Loading...
11/16/1993 ADMINISTRATIVE HEARING Occupational License Appeal - Drew Street Video November 16, 1993 An administrative hearing was held on Tuesday, November 16, 1993, at 3:16 p.m., in the Large Conference Room, third floor of City Hall, 112 S. Osceola Avenue, Clearwater, Florida. Present: Allen V. Mahan, Emergency Management Coordinator Thomas W. Rue, Owner, Drew Street Video Attorney Thomas C. Little, representing Thomas W. Rue and Rue Enterprises, Inc. Attorney Luke Lirot, representing Douglas Hanson and Dou-Han Corporation (arrived at 3:37 p.m.) Milton A. Galbraith, Jr., City Attorney, City of Clearwater Robert J. Surette, Assistant City Attorney, City of Clearwater Kathy Rice, Deputy City Manager, City of Clearwater Also present: Detective Robert Pease, City of Clearwater Janet McMahan, Central Permitting, City of Clearwater (arrived at 3:30 p.m.) Kim Salls, Court reporter Mary K. Diana, Assistant City Clerk Allen Mahan, representing City Manager Michael Wright, called the hearing to order at 3:16 p.m. The issue to be heard was whether or not a Mr. Thomas W. Rue was the bona fide owner of the so-called Drew Street Video business or was indeed and in fact an agent or "straw man" for a Mr. Douglas Hanson. Attorney Little referred to a letter written by the City Attorney dated October 26, 1993 received by Mr. Rue and questioned what ordinance establishes the basis for today's hearing in trying to revoke an occupational license. At this time the Assistant City Clerk swore in all individuals who would be providing testimony in today's hearing. The City Attorney said the city is outside the four corners of the ordinance in the sense that the inquiry is being made on behalf of the City Manager as to facts that will allow him to make a decision on the issue as to whether Mr. Rue is an alter ego of an early applicant who was denied an occupational license. The purpose of this proceeding is to give all affected parties proper due notice. Referring to being outside the four corners of the ordinance, Attorney Little questioned whether the ordinances that are in affect do not specifically authorize this type of hearing. The City Attorney responded the ordinance does not specifically give authorization for this specific hearing. He said this hearing is a good faith attempt to investigate into the facts for the City Manager to make a decision. 1 MAH11.93 11/16/93 Attorney Little questioned whether it is accurate to say that today's meeting is more of an investigation than a hearing. The City Attorney responded it may be described as such. Attorney Little objected to holding a former hearing to consider the revocation of a license which hearing is not authorized by the ordinance and is merely an attempt by the city to enter into an investigatory procedure concerning a suspicion it has. He did not find this a proper basis under the ordinance to have an evidentiary type hearing. The City Attorney responded they were not required to be in attendance, they are here at the invitation of the city. Attorney Little expressed concern without their appearance the city would present its case and the decision made could adversely affect his client's interests. Assistant City Attorney Surette indicated he previously presented to Attorney Little a chronology of the events leading to the events of issuing occupational licenses involving Drew Street Video. Attorney Little stipulated to everything other than the October 7, 1993 letter dealing with Mr. Hanson. Attorney Surette asked Detective Peace if he is familiar with Exhibits 1-6 and he responded he is as he does the occupational license reviews for police background checks. In response to a question, Detective Peaseresponded he has been employed with the City of Clearwater for 15 years in the capacity of a police officer on the street, a detective in investigations and in vice and intelligence for the past 6 years. He indicated he has been performing occupational license reviews for the past 6 years. Detective Peace reviewed Exhibit 1 - county occupational license in the name of Drew Street Video, Dou-Han Inc., acquired by Douglas Hanson dated August 5, 1993; Exhibit 2 - application for city occupational license under Dou-Han Inc. dated August 5, 1993 signed by Douglas Hanson, president Dou-Han Inc. for Drew Street Video; Exhibit 3 - police personal data report completed August 6, 1993, by Douglas Hanson. Attorney Surette asked if Detective Pease had the original of the report and he indicated he did. Attorney Little said he did not object to copies. Attorney Surette asked Detective Pease if Exhibits 4, 5 and 6 are accurate copies of official records pertaining to the file involving the issuance of an occupational license to Drew Street Video at 2152 Drew Street. Detective Pease responded they are. Referring to Exhibit 9 - a letter dated October 7, 1993, Attorney Surette asked Ms. Rice if she sent this letter to Douglas Hanson. She said she sent the letter which reflected denial of an occupational license appeal. The decision was based on Section 29.416(b) regarding false, misleading or fraudulent facts in the permitting of a City application. Attorney Surette