, Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

33. Respondent is charged with violating Section 494.0041(2)(a) F.S. which

provides:

(2) Each of the following acts constitutes

a ground for which the disciplinary actions

specified in subsection (1) may be taken:

(a) Being convicted or found guilty,

regardless of adjudication, of a crime in any

jurisdiction which involves fraud, dishonest

dealing, or any other act of moral turpitude.

34. The range of permissable penalties for such license violation is set

forth in Sections 494.0041(a - e) F.S. These penalties range from imposition of

a fine in an amount not exceeding $5,000 for each count or separate offense

through reprimand, probation, license suspension, or revocation of license, or

any combination thereof. The disciplinary guidelines in Rule 3D-40.111 (2)

F.A.C. specifically state that for a violation of Section 494.001 (2)(a) F.S.

the same range of penalties may be utilized, with revocation of license as the

maximum penalty. In this case, Petitioner seeks revocation.

35. Herein, Respondent Hughes does not dispute that a conviction for

perjury occurred or that perjury is a crime of moral turpitude. (TR 40-41;

231). Respondent defends upon the sole theory that the perjury did not occur in

the course of a mortgage brokerage transaction and therefore he should only

receive a reprimand.

36. Section 494.0041(2)(a) F.S. does not require a finding that the crime

is directly related to the Respondent's practice of business under his license.

Honesty, truthfulness and integrity are attributes which the legislature has

determined are required for individuals who deal with the public as mortgage

brokers. The agency proved that Respondent was adjudged guilty of a federal

crime involving moral turpitude. Respondent is not entitled to administrative

relitigation of the prior judgment of guilt. See, McGraw v. Department of

State, Division of Licensing, 491 So. 2d 1193 (Fla. 1st DCA 1986) and Department

of Banking and Finance v. McCaffrey, DOAH Case No. 86-2718 (RO entered 10/23/86;

FO entered 12/18/86). Respondent also is not entitled to an analysis of whether

or not his perjury was directly, indirectly, or remotely related to the actual

mortgage transaction which involved Neufeld, Carteret Savings Bank and Sugar

Sands Development Corporation on the theory that truthfulness of a mortgage

broker only becomes a disciplinary issue if related to a mortgage transaction.

37. The agency has cited Department of Banking and Finance v. Martin

County Liquors, Inc., 574 So. 2d 170 (Fla. 1st DCA 1991), to the effect that an

agency is entitled to discipline licenses no longer in effect so as to prohibit

the surrendering of a license to avoid administrative action being taken against

the licensee. The case cited does not stand for that premise. The case closest

on point that the undersigned has located is Boedy v. Department of Professional

Regulation, 433 So. 2d 544 (Fla. 1st DCA 1983), but that case deals with

licenses unilaterally inactivated by the licensees and subject to reactivation

by them. Herein, the sole proprietorship license expired August 31, 1994 and

the corporation of which Respondent Hughes was sole equitable owner and

qualifying broker ended January 12, 1994. Neither entity can ever be relicensed

without Respondent Hughes as principal, so if his individual license is

disciplined, discipline against either of his prior business entities is

superfluous at best. At worst, disciplining these entities would confuse and

damage the record and reputation of the new corporation which the agency stated

it does not seek to discipline.

38. DBF appropriately cites Winkleman v. Department of Banking and

Finance, 537 So. 2d. 951 (Fla. 3rd DCA 1989) to the effect that revocation may

be appropriate in cases of criminal convictions for moral turpitude, but neither

the statutory nor rule language applicable to this case mandates revocation.

Rather, both the statute and the rules authorize the agency to exercise its

discretion on a case by case basis within a range of penalites.

