02-002836 Department Of Business And Professional Regulation, Division Of Real Estate vs. Maria L. Nuevo And Realco Realty, Inc. Status: Closed Recommended Order on Thursday, May 29, 2003.

Summary: Revocation for real estate broker who fraudulently represented possession of deposit to sellers and fraudulently inflated purchase price to appraiser.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA DEPARTMENT OF )

BUSINESS AND PROFESSIONAL )

REGULATION, DIVISION OF REAL )

ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 02 - 2836

)

MARIA L. NUEVO and REALCO )

REALTY, INC., )

)

Respondents. )

______________________________)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing in

Miami, Florida, on March 6, 2003.

APPEARANCES

For Petitione r: Christopher J. DeCosta

Senior Attorney

Division of Real Estate

Department of Business and

Professional Regulation

400 West Robinson St reet, Suite N - 809

Orlando, Florida 32801

For Respondents: Michael H. Wolf

Michael H. Wolf & Associates, LLC.

3832 North University Drive

Sunrise, Florida 33322

STATEMENT OF THE ISSUES

The issues are whether Respondents committed fraud, in

violation of Section 475.25(1)(b), Florida Statutes; failed to

prepare monthly trust account reconciliations, in violation of

Rule 61J2 - 14.012(2) and (3), Florida Administra tive Code; failed

to account for or deliver funds, in violation of Section

475.25(1)(d)1, Florida Statutes; and failed to preserve books

and accounts, in violation of Rule 61J2 - 14.012(1), Florida

Administrative Code.

PRELIMINARY STATEMENT

By Administrat ive Complaint dated November 14, 2001,

Petitioner alleged that Respondent Nuevo was a licensed real

estate broker acting as a qualifying broker with registered

corporate real estate broker, Respondent Realco Realty.

The Administrative Complaint alleges th at, on September 4,

2000, Respondent Nuevo "facilitated" a purchase and sale

contract between Omar Canizares, as buyer, and Lorraine Lambo,

as seller, for property known as 10620 Southwest 139th Street,

Miami. The contract allegedly states the purchase pr ice as

$260,000 and the escrow deposit as $1000, which was to be held

by Respondent Realco Realty. The contract allegedly provides

that the buyer was to deposit an additional $4000 with

Respondent Realco Realty within three business days. The

Administrat ive Complaint alleges that "Respondent" never

received any of the deposits.

The Administrative Complaint alleges that the contract

called for the closing to take place on or before September 30,

2000, and the parties selected Trust Title Insurance, Inc., to

serve as closing agent. The Administrative Complaint alleges

that, on September 18 and October 3, 2000, employees of Pedro

Realty, which was the seller's agent, asked Respondent Nuevo to

provide copies of the escrow letter, pre - qualification letter,

an d seller's disclosure letter. However, the Administrative

Complaint alleges that Respondent never provided the requested

information.

Count I of the Administrative Complaint alleges that

Respondent Nuevo is guilty of fraud, misrepresentation,

concealment , dishonest dealing by trick, scheme or device,

culpable negligence, or breach of trust in any business

transaction, in violation of Section 475.25(1)(b), Florida

Statutes.

Count II of the Administrative Complaint alleges that

Respondent Realco Realty is guilty of fraud, misrepresentation,

concealment, dishonest dealing by trick, scheme or device,

culpable negligence, or breach of trust in any business

transaction, in violation of Section 475.25(1)(b), Florida

Statutes.

The Administrative Complaint allege s that, on September 22,

2000, pursuant to the above - described contract, Respondent Nuevo

requested an appraisal for the subject property. The

Administrative Complaint alleges that, on the same day,

Respondent Nuevo faxed an Appraisal Request Form to Appr aisal

Services of South Florida. The Administrative Complaint alleges

that the Appraisal Request Form, prepared by Respondent Nuevo,

lists the sales price of the subject property as $325,000. The

Administrative Complaint alleges that, on September 27, 20 00,

Respondent Nuevo faxed an altered copy of the contract listing

the sales price as $310,000.

Count III of the Administrative Complaint alleges that

Respondent Nuevo is guilty of fraud, misrepresentation,

concealment, dishonest dealing by trick, scheme or device,

culpable negligence, or breach of trust in any business

transaction, in violation of Section 475.25(1)(b), Florida

Statutes.

