95-004111 Division Of Real Estate vs. Phillip B. Gilbert Status: Closed Recommended Order on Thursday, May 30, 1996.

Summary: Respondent broker guilty of fraud for forging deed to close transaction and guilty of other violations of Chapter 475, Florida Statutes.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, DIVISION )

OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 95-4111

)

PHILLIP B. GILBERT, )

)

Respondent. )

___________________________________)

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 January 25, 1996, in

Miami, Florida.

APPEARANCES

For Petitioner: Daniel Villazon, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

400 West Robinson Street

Post Office Box 1900

Orlando, Florida 32802

For Respondent: Phillip B. Gilbert, pro se

150 Northwest Fifty-sixth Street

Miami Shores, Florida 33127

STATEMENT OF THE ISSUE

At issue is whether respondent committed the offenses

alleged in the administrative complaint and, if so, what

disciplinary action should be taken.

PRELIMINARY STATEMENT

By a seven count administrative complaint dated April 26,

1994, petitioner charged that respondent, a licensed real estate

broker, violated various provisions of Chapter 475, Florida

Statutes, and Rule 61J2-14.012, Florida Administrative Code.

Specifically, petitioner alleged in Count I that respondent was

"guilty of fraud, misrepresentation, concealment, false promises,

false pretenses, 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)"; in Count

II that respondent "fail[ed] to maintain trust funds in the real

estate brokerage escrow bank account or some other proper

depository until disbursement thereof was properly authorized in

violation of [subsection] 475.25(1)(k)"; in Count III that

respondent "operated as a broker without being the holder of a

valid and current [active] license as a broker in violation of

[subsection] 475.42(1)(a) . . . and therefore . . . [subsection]

475.25(1)(e)"; in Count IV that respondent "fail[ed] to comply

with a subpoena in violation of . . . [subsection] 475.42(1)(h) .

. . and therefore . . . [subsection] 475.25(1)(e)"; in Count V

that respondent "operated as a broker under a trade name without

causing the same to be noted in the records of the Commission and

placed on his license or so operate as a member of a partnership

or as a corporation or as an officer or manager thereof, without

the partnership or corporation being the holder of a valid

current registration in violation of [subsection] 475.42(1)(k) .

. . and therefore . . . [subsection] 475.25(1)(e)"; in Count VI

that respondent "fail[ed] to prepare the required written monthly

escrow statement-reconciliations in violation of . . . [rule]

61J2-14.012(2) and (3) and therefore . . . [subsection]

475.25(1)(e)"; and in Count VII that respondent "failed to

preserve the books, accounts and, records pertaining to the

broker's real estate brokerage business for a period of not less

than five (5) years subsequent to the time of receipt of any

money, funds, deposit, check or drafts entrusted to the broker or

the conclusion of the broker's involvement in the transaction,

whichever results in a greater period of retention of records in

violation of . . . [rule] 61J2-14.012(4) and therefore . . .

[subsection] 475.25(1)(e)."

Respondent filed an election of rights wherein he disputed

the allegations of fact contained in the administrative

complaint, and on August 16, 1995, petitioner referred the matter

to the Division of Administrative Hearings for the assignment of

a Hearing Officer to conduct a formal hearing pursuant to Section

120.57(1), Florida Statutes.

At hearing, petitioner called Chester Morong and Kenneth

Rehm as witnesses, and its exhibits A (the deposition of Bruce

Gramigna, filed post-hearing) and 1 through 16 were received into

evidence. Respondent testified on his own behalf, and his

exhibits 2 through 7 were received into evidence. 1/

The transcript of hearing was filed February 12, 1996, and

the parties were accorded twenty days from that date to file

proposed recommended orders. Consequently, the parties waived

the requirement that a recommended order be rendered within

thirty days after the transcript is filed. Rule 60Q-2.031,

Florida Administrative Code. Petitioner elected to file such a

proposal and the proposed findings of fact contained therein are

addressed in the appendix to this recommended order.

FINDINGS OF FACT

1. Petitioner, Department of Business and Professional

Regulation, Division of Real Estate (Department), 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, and the rules promulgated

pursuant thereto.

2. Respondent, Phillip Bantu Gilbert, is now and was at all

times material hereto a licensed real estate broker in the State

of Florida, having been issued license number 0460883.