39. The case law holds that an applicant for licensure who has been

convicted of a crime of moral turpitude may demonstrate rehabilitation by good

works, lawful conduct, being self supporting, good associations, and the passage

of time. See, Zaremba v. Division of Finance, DOAH Case No. 94-1229 (RO entered

8/3/94; FO entered 9/16/94) and Hillyer v. Office of Comptroller, Division of

Finance, DOAH Case No. 86-4016 (RO entered 2/3/87; FO entered 2/16/87). Rule

3D-40.111(3)(b)(1-5) F.A.C. permits consideration of mitigating circumstances

when disciplining persons who are already licensed. Mitigating circumstances

are listed as: the severity of the violation; the degree of harm to the

consumer or public; the number of times the violations previously have been

committed by the person; the disciplinary history of the person; and the status

of the person at the time the violation was committed.

40. Herein, the undersigned has considered all the foregoing factors and

has assigned particular weight and consideration to the following: Respondent

has practiced a total of 27 years with only one violation, albeit a serious one.

He has practiced without incident for six years since the mortgage transaction

that gave rise to the criminal charges. Respondent has practiced without

incident for four years since the perjury was committed. Respondent has

practiced over a year without incident since his conviction for perjury. At no

time has the agency considered him a sufficient danger to consumers to seek an

emergency order against him. After the criminal indictment, Respondent was

audited and reviewed by various institutions concerning all his loans in

progress at the time. These quality controls have subjected Respondent to

greater scrutiny than other mortgage brokers, and no fraud in mortgage brokerage

has been assigned against him. Likewise, it appears that none of DBF's own

periodic audits since then have turned up a problem. The agency witness regards

him as a low level potential danger to consumers, not a high level imminent one.

Respondent did not profit in the original mortgage transaction beyond a

reasonable commission based on points, and while an inflated value would

increase his commission, there is no clear evidence he knew the "flip

transaction" was at work to inflate either the loan or his commission. No

independent benefit was achieved by lying on his deposition. Respondent pled

guilty and has cooperated in serving his sentence and paying his fines. This

indicates Respondent's desire to rehabilitate himself. It is, however, of some

concern that Respondent will not complete his sentence until November of 1996,

more than a year after the date of formal hearing and entry of this recommended

order.

41. While it is imperative that every case send a message that the

disciplinary authority has zero tolerance for moral turpitude, that goal can be

accomplished here and the public protected short of revocation. An appropriate

penalty in this case would be an administrative fine of $3,000.00 and probation

until the end of Respondent's federal sentence, such probation being conditioned

upon Respondent practicing his profession under the supervision of a broker

approved by DBF and being held subject to unannounced DBF audits and reviews of

all of his transactions, with the additional caveat that any violation of the

foregoing conditions, any significant discrepancy in his accounts, or any

violations of Chapter 494 F.S. would subject him to immediate and summary

revocation of his license. In the past, DBF itself has selected this type of

discipline in cases of first or even second offenses, before imposing

revocation. See, Department of Banking and Finance v. Ijames, DOAH Case No. 93-

0174 (RO entered 5/24/93; FO entered 6/9/93).

RECOMMENDATION

Upon the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that the Department of Banking and Finance enter a final order

that:

(1) Finds Respondent Hughes individually, license MB 262740745, is guilty

of the charged offense;

(2) Assesses an administrative fine against Respondent Hughes individually

for $3,000, payable within 10 days of entry of the final order; and

(3) Places Respondent Hughes on probation until November 30, 1996,

termination of probation to be conditioned upon his successful completion of his

federal sentence; his practicing during probation under the supervision of a

broker approved by DBF, and his being subject during this probation to

unannounced DBF audit and review of all his transactions; and further providing

that any violation of the final order, any discrepancy in his accounts, or any

violation of Chapter 494 F.S. during his probationary period would subject him

to immediate and summary revocation of his license.

RECOMMENDED this 29th day of June, 1995, at Tallahassee, Florida.

___________________________________

ELLA JANE P. DAVIS

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 29th day of June, 1995.

APPENDIX TO RO 94-5114

The following constitute specific rulings, pursuant to S120.59(2), F.S.,

upon the parties' respective proposed findings of fact (PFOF).

