Florida Court Clerks Charge Unaccounted Millions Through For-Profit Web Company

Florida’s elected clerks have worked their way into the heart of the court system by acting as online cashier and collecting millions of dollars in “convenience” fees through a for-profit corporation that is owned by the clerks and avoids sunshine laws.

Florida clerks association and Civitek books show assets of $26 million.

TALLAHASSEE, Fla. (CN) — In a two-story brick building, sandwiched between a townhouse community and a small shopping plaza on the north side of Tallahassee, dozens of employees process hundreds of millions of dollars’ worth of electronic payments coming through Florida’s vast court system.

Every time an attorney files a lawsuit, a couple submits divorce papers, or a parent makes a child support payment, and pays with a credit card, this company, CiviTek, charges a 3.5% convenience fee — raking in tens of millions of dollars a year.

Unique from other private businesses that contract with Florida: CiviTek is owned and operated by an association made up of elected officials, the Florida Court Clerks and Comptrollers.

Through this company, Florida’s court clerks have entwined themselves into the daily business of the state’s judiciary, processing an estimated $500 million worth of transactions each year and collecting millions of dollars in “convenience” fees from Florida residents caught up in the courts. These profits pay for the clerks’ special projects outside the budget allotted by the Florida Legislature and outside the purview of public records laws.

“We have an association of elected officials — the clerks of court — and they have created for-profit entities that have collected handsome profits at the expense of Florida citizens who have to access the courts and other government services,” said Jason Cornell, an attorney challenging the arrangement.

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.

In addition, a portion of profits from CiviTek are distributed to the clerks association directly. The funds are discretionary, meaning they are outside the public budget and can be used on whatever initiative the clerks choose.

But the exact amount of money received by CiviTek 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 Sunshine Law.

Currently, a class action lawsuit brought by two Orlando-area women is working its way through state court in Tallahassee, claiming the clerks created CiviTek to push out competition and charge excessive fees to benefit their association’s goals.

The complaint now pending in Leon County Circuit Court says, “Class members pay these illegal fees unknowingly to private entities formed and controlled by the elected clerks and comptrollers of the state of Florida and the moneys have been spent for the benefit of the association and retained in bank accounts for their future use and all done in a manner that seeks to ensure secrecy.”

Representatives of the clerks say Civitek cuts down on costs and allows for innovation.

“It’s perfectly legal, unlike the allegations or suggestions in the complaint,” said Barry Richard, an attorney defending the clerks association and CiviTek. “The money that they receive does not go back to the clerks. It’s retained and utilized for public purposes, and in fact, results in a reduction in costs to the taxpayers.”

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.

A seven-member board comprised of court clerks from across the state manages the company.

CiviTek offers docketing programs for local courts and technical support to the clerks, and also has multimillion-dollar software contracts with other state agencies. But the lion’s share of Civitek income comes from convenience fees charged when anyone pays with a credit card or electronic check through a handful of websites:

  • MyFloridaCounty.com, which processes child support payments, court document orders and traffic ticket payments.
  • MyFloridaRemit.com, which handles child support payments for electronic checks. Consumers pay a one-time $5 fee for the service.
  • Mypaymentportal.com, operated by another clerks-created entity, CiviTek National Inc., which processes electronic payments for local and state governments outside of Florida.
  • MyFloridaAccess.com, also known as the “e-filing portal.”

The amount of e-filed traffic handled by CiviTek was goosed by the Florida Supreme Court in 2013, when it ordered all attorneys to file civil actions electronically through the e-filing portal, managed by the Florida Courts E-Filing Authority. The authority then pays CiviTek, and the clerks’ association, to operate the portal, including processing payments through the site.

The e-filing portal authority paid $3.5 million last year to the clerks association for the operation of the portal by CiviTek, the corporation owned by the clerks association. In addition, CiviTek is permitted to charge a hefty 3.5% convenience fee.

For example, a standard civil lawsuit filing fee of $400 would incur an extra $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.

CiviTek’s other projects are more opaque.

MyFloridaCounty.com, the CiviTek-run website that handles payments for child support and traffic tickets, takes in more than $20 million in transactions per month, according to 2017 employee training documents obtained by Courthouse News.

These documents show CiviTek processing $315 million worth of transactions in 2016, with nearly $3 million in profit. The clerks association received $1.3 million of those funds, the rest retained by CiviTek.

The clerks association did not respond to a request for a statement of revenue from websites other than the e-filing portal over the last year. Nor would they explain how the funds are spent.