Respondent's licensure status

3. On May 13, 1992, respondent applied to the Department

for licensure as a real estate broker. As part of that

application, respondent was required to make an election with

regard to whether, upon successful completion of the examination,

he would be actively employed or preferred an inactive broker's

license. Specifically, the application provided:

EMPLOYMENT INFORMATION

You must select one of the following options

for your first license which automatically

will be mailed as notice of passing the exam-

ination, together with your examination score.

The receipt of either license will establish

your broker's status. You may immediately

file a request to change employer, register

as a real estate broker (sole proprietorship),

or become a broker-member of a corporation or

partnership, at no additional charge.

[ ] I will continue my present employment

as a broker-salesman. (ATTACH COPY of your

current salesman's license or Validated

Confirmation Slip.)

[x] I wish to be issued an inactive

broker's license and understand that it may

be converted to a broker's or broker-sales-

man's license if I file and request same when

notified that I have passed the examination.

Respondent elected the second option, to be issued an inactive

broker's license.

4. Respondent successfully completed the examination, and

on December 21, 1992, was issued his broker license. Such

licenses do not carry any legend reflecting active or inactive

status; however, due to his election, which evidenced no current

real estate employment or place of business, respondent's status

was inactive.

5. Following licensure, respondent began to actively

operate as a broker, under the name Bantu Enterprises, at 150

Northwest 56th Street, Miami Shores, Florida. Bantu Enterprises,

of which respondent is president and founder, is a Florida

corporation, and has never been registered as a trade name or

real estate brokerage company by the Department.

6. Respondent's license continued in a voluntary inactive

status until, following the investigation hereinafter discussed,

he applied to the Department for active status. That

application, filed March 1, 1994, identified the name and

business address of the owner/broker as Phillip B. Gilbert, 150

Northwest 56 Street, Miami, Florida.

The Morong transaction

7. On or about June 14, 1993, Chester Morong and Lynette

Morong, his wife, submitted an offer to purchase certain real

property located at 700 Northwest 55 Avenue, Plantation, Florida,

to the Department of Veterans Affairs (VA) for $177,250.00. Such

offer was submitted through Bantu Enterprises, with Phillip B.

Gilbert noted as the principal broker and sales person, and

reflected an earnest money deposit of $1,500.00 being held by the

broker.

8. On June 30, 1993, respondent was advised by the VA that

the Morong offer had been accepted for processing, and respondent

was accorded three business days to present the Morongs to an

authorized VA lender to process their offer. Respondent

apparently complied with such requirement, and on August 4, 1993,

the VA advised respondent that the Morongs had been approved to

purchase the property and a closing date of August 13, 1993, was

established.

9. On August 9, 1993, the VA sent by overnight express to

respondent, as the broker of record, the closing package. Under

established procedure, respondent was to close the transaction,

and then return to the VA, within 10 days of the closing, the

closing package, the proceeds due the VA, and a recording receipt

for any legal instruments that were recorded.

10. On August 13, 1993, Mr. Morong requested of respondent

that the closing be postponed for fourteen days. According to

Mr. Morong, a hurricane had destroyed his parents' home in

Trinidad the previous weekend, and he had been required to use

the closing monies, among others, to provide them assistance.

11. Respondent assured Mr. Morong that the time for closing

could be extended; and on some date between August 13 and August

16, 1993, secured the Morongs' signatures to the closing

documents in anticipation of closing. Among those documents was

a mortgage deed to secure the repayment of the VA financing and a

mortgage note in the sum of $175,750.00.

12. On August 16, 1993, the VA contacted respondent's

office and advised that there might be a title problem, and that

the closing might have to be postponed to see if the problem

could be resolved. According to the VA, respondent's office

manager informed them that Mr. Gilbert told her to inform the VA

that the sale had closed. In fact, the sale had not closed at

that time.

13. At or about 2:30 a.m., August 17, 1993, respondent

telephoned Mr. Morong and stated he had received a call from the

VA and that if he didn't have the closing costs the next day he

(respondent) would quit claim the property to another person.

14. On August 17, 1993, Mr. Morong telephoned the VA and

learned that there might be a title problem with the property,

associated with a bankruptcy. Acting on that advice, Mr. Morong

delivered a letter to Mr. Gilbert that same day, which letter

stated:

Without prejudice I would like to formally

withdraw my offer to close on the purchase

of the above captioned property.