Petitioner's PFOF:

1-8, 24-26 are covered in FOF 1-8 as necessary. Otherwise accepted but

not adopted.

9-20, 22-23 Accepted, except that unnecessary, subordinate and/or

cumulative evidence has not been adopted.

21, 27-31 Rejected as conclusions of law or legal argument, not

proposed findings of fact

Respondent's PFOF:

1-7 are introductory and labelled "Statement of the Case." They are

covered within the "Preliminary Statement" of the Recommended Order.

8-17, 20-21, Accepted except that unnecessary, subordinate

23, 25-27 and/or cumulative evidence has not been adopted.

18, 24 Rejected as a conclusion of law, not a proposed finding of fact

19 Irrelevant

22 Accepted only as modified and covered in FOF 27-29

COPIES FURNISHED:

Elise M. Greenbaum

Assistant General Counsel

Office of the Comptroller

The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

J. Ladon Dewrell, Esquire

Post Office Box 1510

Fort Walton Beach, Florida 32541

Honorable Robert Milligan

Comptroller, State of Florida

The Capitol, Plaza Level

Tallahassee, Florida 32399-0350

Harry Hooper

General Counsel

Office of the Comptroller

The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

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.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA DEPARTMENT OF

BANKING AND FINANCE, DIVISION OF

FINANCE,

Petitioner,

vs. DBF CASE No. 3233-F-1/94

DOAH CASE No. 94-5114

WILLIAM H. HUGHES MORTGAGE

BROKER INC., HUGHES, WILLIAM H.

D/B/A WILLIAM H. HUGHES, A SOLE

PROPRIETORSHIP, AND WILLIAM H.

HUGHES, INDIVIDUALLY,

Respondent.

__________________________________/

FINAL ORDER AND NOTICE OF RIGHTS

This cause came on before Robert F. Milligan, the undersigned, as Statutory

Head of the Department of Banking and Finance, (the Department), for the purpose

of issuing a Final Order. Pursuant to Notice, a Formal Hearing was conducted in

this matter on April 11, 1995, in Shalimar, Florida, before Ella Jane P. Davis,

a duly designated Hearing Officer of the Division of Administrative Hearings.

On June 29, 1995, Hearing Officer Davis submitted a Recommended Order to the

Department, a copy of which is attached hereto as Exhibit A, and incorporated

herein by reference as if set forth at length. On July 14, 1995, counsel for

Petitioner timely filed Exceptions to the Recommended Order, a copy of which is

attached hereto as Exhibit B. On July 28, 1995, Respondent filed responses to

the Department's exceptions. The Department being authorized and directed to

administer and enforce Chapter 494, Florida Statutes, hereby rules on the

Exceptions and having reviewed the entire record of this proceeding enters this

Final Order regarding William H. Hughes Mortgage Broker, Inc., Hughes, William

H. D/B/A William H. Hughes, A Sole Proprietorship, and William H. Hughes,

Individually.

RULINGS ON EXCEPTIONS

First Exception: The Department takes exception to the Recommended Order's

Finding of Fact, paragraph 4, in which the Hearing Officer found that the agency

did not do an immediate field audit of Mr. Hughes' business upon notification,

did not file an immediate cease and desist order against his mortgage brokerage

activities...

The Department's exception is hereby denied on the following grounds.

Though testimony was presented at the hearing that the Department did perform a

field exam of Hughes' mortgage brokerage business (TR 117, lines 1-5), the

Department's witness, Mr. Robert Tedcastle, Bureau Chief of the Bureau of

Financial Examinations for the Division of Finance, testified that no field

examination was done on the perjury conviction in this case. Thus, there is

competent evidence to support the Hearing Officer's finding that an immediate

field audit was not done upon notification of the perjury conviction.