Count IV of the Administrative Complaint alleges that

Respondent Realco Realty is guilty of fraud, misrepresentation,

c oncealment, dishonest dealing by trick, scheme or device,

culpable negligence, or breach of trust in any business

transaction, in violation of Section 475.25(1)(b), Florida

Statutes.

The Administrative Complaint alleges that the above -

described contract c ontains a closing date, but the parties

failed to close by that date. The Administrative Complaint

alleges that, on October 9, 2000, the seller's agent mailed a

demand for the deposit to Respondents, but they failed to

respond to the demand or notify Peti tioner.

Count V of the Administrative Complaint alleges that

Respondent Nuevo is guilty of failing promptly to provide

written notification to the Florida Real Estate Commission,

after the last demand, to resolve the escrow fund dispute and to

institute o ne of the settlement procedures identified in Section

475.25(1)(d)1, Florida Statutes.

The Administrative Complaint alleges that, on February 21,

2001, Petitioner's investigator, pursuant to an investigation,

conducted an audit of Respondents' business re cords. The audit

allegedly revealed that Respondents opened a sales deposit

escrow account in September 2000 and that they had never

reconciled the account. Also, during the audit, Respondent

Nuevo was allegedly unable to provide copies of offers, counte r

offers, and disclosures.

Count VI of the Administrative Complaint alleges that

Respondent Nuevo is guilty of failing to properly prepare the

required written monthly escrow statement reconciliations, in

violation of Rule 61J2 - 14.012(2) and (3), Florida Administrative

Code, and is thus in violation of Section 475.25(1)(e), Florida

Statutes.

Count VII of the Administrative Complaint alleges that

Respondent Nuevo is guilty of failing to account or deliver

funds, in violation of Section 475.25(1)(d)1, Flori da Statutes.

Count VIII of the Administrative Complaint alleges that

Respondent Nuevo is guilty of failing to preserve and make

available to Petitioner and preserve at least one legible copy

of all books, records, and supporting documents and failing to

k eep an accurate account of all trust fund transactions, in

violation of Section 475.5015, Florida Statutes

Count IX of the Administrative Complaint alleges that

Respondent Nuevo is guilty of failing to preserve and make

available to Petitioner all books, records, supporting documents

and failing to keep an accurate account of all trust fund

transactions, in violation of Rule 61J2 - 14.012(1), Florida

Administrative Code, and is thus in violation of Section

475.25(1)(e), Florida Statutes.

Count X of the Admi nistrative Complaint alleges that

Respondent Realco Realty is guilty of failing to properly

prepare the required written monthly escrow statement

reconciliations, in violation of Rule 61J2 - 14.012(2) and (3),

Florida Administrative Code, and is thus in viol ation of Section

475.25(1)(e), Florida Statutes.

Count XI of the Administrative Complaint alleges that

Respondent Realco Realty is guilty of failing to account or

deliver funds, in violation of Section 475.25(1)(d)1, Florida

Statutes.

Count XII of the Ad ministrative Complaint alleges that

Respondent Realco Realty is guilty of failing to preserve and

make available to Petitioner all books, records, and supporting

documents and failing to keep an accurate account of all trust

fund transactions, in violation of Rule 61J2 - 14.012(1), Florida

Administrative Code, and is thus in violation of Section

475.25(1)(e), Florida Statutes.

Count XIII of the Administrative Complaint alleges that

Respondent Realco Realty is guilty of failing to preserve and

make available to Petitioner at least one legible copy of all

books, records, and supporting documents and failing to keep an

accurate account of all trust fund transactions, in violation of

Rule 61J2 - 14.012(1), Florida Administrative Code, and Section

475.5015, Florida Statutes, and is thus in violation of Section

475.25(1)(e), Florida Statutes.

The Administrative Complaint seeks revocation, among other

penalties. However, as noted in its proposed recommended order,

Petitioner concedes Counts V, VII, VIII, XI, and XII.

At the hearing, Petitioner called two witnesses and offered

into evidence 13 exhibits: Petitioner Exhibits 1 - 13.

Respondents called one witness and offered into evidence two

exhibits: Respondents Exhibits 2 and 3. All exhibits were

admitted. However , the Administrative Law Judge gave

Respondents ten days to file Respondents Exhibit 3, but they did

not file the exhibit, so it is deemed withdrawn.