This decision though saddening for us . . .

was arrived at due to the attending problems

with the property.

I would like the urgent return of my $1500

earnest money. I also would like to bid on

another property.

On August 19, 1993, Mr. Morong was given a check, post-dated for

August 21, 1993, on the account of Bantu Enterprises, in the sum

of $1,500.00, for return of his escrow deposit. That check was

subsequently negotiated and paid.

15. Respondent did not advise the VA of Mr. Morong's

withdrawal of the offer to purchase or his return of Mr. Morong's

earnest money deposit. Had he done so, the closing on this

property would not have occurred and the VA would have offered

the property to the next highest bidder (offeror). Under such

circumstances, respondent would have lost the six percent

commission he anticipated from the transaction.

16. Subsequent to Mr. Morong's withdrawal of his offer to

purchase on August 17, 1993, respondent proceeded to close on the

property, without the Morongs' consent. In so doing, respondent

caused the special warranty deed from the VA to the Morongs, as

well as the mortgage previously executed by the Morongs, to be

recorded in the public records of Broward County, Florida.

Thereafter, on August 26, 1993, respondent caused a quit claim

deed, dated August 18, 1993, between Chester Morong and Lynette

Morong, his wife, as grantors and Beverly A. Henry, a single

woman, as grantee, to be recorded in the public records. That

quit claim deed, prepared by respondent's brokerage, is a

fraudulent document since the signatures affixed to the quit

claim deed purporting to be those of Mr. and Mrs. Morong are

forgeries, as the Morongs never executed any such document.

17. On August 23, 1993, the VA received the closing package

back from respondent, along with the settlement proceeds.

Facially, the documents reflected that the sale had closed on

August 13, 1993, and that Chester Morong and Lynette Morong, his

wife, were the owners of the property. No reference was made to

the transfer to Ms. Henry, and no request was made, at the time,

for an assumption of mortgage package.

The investigation of respondent's records and escrow accounts

18. Following a complaint from Mr. Morong, after he

discovered that the closing had occurred as heretofore discussed,

a Department investigator commenced an audit of respondent's

business practices. Among the items addressed by the

investigator with respondent on his initial visit was a request

to audit respondent's account to ascertain when Mr. Morong's

$1,500.00 deposit was placed in escrow, and into what escrow

account it was placed. To adequately conduct such an audit, the

investigator would need respondent's bank deposit slips, monthly

bank statements, case files and broker's monthly reconciliations.

Respondent advised the investigator that he did not have the

documents available at the time.

19. Subsequently, on February 16, 1994, the investigator

served a subpoena on respondent to compel production of the

documents. That subpoena commanded that respondent produce on

February 21, 1994, the following:

For the period Jan. 1, 1993 to present, all

sale/purchase agreements, contracts, leasing

or rental agreements either closed, pending

or null and void including monthly bank state-

ments and cancelled checks plus monthly

reconciliations of all escrow accounts and

bank deposit slips.

20. In response to the subpoena, respondent produced some

bank statements and cancelled checks on an account for Bantu

Enterprises, but no banking information for accounts in his name.

As for the documents produced, they were fragmentary and not

inclusive of the audit period, no contracts or case files were

produced, and no written monthly reconciliations, as required by

Rule 61J2-14.012, Florida Administrative Code, were produced.

Consequently, a complete picture of respondent's activities was

not presented, and the audit could not be completed. As of the

date of hearing, respondent had still failed to produce the

documentation requested by the subpoena, and the audit could not

be completed.

CONCLUSIONS OF LAW

21. 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.

22. Here, petitioner seeks to take disciplinary action

against respondent for violating the provisions of Section

475.25(1), Florida Statutes. Consequently, 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 as

follows in Slomowitz v. Walker, 429 So.2d 797, 800 (Fla. 4th DCA

1983):

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 remem-

bered; the testimony must be precise and

explicit and the witnesses must be lacking

in confusion as to the facts in issue. The

evidence must be of such weight that it pro-

duces 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.

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.