The Department concurs with the Hearing Officer's finding that the

Department did not file an immediate cease and desist order against Hughes with

respect to his mortgage brokerage activities. However, the Department takes

exception to the inference that because the Department did not file an immediate

cease and desist order against Hughes, revocation of his mortgage brokerage

licenses is therefore inappropriate. The undersigned agrees if any such

inference is drawn by the Hearing Officer, that the inference is unfounded and

contrary to the statutorily permissible use of discretion by the Department in

administering the statutes it governs. Therefore, the fact that the Department

did not order an immediate cease and desist order can not be used as grounds for

mitigating the severity of the penalty sought by the Department. Accordingly,

if such an inference is implied, the Department's exceptions granted.

Second Exception: The Department take exception to the Recommended Order's

Finding of Fact, paragraph 5, wherein the Hearing Officer found that periodic

Department field audits had been performed on Hughes since the Amended

Administrative Complaint was referred to the Division of Administrative Hearings

and that those periodic field audits had not caused the Department to move to

expedite this case or take any emergency action.

Upon complete review of the record of this proceeding the Department's

exception is hereby denied on the following grounds. The Department's witness,

Robert Tedcastle, testified at the hearing that no emergency action was taken.

(TR 113-116). As there is competent, substantial evidence to support the

Hearing Officer's Finding of Fact, paragraph 5, the finding must be upheld. See

Clark v. Department of Professional Regulation, 463 So.2d 328 (Fla. 5th DCA

1985). However, if the Hearing Officer is inferring that the penalty ordered by

the Department should be mitigated due to the fact that no emergency action was

taken in this case, such an inference is contrary to the statutorily permissible

use of discretion the Department is entitled to exercise in imposing appropriate

administrative sanctions. It is well to note that there is motion evidence that

supports the fact that at least part of the delay in the expedition of this case

is due to the actions of the Respondent.

Third Exception: The Department takes exception to the Recommended Order's

Finding of Fact, paragraph 10, wherein the Hearing Officer found that "it is

inferred that Carteret performed its own separate appraisal on the B-801 Grand

Mariner Condominium it did in every other case." The Department claims no

factual basis or competent, substantial evidence exists to support this

inference. However, at the hearing the Respondent presented the testimony of

Ms. Rice Lamb, who testified that she was employed by Carteret at the time of

the subject transaction and that for every single appraisal that was done, I

don't care who it was done by, we would have to order a review from a different

appraisal company to make sure the value was there." She further testified that

those intended controls were utilized on the subject loan stating that she knew

for a fact that Carteret had done the review appraisal. (TR 179 lines 5-17).

Therefore, there is competent, substantial evidence in the record to support the

Hearing Officer's Finding of

Fact, paragraph 10, accordingly the Department's exception is denied and

the Hearing Officer's finding is adopted.

Fourth Exception: The Department takes exception to the Recommended

Order's Finding of Fact, paragraph 29, wherein the Hearing Officer found that of

these persons were formerly employed by Carteret Savings Bank and were fully

aware of all circumstances of his criminal case.

The Department's exception is granted and the Hearing Officer's Finding of

Fact, paragraph 29, is rejected on the following grounds. While two persons

formerly employed by Carteret Savings Bank testified that they were aware of

Hughes' conviction for perjury, there is no competent, substantial evidence to

support the Hearing Officer's finding that these witnesses were "fully aware of

all circumstances of his [Hughes'] criminal case."

Fifth Exception: The Department takes exception to the Recommended Order's

Finding of Fact, paragraph 30, wherein the Hearing Officer found that DBF's only

expressed reason for reguesting license revocation instead of other permissible

disciplinary penalties was its perception that the perjury in this case was

directly related to the transaction of mortgage brokerage business.