The court reporter filed the transcript on April 7, 2003.

The parties filed their proposed recommended o rders by May 22,

2003.

FINDINGS OF FACT

1. At all material times, Respondent Maria L. Nuevo

(Respondent) was a licensed real estate broker, holding license

number 3006548. Respondent was first licensed, as a real estate

salesperson, in Florida in 1984 and became a broker in 1986.

2. Respondent is president of, and qualifying broker for,

Respondent Realco Realty, Inc. (Realco Realty), which is a

corporation registered as a real estate broker, holding license

number 1011738.

3. In late August or early Septe mber 2000, Respondent

prepared a Residential Sales and Purchase Contract (Contract) on

behalf of Omar Canizares, as buyer, to purchase a residence at

10620 Southwest 139th Street in Miami (Property). The Contract

provided for a purchase price of $260,000 and a deposit of $1000

to be held by Realco Realty.

4. Respondent presented the Contract to Zoila de Castro, a

real estate broker who was representing Antonio and Lorraine

Lambo, and Mrs. Lambo. The record is poorly developed on these

points, but it appe ars that Mr. and Mrs. Lambo jointly owned the

Property and that both of them never signed the Contract.

5. Respondent left the Contract with Mrs. Lambo because

Mr. Lambo was out of town. A few days later, Ms. de Castro

returned the Contract to Respondent, intending to convey a

counteroffer that raised the purchase price to $265,000 and the

deposit to $5000 -- to be paid within three days after the

inspection. However, the Contract delivered by Ms. de Castro to

Respondent is notable for two omissions -- a signa ture of one of

the Lambos and a deadline for Canizares' acceptance of the

counteroffer.

6. Ms. de Castro's testimony that she delivered to

Respondent the only original contract with signatures of both

Lambos is discredited for two reasons. First, Responden t would

likely use the better version of the Contract -- i.e., the one

with both sellers' signatures -- when providing a copy to the

appraiser. Second, Ms. de Castro appears to have maintained, at

best, an imperfect grasp of all that was transpiring in this

a ttempted transaction and may be claiming to have delivered a

fully signed contract -- though still without a deadline for

Mr. Canizares' acceptance -- in order to place herself in a better

light.

7. At this point in the transaction, the lack of an

enforceable a greement between Mr. Canizares and the Lambos

should have been obvious to the Lambos' real estate broker, but

it was not. The testimony depicts a series of unanswered

letters and unsatisfied demands, as the Lambos initially tried

to get the deal to close and eventually tried only to get the

deposits, which they believed now totalled $5000.

8. In fact, neither Respondent held any deposit. Although

relieved from the obligation to collect another $4000 in

deposit, due to the failure of the parties to come to an

agreement, Respondents had misrepresented to the Lambos and

Ms. de Castro that they held the initial $1000 deposit.

9. Although Petitioner has failed to prove other

fraudulent acts by either Respondent toward the Lambos or

Ms. de Castro, Petitioner has p roved another fraudulent act by

Respondents in connection with this transaction. Exploiting

Ms. de Castro's lack of diligence, Respondents appear to have

shopped the Contract. On September 22, 2000, Respondent ordered

an appraisal on a form showing the p urchase price as $325,880.

At the request of the appraiser, Respondent sent to the

appraisal a copy of an altered Contract, which provided for a

purchase price of $310,100 and reflected total deposits of

$5000.

10. The Lambos - Canizares sale never closed, and the Lambos

never received any money representing the deposit that they

claimed to be owed.

11. Respondents opened an escrow account in September

2000, but had never performed written monthly escrow

reconciliation for their trust account through the date of the

audit in February 2001. Additionally, at the time of the audit,

Respondents were unable to produce any documentation pertaining

to their real estate practice. However, Respondents later

produced banking records and reconciliations for January and

Februa ry 2001, which were undoubtedly prepared after the

February 2001 audit.

CONCLUSIONS OF LAW

12. The Division of Administrative Hearings has

jurisdiction over the subject matter. Section 120.57(1),

Florida Statutes. (All references to Sections are to Florida

S tatutes. All references to Rules are to the Florida

Administrative Code.)