23. Pertinent to this case, Section 475.25(1), Florida

Statutes, provides that the Florida Real Estate Commission may:

(1) . . . place a licensee, registrant, or

permittee on probation; may suspend a license,

registration, or permit for a period not

exceeding 10 years; may revoke a license,

registration, or permit; may impose an admin-

istrative fine not to exceed $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, registrant,

permittee, or applicant:

* * *

(b) Has been guilty of fraud, misrepresent-

ation, concealment, false promises, false

pretenses, dishonest dealing by trick,

scheme, or device, culpable negligence, or

breach of trust in any business transaction

in this state or any other state, nation, or

territory

* * *

(e) Has violated any of the provisions of

this chapter or any lawful order or rule made

or issued under the provisions of this

chapter or chapter 455.

* * *

(k) Has failed, if a broker, to immediately

place, upon receipt, any money, fund, deposit,

check, or draft entrusted to him by any person

dealing with him as a broker in escrow with a

title company, banking institution, credit

union, or savings and loan association located

and doing business in this state, or to depos-

it such funds in a trust or escrow account

maintained by him with some bank, credit

union, or savings and loan association located

and doing business in this state, wherein the

funds shall be kept until disbursement thereof

is properly authorized . . .

Also pertinent to this case are the following provisions of

Sections 475.42, Florida Statutes, and Rule 61J2-14.012, Florida

Administrative code:

475.42 Violations and penalties.--

(1) VIOLATIONS.--

(a) No person shall operate as a broker or

salesperson without being the holder of a valid

and current active license therefor.

* * *

(h) No person shall fail or refuse to appear

at the time and place designated in a subpoena

issued with respect to a violation of this

chapter, unless because of facts that are

sufficient to excuse appearance in response

to a subpoena from the circuit court . . .

* * *

(k) No person shall operate as a broker

under a trade name without causing the trade

name to be noted in the records of the comm-

ission and placed on his license, or so oper-

ate as a member of a partnership or as a corp-

oration or as an officer or manager thereof,

unless such partnership or corporation is the

holder of a valid current registration.

61J2-14.012 Broker's Records.

(1) A broker who receives a deposit as

previously defined shall preserve and make

available to the BPR, or its authorized

representative, all deposit slips and state-

ments of account rendered by the depository

in which said deposit is placed, together

with all agreements between the parties to

the transaction. In addition, the broker

shall keep an accurate account of each deposit

transaction and each separate bank account

wherein such funds have been deposited. All

such books and accounts shall be subject to

inspection by the BPR or its authorized

representatives at all reasonable times during

regular business hours.

(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 date used to reconcile the balances, the

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

account(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.

* * *

(4) The books, accounts and records per-

taining to the broker's real estate brokerage

business shall be preserved for a period of

not less than 5 years after receipt of any

money, funds, deposit, check or drafts en-

trusted to the broker or the conclusion of

the broker's involvement in the transaction,

whichever results in a greater period of reten-

tion of records. If any brokerage record has

been the subject of or has served as evidence

in litigation, relevant books, accounts and

records must be retained for at least 2 years

after the conclusion of the civil action or

the conclusion of any appellate proceeding,

whichever is later, but not less than a total

of 5 years as set above.

24. Here, the proof is clear and convincing that

respondent's conduct with regard to the Morong transaction

violated the provisions of subsection 475.25(1)(b), as alleged in

Count I of the administrative complaint. The proof further

demonstrated that respondent operated as a broker without a

current active license, and operated under a trade name or as a

corporation without registering such name or corporation with the

Commission, as alleged in Counts III and V, in violation of

subsections 475.42(1)(a) and (k), and therefore subsection

475.25(1)(e), Florida Statutes. The proof also demonstrated that

respondent, by failing to produce records in response to the

Department's subpoena, failed to maintain records he was legally

obligated to maintain or failed to comply with a subpoena issued

by the Department, as alleged in Counts IV and VII, in violation

of subsection 475.42(1)(h) and rule 61J2-14.012, and therefore

subsection 475.25(1)(e), Florida Statutes. Finally, the proof

demonstrated that respondent failed to maintain a monthly written

statement-reconciliation as alleged in Count VI, in violation of

rule 61J2-14.012(2), and therefore subsection 475.25(1)(e),

Florida Statutes.