Upon review of the complete record of this proceeding, there is competent,

substantial evidence that supports the Department's assertion that the

Department did not seek to revoke Hughes' Mortgage Broker licenses solely on

that basis. The Department presented the testimony of Robert Tedcastle, who

testified that the Department also sought to revoke Hughes' license to protect

the Florida consumer and to ensure that the mortgage broker who assists the

Florida consumer in obtaining a mortgage loan, possesses integrity beyond

reproach. Accordingly, the Department's exception is hereby adopted and the

Hearing Officer's Finding of Fact, paragraph 30, is rejected as not supported by

competent, substantial evidence in the record.

Sixth Exception: The Department takes exception to the Recommended Order's

Conclusion of Law, paragraph 37, wherein the Hearing Officer concluded that if

Hughes' individual license was disciplined, discipline against either of his

prior business entities is superfluous at best. At worst, disciplining these

entities would confuse and damage the record and reputation of the new

corporation

The Department's exception is rejected on the following grounds. The sole

proprietorship license held by Hughes expired on August 31, 1994. Further, the

Department has approved and issued a new license to the new owner of the

mortgage broker corporation in question, thus the corporate license previously

held by Hughes, is no longer is effect. As the sole proprietorship could not be

relicensed without Hughes as the principal broker and as the mortgage broker

corporation is currently licensed under the new owner, discipline against either

of these prior business entities would serve no useful purpose. Under the

particular facts of this case, the Hearing Officer's conclusion is adequate and

hereby adopted.

Seventh Exception: The Department takes exception to the Recommended

Order's Conclusion of Law, paragraph 38, wherein the Hearing Officer concluded

that neither the statute nor the applicable rule mandates that the involved

licenses be revoked. The Department concurs with this conclusion, as well as

the Hearing Officer's conclusion that both the statute and the rule authorize

the agency to exercise its discretion on a case by case basis within a range of

penalties." The Department contends it is in furtherance of this authority that

the Department exercised its discretion by seeking revocation of the involved

mortgage broker's licenses. Accordingly, the Department's exception is granted.

Eighth Exception: The Department takes exception to the Recommended

Order's Conclusion of Law, paragraph 39, with respect to the application of Rule

3D-40.111(3), Florida Administrative Code. The Hearing Officer states that Rule

3D-40.111(3)(a), F.A.C., provides that where aggravating or mitigating

circumstances are supported by clear and convincing evidence, the Department

shall be entitled to deviate from the sentencing guidelines provided in Rule 3D-

40.111(2), F.A.C., in imposing discipline upon any person. The Department

agrees with the Hearing Officer's recitation of Rule 3D-40.111(3)(a), however,

the Department argues that while the agency is entitled to deviate from imposing

the penalty of revocation of Hughes' mortgage broker's licenses, it is not

required to deviate from imposing this penalty. As the Department's exception

further expounds on the undersigned's interpretation of Rule 3D-40.111(3)(a),

F.A.C., the exception is granted.

