Florida Clerks Rake In Millions for Retirement From E-Filing Portal
When Floridians access their court system, elected court clerks who took over the state’s e-filing portal take in millions for health care during their retirement.
PDF: class action lawsuit
by Alex Pickett, Court House News, February 8, 2021
(CN) — With 15 board members and more than 100 employees, the Florida Court Clerks and Comptrollers act as a gatekeeper for attorneys and residents who access the state’s court system.
Through their own for-profit company CiviTek, the clerks manage a series of websites that process an estimated $500 million worth of transactions each year and collect millions in “convenience” fees.
Every time an attorney files a lawsuit, a couple submits divorce papers, or a parent makes a child support payment and pay with a credit card, they must navigate through CiviTek-created portals and pony up the company’s 3.5% convenience fee.
The clerks say all money taken in by CiviTek pays for company operations, and extra funds are reinvested into new technology and protect against unforeseen events, like power outages caused by a catastrophic hurricane.
But a portion of the profits from CiviTek go to the clerks association directly, including a well-funded health retirement plan and money for multiday conferences and workshops at hotels and resorts around the state.
The Florida Court Clerks and Comptrollers created CiviTek in 1991 to “provide enterprise services and project management services, including information technologies” to the clerks of court, according to association documents.
Through CiviTek, the clerks association created its own vendor to capture multimillion-dollar contracts with state agencies to process payments for child support and tickets, through MyFloridaCounty.com and MyFloridaRemit.com.
And those payments came with a 3.5% convenience fee — higher than any other vendor taking electronic payments in the state.
Then, the Florida Legislature gave the green light for the clerks to implement electronic filing of new lawsuits and other court proceedings. In 2010, the clerks pushed to create the Florida Courts E-Filing Authority — an organization tasked with creating and maintaining that e-filing system.
In 2013, a Florida Supreme Court order mandated all court filings from attorneys should flow through the e-filing portal. The clerks, already festooned on the board of the Florida Courts E-Filing Authority, used its company CiviTek, to implement the change, along with the 3.5% fee for every filing.
A standard civil lawsuit filing fee of $400 incurs a $14 convenience fee. Electronic checks incur a flat $5 fee. These innocuous fees amount to a staggering amount of money: more than 1 million e-filings go through the portal each month.
The clerks association maintains the money generated by the E-Filing Authority goes back into its operations. However, the association charges the authority to use its Civitek-developed software and services to the tune of $3.5 million a year.
In effect, the clerks association sells its software and services to state agencies obliged to accept such filings by government mandate, then profits off the fees generated.
And all the while, its members sit on a board that controls the terms of the contract.
In 2012, the clerks association expanded the CiviTek business model and created CiviTek National Inc.
This for-profit corporation provides child support payment processing for states and territories outside Florida, including Oregon, Washington state, Hawaii, Maryland, New Jersey and the U.S. Virgin Islands.
According to company documents, the CiviTek National board consists of three clerks of court appointed by the presidents of the association and CiviTek. These officers operate a nationwide, profitmaking enterprise that provideschild support payment processing for states and territories other than Florida, including Oregon, Washington state, Hawaii, Maryland, New Jersey and the U.S. Virgin Islands.
CiviTek National’s financials are similarly not offered for public view, though a 2017 audit of the clerks association, and Form 990s, reveals money flows between the two entities.
The exact amount of money received by CiviTek, CiviTek National and the clerks association is unclear, as is where the funds are spent. The clerks association, a nonprofit, and CiviTek, a Florida for-profit company, are not subject to the Florida’s public records law.
The clerks association has refused to provide CiviTek’s or CiviTek National’s financial statements, however, as a nonprofit entity, the clerks association must file a Form 990 with the Internal Revenue Service each year.
The last three years of Form 990s, recently obtained by Courthouse News, show the clerks association is bringing in tens of millions of dollars each year.
The clerks association ended 2019 with more than $22.4 million in revenue and $31.4 million in assets. The association’s revenue in 2018 and 2017 reflect similar figures, according to the documents.
Records show a large portion of the money received goes to interchange fees that cover a bank’s acceptance of credit card-based transactions, maintenance of servers and office expenses.
The association also has several salaried employees, including CEO Chris Hart IV, who was paid $228,651 in 2019 and CFO Brian Machek, who received $123,547. A handful of project managers and administrators also pulled in more than $100,000 that year.
But some of that money also goes into perks for the employees of the clerks association.
Retirees from the association receive a well-funded health reimbursement plan — the benefits trust has more than $1.7 million, according to the latest financial statement.
Clerks and association employees also attend multiday conferences and workshops at hotels and resorts around the state.
In 2018, the association spent more than $242,000 on conferences and meetings, according to its form 990. That year’s fall conference was held at the Hyatt Regency Hotel in Jacksonville’s riverfront district.
Records show the association also spent $436,000 in travel-related expenses that year.
In 2019, the association expended $109,000, including a summer conference at the Omni Orlando Resort in Championsgate. The association also spent $211,000 for travel.
Currently, a class action lawsuit brought by two Orlando-area women is working its way through state court in Tallahassee. The women claim the clerks created CiviTek and CiviTek National to push out competition and charge excessive fees to benefit their association’s goals.
In an email, Patrick Manderfield, deputy communications director for the clerks association, defended the convenience fees charged by CiviTek.
“Civitek is a private vendor in a very competitive industry,” Manderfield said. “It is permitted under Florida statute to charge a convenience fee for the hundreds of millions of dollars in transactions it processes on an annual basis on behalf of the state.”
Much of the revenue collected, he said, goes to paying interchange fees levied by the credit card issuing banks.
Manderfield said the fees are “used responsibly and with prudent oversight.”
But Ben Wilcox, research director for Integrity Florida, a Tallahassee-based government watchdog group, is not convinced.
“The whole arrangement looks, technically, like it may be legal, but I don’t think the public would like the way it looks,” said Wilcox.
“People who have fallen on hard times, or are going through a divorce, they don’t want to feel like the clerks are profiting off of them,” he added.
Other vendors contracting with government agencies charge less in convenience fees, he said, and opening up bids to other vendors could add to healthy competition and lower costs to those who access the courts.
The lack of transparency can also open the door to malfeasance.
In December, the Leon County Sheriff’s Office arrested the association’s special events manager on suspicion of embezzling more than $175,000.
According to the affidavit, KayDubois Carson, who helped organize the association’s annual conferences, used an association credit card to pay for unapproved flights to Mexico and Europe, and leadership seminars. Investigators also say she used the credit card to purchase a tattoo, a computer, clothing and makeup over a 21-month period in 2017-2018.
The association’s chief financial officer discovered the purchases last fall and alerted the authorities. Carson has pleaded not guilty.
Wilcox with the watchdog group said the lack of accountability is the overriding concern
“It’s troubling that there is no accountability here,” Wilcox said. “Nobody is raising questions about whether the money is being used as efficiently as possible.”