25. While the Department's charges in Counts I and III

through VII of the administrative complaint have been sustained,

it has failed to carry its burden of proof with regard to the

allegations of Count II. Such count alleged that respondent

"fail[ed] to maintain trust funds in the real estate brokerage

escrow bank account or some other proper depository until

disbursement thereof was properly authorized in violation of

[subsection] 475.25(1)(k)." The proof demonstrated, however,

that respondent apparently did maintain trust funds in an escrow

account, albeit in the name of Bantu Enterprises. Consequently,

while respondent is guilty of failing to register Bantu

Enterprises, as heretofore noted, he is not guilty of the

separate offense of having failed to maintain trust funds in an

escrow account under his signatory control.

26. Having resolved that respondent committed the offenses

heretofore noted, it remains to resolve the appropriate penalty

for his offenses. Considering the seriousness of respondent's

violations, the Department's recommendation that revocation is

the appropriate penalty is accepted.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that a final order be rendered which finds

respondent guilty of Counts I and III through VII of the

administrative complaint, and which dismisses Count II of the

administrative complaint. As a penalty for such violations,

respondent's broker's license should be revoked.

DONE AND ENTERED this 30th day of May 1996 in Tallahassee,

Leon County, Florida.

____________________________________

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 30th day of May 1996.

ENDNOTE

1/ On February 5, 1996, respondent filed a letter with the

Division of Administrative Hearings to which were attached copies

of two checks. To the extent respondent's submittal could be

construed as a request that the copies of the two checks be

received into evidence, such request, in the face of petitioner's

objection, is denied.

APPENDIX

Petitioner's proposed findings of fact are addressed as follows:

1. Addressed in paragraph 1.

2. Addressed in paragraph 2.

3 and 4. Addressed in paragraphs 3 and 4.

5 through 10. Addressed in paragraphs 7 through 17.

11 and 12. Addressed in paragraphs 19 and 20.

12. (sic) Addressed in paragraphs 5 and 6.

13. (sic) Addressed in paragraph 20.

COPIES FURNISHED:

Daniel Villazon, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

Post Office Box 1900

Orlando, Florida 32802-1900

Phillip B. Gilbert, pro se

150 Northwest Fifty-sixth Street

Miami Shores, Florida 33127

Henry M. Solares, Director

Division of Real Estate

Post Office Box 1900

Orlando, Florida 32802-1900

Lynda L. Goodgame, 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 ten

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.

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

DISTRICT COURT OPINION

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

NOT FINAL UNTIL TIME EXPIRES

TO FILE REHEARING MOTION

AND, IF FILED, DISPOSED OF.

IN THE DISTRICT COURT OF APPEAL

OF FLORIDA

THIRD DISTRICT

JANUARY TERM, A.D. 1997

PHILLIP B. GILBERT,

Appellant,

vs. CASE NO. 96-02955

LOWER

STATE OF FLORIDA, DEPARTMENT TRIBUNAL NO. 95-4111

OF BUSINESS AND PROFESSIONAL

REGULATION, DIVISION OF REAL

ESTATE,

Appellee.

_____________________________/

Opinion filed April 9, 1997.

An appeal determined pursuant to Florida Rule of Appellate

Procedure 9.315(a) from the State of Florida, Department of

Business and Professional Regulation, Division of Real Estate.

Phillip B. Gilbert, in proper person.

Daniel Villazon, for appellee.

Before SCHWARTZ, C.J., and COPE and GERSTEN, JJ.

PER CURIAM.

Affirmed.

M A N D A T E

DISTRICT COURT OF APPEAL OF FLORIDAA

THIRD DISTRICT

DCA# 96-2955

PHILLIP B. GILBERT

vs.

STATE OF FLA, DEPT OF BUSINESS AND PROFRESSIONAL REGULATION, etc.

This cause having been brought to this Court by appeal, and

after due consideration the Court having issued its opinion.

YOU ARE HEREBY COMMANDED that further proceedings be had in

said cause accordance with the opinion of this Court attached

hereto and incorporated as part of this order, and with the rules

of procedure and laws of the State of Florida.

Case No. 95-4111

WITNESS, T he Honorable Alan R. Schwartz

Chief Judge of said District Court and seal of said Court at

Miami, this 25th day of April, 1997.

(SEAL) ___________________________________________________

LOUIS J. SPALLONE, Clerk

District Court of Appeal of Florida, Third District