Ninth Exception: The Department takes exception to the Recommended Order's

Conclusion of Law, paragraph 40, wherein the Hearing Officer concluded that, as

a mitigating factor, at no time has the agency considered him a sufficient

danger to consumers to seek an emergency order against him." The Department's

exception is granted on the following grounds. Both sections 494.0041(1) and

(2)(a), Florida Statutes, and Rule 3D-40.111(3), F.A.C., authorize the agency to

exercise its discretion on a case by case basis within a range of penalties when

imposing appropriate administrative sanctions against a licensee for violations

of Chapter 494, Florida Statutes, and the rules promulgated thereto. The

Department previously exercised its discretion in this case by noticing its

intent to impose the penalty of revocation of the involved mortgage broker's

licenses. Florida Appellate Courts, as well as the Division of Administrative

Hearings, have consistently held that an agency's interpretation of a statute it

administers is accorded great deference due to the agency's expertise and

experience in the application of the statute. In the Matter of Gary L. Waldron,

540 So.2d 247 (Fla. 4th DCA 1989).

The fact that the Department did not seek an immediate order to cease and

desist against Hughes has no bearing on the relationship to the seriousness of

the violation of Florida Law engaged in by Hughes with his conviction for

perjury. The inference derived from the Hearing Officer's conclusion of law

implicitly provides that revocation or suspension of a license is inappropriate

unless the Department concurrently seeks an immediate cease and desist order

against the licensee. Such an interpretation is contrary to the intent and

language of the statutory and rule provisions in effect. See Perishing

Industries v. Department of Banking and Finance 591 So.2d 991 (Fla. 1st DCA

1991). Motel 6 Operating L.P. v. Department of Business Regulation, 560 So.2d

1322 (Fla. 1st DCA 1990)(agency interpretation of statute must be upheld if not

unreasonable or outside range of possible interpretations).

The Department also takes exception to the Hearing Officer's conclusion

that because various institutions took certain measures to review all of Hughes'

loans in process at the time of his perjury conviction, that these quality

control measures have subjected Hughes to greater scrutiny than other mortgage

brokers..." The Department's exception is granted and the Hearing Officer's

conclusion is rejected based on the fact that there is no competent, substantial

evidence in the record to support this conclusion. Clark.

The Department also takes exception to the Hearing Officer's conclusions

that it appears that none of DBF's own periodic audits since then have turned up

a problem, and that the agency witness regards him as a low level potential

danger to consumers, not a high level imminent one." The Department's exception

is granted and the Hearing Officer's conclusion is rejected on the following

grounds. The Department's witness, Robert Tedcastle, testified that it would

appear there was no eminent danger to the Florida consumers, however, he did not

testify that he regarded Hughes as a "low level potential danger to consumers.

Thus, there is no competent, substantial evidence in the record to support such

a conclusion by the Hearing Officer.

The Department also takes exception to the Hearing Officer's conclusion in

paragraph 40, wherein the Hearing Officer concluded that as a mitigating factor,

"Hughes did not derive an independent benefit from lying at his deposition, and

that he did not profit beyond a reasonable commission in the mortgage brokerage

transaction with respect to Sugar Sands Development Corporation. The Department

argues that for a conviction of perjury to exist, it must "be proven, that an

individual made particular statements in a court proceeding, that the individual

knew the statements to be false when they were made and that the statements were

material in the court proceeding." U.S. v. Joseph, 651 F. Supp. 1346, 1347

(S.D. Fl. 1987). Financial benefit or any other advantage, therefore, has no

relevance as to whether an individual has committed perjury or to the

seriousness of the offense. Accordingly, the Department's exception is granted

and the Hearing Officer's conclusion is rejected.

Tenth Exception: The Department takes exception to paragraphs two and

three of the Recommendation Section of the Recommended Order, wherein the

Hearing Officer recommended that the Department enter a Final Order that:

"(2) assesses an administrative fine against

Respondent Hughes, individually for $3,000"

and that

(3) places Respondent Hughes on probation

until November 30, 1996...

The Department initially sought to revoke the mortgage brokerage

registrations of Respondent Hughes, individually, as well as those of William H.

Hughes Mortgage Broker, Inc., and Hughes, William H. d/b/a William H. Hughes, A

Sole Proprietorship. It is noted in light of the evidence now of record that

the penalties recommended by the hearing officer should be increased to prevent

a licensee from merely going about business as usual after payment of a fine in

light of the serious criminal conviction involved herein. Suspension of this

license is within the permissible statutory range of Section 494.0041(1),

Florida Statutes, and Rule 3D-40.111(3), F.A.C. It is clearly within the

Department's discretion to impose suspension in this particular case based on

the facts and circumstances presented. Pershing Industries V. Department of

Banking and Finance, 591 So.2d. 991 (Fla. 1st DCA 1991). Further, the Supreme

Court of Florida has held that while deference to an agency's interpretation of

a statute it is charged with administering may not be absolute, the agency's

interpretation cannot be overturned unless clearly erroneous. Laborer's

International Union of North America local 478 v. Borrougs, 541 So.2d. 1160

(Fla. 1989). In accordance with section 120.59(10), Florida Statutes, (1994

Supp.), the following citations to the record justify an increase in the penalty

recommended by the Hearing Officer:

Hughes' conviction for perjury is less than two

years old. (Dept. Exh. 8)

The serious nature of Hughes' conviction. (Dept.