asked if the decision was based on failure to include prior criminal convictions and Ms. Rice responded this was the case. The date of hearing denying the appeal of the occupational license for Drew Street Video was September 30, 1993. Attorney Surette indicated the authenticity of the documents have been established and 2 MAH11.93 11/16/93 asked they be marked as a composite exhibit (the chronology and attached exhibits) for the purposes of this hearing. Attorney Little agreed. Attorney Luke LaRue, attorney representing Dou-Han Corporation, arrived at 3:37 p.m. Attorney Surette said the presentation today will determine if there has been an arm length transaction regarding the sale of the business from Mr. Hanson to Mr. Rue or if there has been an attempt to circumvent the ordinance. Detective Pease reviewed the chronology and exhibits for Drew Street Video for Mr. Mahan. Referring to page 2 of the occupational license application (Exhibit 2), Detective Pease indicated this page deals with inventory and the schedule fee. In response to Attorney Surette's question, Detective Pease said the amount of the inventory listed by Mr. Hanson for Drew Street Video was $20,000. Referring to the background information (Exhibit 3) to the police department and in response to Attorney Surette' question, Detective Pease indicated Mr. Hanson failed to list his arrests in Michigan. One of the offenses was armed robbery. Attorney Little questioned the relevance of this line of questioning. Attorney Surette said the purpose of this line of questioning is to provide the background leading up to the submission of the application by Mr. Rue to determine if the ordinance has been circumvented. Attorney Little again objected to this line of questioning as he did not see how it was relevant in determining if his client was a straw man for Mr. Hanson. Detective Pease reviewed a utilities deposit for city sewer and water for Drew Street Video submitted by Mr. Hanson dated August 10, 1993, (Exhibit 4), a letter from James Polatty, Planning & Development Director of the City of Clearwater, revoking issuance of a temporary license (Exhibit 5), and an application by Carl Thompson for an occupational license for adult video sales for Drew Street Video dated September 24, 1993 Attorney Surette noted for the record that on September 30, 1993, a hearing was conducted before Ms. Rice regarding the denial of the application submitted by Mr. Hanson. He indicated Ms. Rice summarized the basis for her denial in a letter dated October 10, 1993. Detective Pease reviewed an application submitted by Thomas Rue for a city occupational license for Drew Street Video dated October 4, 1993 (Exhibit 7) with the estimated cost of the inventory at $50,000 and a background information report to the police department for the issuance of a city occupational license for Drew Street Video on October 5, 1993 listing Mr. Rue's current employment as Assistant Manager of Dou-Han Inc. from July 20, 1993 to present and prior employment as a clerk for Dou-Han Inc. at a different address. In response to Mr. Surette's question, Detective Pease said Mr. Hanson is listed as president of Dou-Han Inc. Detective Pease said no bank and credit references were listed on the application by Mr. Rue. 3 MAH11.93 11/16/93 Attorney Surette referred to the letter sent by Ms. Rice notifying Mr. Hanson of the denial of the appeal (Exhibit 9). He asked Mr. Mahan to consider the sequence of events that occurred from September 30, 1993 to October 7, 1993. Mr. Mahan asked if it is customary on an application to provide financial background. Mr. Rue indicated he had no financial references at that time. Detective Pease reviewed the papers of incorporation for Rue Enterprises filed with the State of Florida on October 8, 1993. The only officer listed is Thomas Rue. Detective Pease reviewed the definition of established or commenced business which was a business licensed and open to the public or possesed a current, valid and unexpired occupational license on or before October 18, 1993 (Exhibit 11) and a letter from the City Attorney to Mr. Rue (Exhibit 12). Attorney Surette asked that Mr. Mahan take notice of the nine requests the City Attorney had made requesting documentation to determine if Mr. Rue was a bona fide owner of Drew Street Video. Detective Pease reviewed city utility deposits transferred to Rue Enterprises which indicated utilities were turned on October 28, 1993 (Exhibit 13). Attorney Surette noted the utility deposits were transferred two days after the City Attorney's letter of October 26, 1993 to Mr. Hanson requesting that evidence of all utility accounts for the business be provided for today's hearing. Attorney LaRue was sworn in at this time. Attorney Little asked if the city had any evidence or any witnesses to show that Mr. Rue was a straw man other than just inquiry to Mr. Rue. Attorney Surette responded no other than the chronology and specific information contained within. Attorney Little asked what grounds the city had in the letter to indicate they believed that Mr. Rue was a straw man. Attorney Surette again reviewed the chronology indicating the