13. Section 475.25 provides, in relevant part:

(1) The commission may deny an application

for licensure, registration, or permit, or

renewal thereof; may 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 administrative 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,

misrepresentation, 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; has

violated a duty imposed upon her or him by

law or by the terms of a listing contract,

written, oral, express, or imp lied, in a real

estate transaction; has aided, assisted, or

conspired with any other person engaged in

any such misconduct and in furtherance

thereof; or has formed an intent, design, or

scheme to engage in any such misconduct and

committed an overt act in furtherance of such

intent, design, or scheme. It is immaterial

to the guilt of the licensee that the victim

or intended victim of the misconduct has

sustained no damage or loss; that the damage

or loss has been settled and paid after

discovery of the mi sconduct; or that such

victim or intended victim was a customer or a

person in confidential relation with the

licensee or was an identified member of the

general public.

(d)1. Has failed to account or deliver to

any person, including a licensee under this

chapter, at the time which has been agreed

upon or is required by law or, in the absence

of a fixed time, upon demand of the person

entitled to such accounting and delivery, any

personal property such as money, fund,

deposit, check, draft, abstract of title,

mortgage, conveyance, lease, or other

document or thing of value, including a share

of a real estate commission if a civil

judgment relating to the practice of the

licensee's profession has been obtained

against the licensee and said judgment has

n ot been satisfied in accordance with the

terms of the judgment within a reasonable

time, or any secret or illegal profit, or any

divisible share or portion thereof, which has

come into the licensee's hands and which is

not the licensee's property or which the

licensee is not in law or equity entitled to

retain under the circumstances. However, if

the licensee, in good faith, entertains doubt

as to what person is entitled to the

accounting and delivery of the escrowed

property, or if conflicting demands hav e been

made upon the licensee for the escrowed

property, which property she or he still

maintains in her or his escrow or trust

account, the licensee shall promptly notify

the commission of such doubts or conflicting

demands and shall promptly:

a. Requ est that the commission issue an

escrow disbursement order determining who is

entitled to the escrowed property;

b. With the consent of all parties, submit

the matter to arbitration;

c. By interpleader or otherwise, seek

adjudication of the matter by a court; or

d. With the written consent of all parties,

submit the matter to mediation. The

department may conduct mediation or may

contract with public or private entities for

mediation services. However, the mediation

process must be successfully completed within

90 days following the last demand or the

licensee shall promptly employ one of the

other escape procedures contained in this

section. Payment for mediation will be as

agreed to in writing by the parties. The

department may adopt rules to implement this

section.

If the licensee promptly employs one of the

escape procedures contained herein, and if

she or he abides by the order or judgment

resulting therefrom, no administrative

complaint may be filed against the licensee

for failure to acc ount for, deliver, or

maintain the escrowed property. If the buyer

of a residential condominium unit delivers to

a licensee written notice of the buyer's

intent to cancel the contract for sale and

purchase, as authorized by s. 718.503 , or if

the buyer of real property in good faith

fails to satisfy the terms in the financing

cl ause of a contract for sale and purchase,

the licensee may return the escrowed property

to the purchaser without notifying the

commission or initiating any of the

procedures listed in sub - subparagraphs a. - d.

(e) Has violated any of the provisions of

thi s chapter or any lawful order or rule made

or issued under the provisions of this

chapter or chapter 455.

14. Section 475.5015 provides:

Each broker shall keep and make available to

the department such books, accounts, and

records as will enable the departme nt to

determine whether such broker is in

compliance with the provisions of this

chapter. Each broker shall preserve at

least one legible copy of all books,

accounts, and records pertaining to her or

his real estate brokerage business for at

least 5 years from the date of receipt of

any money, fund, deposit, check, or draft

entrusted to the broker or, in the event no

funds are entrusted to the broker, for at

least 5 years from the date of execution by

any party of any listing agreement, offer to

purchase, rental property management

agreement, rental or lease agreement, or any

other written or verbal agreement which

engages the services of the broker. If any

brokerage record has been the subject of or

has served as evidence for litigation,

relevant books, a ccounts, 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 in no case less than

a total of 5 years as set above. Disclosure

documents required under ss. 475.2755 and

475.278 shall be retained by the real estate

licensee in all transactions that result in

a written contract to purchase and sell real

property.