Exh. 8)

Hughes' conviction for perjury evinces a disregard

for both Federal and Florida law. (Dept. Exh. 8)

Hughes' conviction for perjury constitutes an act

of moral turpitude. (Dept. Exh. 8)

Hughes is currently on probation, and will continue

to be so until November, 1996. (Dept. Exh. 8)

Hughes' perjury conviction is directly related to

his actions as a licensed mortgage broker;

therefore some increase in penalty (i.e. suspension

of his license) is appropriate. (TR 81, lines 23-

25, TR 82, TR 83, line 1; Dept. Exh. 1, Request for

Admissions, #7 and #12, responses thereto)

The Department is responsible for protecting

Florida consumers, thus the Department must ensure

that individuals licensed as mortgage brokers are

of good moral character, reliable and possess

integrity beyond reproach. As evidenced by the

conduct that led to his conviction for perjury,

Hughes' fails to meet this standard. (TR 83, lines

20-25, TR 84)

PRELIMINARY STATEMENT

The Department adopts and incorporates by reference the preliminary

statement contained in Pages 2-3 of the Recommended Order entered in this

proceeding as if set forth at length.

FINDINGS OF FACT

The Department adopts and incorporates by reference (except as modified in

the Rulings on Exceptions), the Findings of Fact contained in Paragraphs 1-30 of

the Recommended Order as if set forth at length.

CONCLUSIONS OF LAW

The Department adopts and incorporates by reference, (except as modified in

the Rulings on Exceptions), the Conclusions of Law found in Paragraphs 31-41 of

the Recommended Order as if set forth at length.

FINAL ORDER

Having ruled on the Exceptions filed by the Petitioner and based on the

foregoing Findings of Fact and Conclusions of Law, it is ORDERED that:

(1) The Mortgage Brokerage license issued by

the state of Florida to William H. Hughes is

hereby suspended for a period of ninety (90)

days from the date of entry of this Final

Order;

(2) A $3,000 administrative fine, payable

within ten (10) days of entry of this Final

Order, is assessed against William H. Hughes;

(3) Upon completion of the suspension imposed

by this Final Order, William H. Hughes will be

placed on probation until November 30, 1996,

termination of probation to be conditioned

upon his successful completion of his federal

sentence; his practicing during probation

under the supervision of a broker approved by

the Department of Banking and Finance, and his

being subject during this probation to

unannounced Department audits and review of

all his transactions; and further providing

that any violation of the Final Order, any

discrepancy in his accounts, or any violation

of Chapter 494, Florida Statutes, during his

probationary period would subject him to

immediate and summary revocation of his

license.

DONE and ORDERED this 27th day of September, 1995, in

Tallahassee, Leon County, Florida.

___________________________________

ROBERT F. MILLIGAN, As Comptroller

and Head of the Department of

Banking and Finance

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL

REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ATE

GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE

COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK AND A

SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT

COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE

APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED

WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

CERTIFICATE OF SERVICE

I hereby certify that a true copy of the foregoing Final Order with Notice of

Rights has been furnished by U.S. regular mail to J. Ladon Dewrell, Esquire,

Dewrell and Campbell, P.A., 207 Florida Place, S.E., Post Office Box 1510, Fort

Walton Beach, Florida 32549-1510, this 27th day of September, 1995.

___________________________________

Ellen C. Marino

Assistant General Counsel

Office of the Comptroller

The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

[phone]

cc: Elise Greenbaum, Chief Counsel

Steve Godwin, Assistant General Counsel