critical period are the events leading up to October 18, 1993. The City had receipt and referral of the adult ordinance before the City Commission on this date. The definition of established or commenced business relevant to this hearing was whether an individual had obtained a current and valid occupational license on or before October 18, 1993. Prior to September 30, 1993, Mr. Carlos Thompson filed an application for an occupational license for Drew Street Video which was denied. The City has no knowledge of any connection between Mr. Thompson, Mr. Hanson and Mr. Rue. Mr. Rue is the third applicant submitting an application for an occupational license for Drew Street Video on October 4, 1993. He indicates on the application he will be acquiring $50,000 worth of inventory. No evidence has been shown that Mr. Rue has the economic means to purchase inventory of this amount and operate the business as the bona fide owner. Attorney Surette said although there are no specific procedure requirements requiring today's hearing, there are procedure requirements dealing with the revocation of an occupational license that may have been issued contained within the code. Today's hearing will allow Mr. Rue to perfect a record that will provide the City an opportunity to determine whether there are any grounds to have the Commission further review further the possible revocation of any license or 4 MAH11.93 11/16/93 whether Mr. Rue is a bonified owner of the business. In rebuttal, Attorney Little indicated no tangible evidence has been presented to show that Mr. Rue is a straw man and nothing has been proven to the contrary. He found the hearing to be unusual. Attorney Surette responded Mr. Rue was invited to the hearing to eliminate concerns that he is a straw man and is circumventing the ordinance. He said it was up to Mr. Rue whether he wanted to attend the hearing. Attorney Little felt Mr. Rue has to appear to protect his rights and to show he is not "guilty" of some type of violation. Attorney Surette asked Mr. Rue the date when he signed documentation transferring any ownership of Drew Street Video from Mr. Hansen to himself. Mr. Rue responded the sale was completed on October 8, 1993 and the amount of the sale was $100,000 which covered all inventory, furnishings, displays, etc. He submitted a composite exhibit. Attorney Surette asked if there are any other officers of Rue Enterprises, Inc. other than Mr. Rue. Mr. Rue responded there were none. There was discussion regarding the terms of the agreement for the purchase of Drew Street Video. A question was raised when the UCC financing statement was filed and Mr. Rue said they were filed with the state on October 13, 1993 and with the county on October 8, 1993. Discussion ensued in regard to Mr. Hanson's $3,600 security deposit on the building. Mr. Rue is required to sublease the building and the security deposit will not be refunded. In response to a question it was indicated no additional security deposit is required. A question was raised regarding an effective date of October 4, 1993 on the Assignment/Assumption Agreement. Mr. Hanson said this date referred to the date when Mr. Hanson and Mr. Rue got with the property owner to arrange this agreement. Attorney Surette asked whose signature was on the security agreement and Attorney Little responded his secretary's. Discussion ensued in regard to when the Articles of Incorporation for Rue Enterprises, Inc. were signed. A question was raised as to why the rush to form a corporation and Mr. Rue responded he had the opportunity to go into business with no money down. There was discussion regarding the dates of the sequence of events leading up to Mr. Hanson purchasing the business known as Drew Street Video. The meeting recessed from 4:20 p.m. to 4:25 p.m. Attorney Surette questioned whether Mr. Hanson has any ownership interests in Rue Enterprises, Inc. Mr. Rue responded he did not, other than the note. Attorney Surette asked if Mr. Rue has a bank account and he responded he has a corporate bank account which he obtained today. He said his personal banking account prior to 5 MAH11.93 11/16/93 today was at Barnett Bank. In response to a question, Mr. Rue said at the time he applied for an occupational license, he did not have a bank account. In response to Attorney Little's question, Mr. Rue responded all business bills have been paid by him or his corporation. Attorney Little responded to a letter from Mr. Rue's insurance agent and asked that it be added to the composite exhibit previously submitted. In response to Attorney Surette's question, Mr. Rue said the insurance for the business was transferred into his name on October 8, 1993. Discussion ensued in regard to whether this business venture was an arm length's transaction between Mr. Hanson and Mr. Rue. A question was raised if Mr. Rue intended to make a go of this business and he responded he did. Attorney LaRue indicated the date the notice regarding the adult ordinance appeared in the newspaper is critical. Staff is to provide this date to Mr. Mahan to use in his evaluation of this hearing. The hearing adjourned at 4:35 p.m. 6 MAH11.93 11/16/93