15. Rule 61J2 - 14.012 provides:

(1) A broker who receives a deposit as

previously defined sh all preserve and make

available to the BPR, or its authorized

representative, all deposit slips and

statements of account rendered by the

depository in which said deposit is placed,

together with all agreements between the

parties to the transaction. In a ddition,

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 a t all

reasonable times during regular business

hours.

(2) Once 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 use d

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, an itemized list of the

broker's tr ust liability, 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 revi ew, sign and date the

monthly statement - reconciliation.

(3) Whenever the trust liability and the

bank balances do not agree, the

reconciliation shall contain a description

or explanation for the difference(s) and any

corrective action taken in reference to

shortages or overages of funds in the

account(s). Whenever a trust bank account

record reflects a service charge or fee for

a non - sufficient check being returned or

whenever an account has a negative balance,

the reconciliation shall disclose the

cause (s) of the returned check or negative

balance and the corrective action

taken.

16. Petitioner must prove the material allegations by

clear and convincing evidence. Department of Banking and

Finance v. Osborne Stern and Company, Inc. , 670 So. 2d 932 (Fla.

199 6) and Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987).

17. As to Counts I and II, Petitioner has proved that

Respondents are guilty of fraud, misrepresentation, concealment,

dishonest dealing by trick, scheme, or device, or breach of

trust in any business t ransaction by presenting the Contract,

which reflects that they held a $1000 deposit, when they did not

hold any such deposit.

18. As to Counts III and IV, Petitioner has proved that

Respondents are guilty of fraud, misrepresentation, concealment,

dishonest de aling by trick, scheme, or device, or breach of

trust in any business transaction by increasing the purchase

price shown on the Contract when presenting the Property for an

appraisal.

19. As to Counts VI and X, Petitioner has proved that

Respondents are guilty of failing to perform written monthly

reconciliations on their escrow account.

20. As to Count XI, Petitioner has failed to prove that

Realco Realty failed to account for or deliver funds. The

parties never entered into an enforceable agreement, so Realco

Re alty did not have any obligation to account for or deliver the

deposit to the Lambos.

21. As to Count XIII, Petitioner has failed to prove that

Realco Realty failed to preserve and make available a copy of

all books, records, and supporting documents. Realco Realty

eventually produced copies of its bank records, and Petitioner

failed to prove that Realco Realty had other documents that it

failed to produce.

22. Rule 61J2 - 24.001(3)(c) provides that the usual penalty

for "fraud, misrepresentation, and dishonest deal ing" is

revocation, but the usual penalty for "concealment" is only a

suspension of three to five years and a $1000 fine. Although

Respondents' handling of the deposit could be characterized as

concealment, it is also an active misrepresentation to repres ent

that they are holding a deposit when they are not. Providing an

altered contract and misinformation to the appraiser is clearly

fraud and misrepresentation.

23. It is unnecessary to consider the penalties for the

other violations. Each Respondent is guil ty of two fraudulent

acts, either of which justifies revocation. These fraudulent

acts are aggravated by the apparent scheme of Respondents to

enable their client to try to obtain a higher appraisal probably

to sell the Contract, but possibly to obtain ex cessive financing

when purchasing the Property. Except for the absence of a

disciplinary history, there are no mitigating factors.

RECOMMENDATION

It is

RECOMMENDED that the Florida Real Estate Commission enter a

final order revoking the real estate brok er licenses of Maria L.

Nuevo and Realco Realty, Inc.

DONE AND ENTERED this 29th day of May, 2003, in

Tallahassee, Leon County, Florida.

S

___________________________________

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 29th day of May, 2003.

COPIES FURNISHED:

Nancy P. Campiglia, Acting Director

Division of Real Estate

Department of Business and

Professional Regulation

400 Wes t Robinson Street, Suite 802, North

Orlando, Florida 32801

Hardy L. Roberts, III, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

Christopher J. DeCosta

Senior Attorney

Divis ion of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N - 809

Orlando, Florida 32801

Michael H. Wolf

Michael H. Wolf & Associates, LLC.

3832 North University Drive

Sunrise, Florida 33322

NOTICE OF RIGHT T O SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this recommended order. Any exceptions

to this recommended order must be filed with the agency that

will issue the final order in this case.