But the clerks association and CiviTek readily admit, as private entities, they are not subject to Florida’s Sunshine Law.

The association does list a 2017 audit on its website that reveals the assets of the combined entities at more than $26 million. Between convenience fees, government contracts and association member dues, the entities brought in over $23 million in revenue that year.

All of it outside the budget designated for the courts by the Florida Legislature.

Florida’s chief financial officer regulates how state agencies take in electronic payments. Under the CFO’s guidelines, “state agencies, the judicial branch and units of local government” may charge convenience fees as long as the fee does not “exceed the total cost to the agency and not received by the state.”

In court documents answering the class action complaint, the clerks association and CiviTek maintain they are not bound by that statute since they are not state agencies. The government entity cannot add any amount onto what it is being charged by the private vendor, Richard, the attorney representing the clerks, explained. “It says you can’t charge more than you’re being charged.”

But Cornell, one of the attorneys from Liggio Law who filed the class action suit, said the clerks of court bypassed these regulations by creating their own vendor.  

“The clerks have done a runaround, or attempted to, around that law by creating for-profit entities that are charging fees that are far above market rates,” said Cornell.

Most credit card processing fees range from 1.4% to 2.6% except for American Express, which charges merchants up to 3.5%. And many Florida state agencies charge convenience fees well below CiviTek’s 3.5%.

County tax collectors charge between 2.3% and 2.5%. Parents making child support payments directly through the Florida Department of Revenue — and not MyFloridaCounty.com operated by CiviTek — pay 2.5%.

Bill Newton, deputy director of the Florida Consumer Action Network, said his advocacy group generally does not approve of government entities charging convenience fees, especially in an era in which electronic transactions are so commonplace.

“This is a way they can take in a bit of extra money, quite a bit of money actually, and not get dinged for it,” he said.

Newton, who is not involved in the litigation against CiviTek, said his organization believes most public services should be operated by governmental agencies and not private companies.

“We think the government can do certain things very well,” Newton said. Referring to private companies, he added, “If they can do it cheaper and better, then we’re saving money, we’re still getting the same service, it makes sense to do it.”

He added, “But they really have to do it cheaper and better. That’s the problem here — there’s no competition.”

Cornell agrees.

“Ideally, a private-public partnership involves two separate, unrelated entities that work together for the common good,” the attorney said. “Here, we have a public entity creating a private entity to do an end-run around the budget constraints that they’re facing.”

The lawyer for the clerks answered the claim that the convenience fees are excessive by arguing that Florida statutes only prevent state agencies from adding on a “surcharge.” 

“It doesn’t apply to CiviTek anyway, because it’s not a state agency,” Richard said. “It’s a private entity.”

Government and private partnerships are beneficial to Florida residents, he argued.

“There are a lot of people who feel strongly that it’s a good thing to have a coalition of government and private businesses,” Richard said. “The government is probably the least efficient way to use public money. It’s much more effective if you have a private entity that has a motive to hold down costs and increase the profit margin.”

But where do those profits go, asked Debra Rosenbluth, co-counsel for the class action.

“I think it’s important to know that we don’t know where they’re spending this money,” she said. “We do know that it’s millions and millions of dollars.”

The complaint alleges the clerks association spends “lavishly” on conferences around the state, and on lobbying efforts.

“What we contend they’ve done is created these for-profit organizations to pay for these continuing education events, all this travel and other related expenses, on the backs of Florida consumers who are accessing the courts,” Cornell said. “Meaning, they’re not getting it from the legislature, they’re getting it from for-profit entities, and consumers are footing the bill for it.”

Richard dismissed the allegations of excessive spending. He said the association uses CiviTek funds to improve technology and maintain reserves in case of an emergency.

“They use it all for legitimate purposes,” said Richard, of the firm Greenberg Traurig. “They don’t use it for fancy parties or fancy gatherings.”

In a brief conversation with Courthouse News, Chris Hart IV, the CEO of the Florida Court Clerks and Comptrollers, said the association will prevail in the class action lawsuit.

“I feel as confident as I ever did that they are completely misinformed on their case,” he said, but declined to explain further and did not respond to subsequent messages left for him.

Richard insists the clerks and CiviTek have nothing to hide.

“This is not an issue that has been the subject of any general angst,” he said. “There was no criticism by the Legislature or the executive branch. Nobody was complaining that people were taken advantage of.

“The point is, they are not doing anything illegal or inappropriate.”

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