FINANCIAL
CRIMES
SYMPOSIUM
Department of Business & Professional Regulation
Division of Real Estate
REAL ESTATE ENFORCEMENT:
WHAT WE DO TO PROTECT YOU
Real Estate Enforcement:
What We Do to Protect You
 Overview
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How DRE Operates
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How DRE Combats License Law Violations
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Bullet Proof Your Practice
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Case Studies
Real Estate Enforcement:
What We Do To Protect You
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How DRE Operates
1. DBPR / DRE / OGC
2. Our Boards:
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Commission: brokers / sales associates (FREC)
Appraisal Board: appraisal licenses (FREAB)
Real Estate Enforcement:
What We Do To Protect You
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How DRE Operates
3. What is a license law violation?
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Governed by Florida Statutes Chapters 120, 455
and 475 plus Florida Administrative Rules
Administrative Law
Real Estate Enforcement:
What We Do To Protect You
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How DRE Operates
4. Complaint Process
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Complaint filed
Reviewed determining if colorable
Complaint sent to investigation
File sent to prosecutors
File sent to probable cause panel
Dismissed / Letter of Guidance; or
Administrative Complaint
Real Estate Enforcement:
What We Do To Protect You
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How DRE Combats License Law Violations
1. Notification to the State Attorney
• Criminal charges
• Example: theft, unlicensed activity
2. Emergency Suspension Orders
• Florida Statute Sections 120.60(6) and 455.225(8)
3. Escrow Disbursement Orders
4. Administrative Complaints
.Top 5 Statutes FREC and FREAB
Top 5 FREC Charging Statutes
VIOLATION
Emergency Suspension Order
If the agency finds that immediate serious danger to the public health,
safety or welfare…
Making misleading, deceptive or fraudulent representations in or
related to the practice of licensee’s profession or employing a
trick or scheme related to the practice of a profession
FLORIDA STATUTE
Sections 455.225(8) and
120.60(6)
Sections 455.227(1)(a)
and (m)
Guilty of Fraud, misrepresentation, concealment, false promises, false
pretenses, dishonest dealings by trick scheme or device, culpable
negligence, or breach of trust in any business transaction in this State
Section 475.25(1)(b)
Failed to keep and make available to the department such books,
accounts, and records…
Section 475.5015
Obstruction or Hindering
A person may not obstruct or hinder in any manner the enforcement of
this chapter or the performance of any lawful duty by any person
acting under the authority of this chapter
Section 475.42(1)(h)
Top 5 FREAB Charging Statutes
VIOLATION
Emergency Suspension Order
If the agency finds that immediate serious danger to the public health,
safety or welfare…
Making misleading, deceptive or fraudulent representations in or
related to the practice of licensee’s profession or employing a trick or
scheme related to the practice of a profession
FLORIDA STATUTE
Sections 455.225(8) and
120.60(6)
Sections 455.227(1)(a)
and (m)
Guilty of Fraud, Misrepresentation, Concealment, False, False
Pretenses, Dishonest Conduct, Culpable Negligence, or Breach of
Trust in Any Business Transaction in this State
Section 475.624(2)
Retention of Records. An Appraiser Registered, Licensed, or Certified
Under this Part Shall Retain, for at least 5 years, Original or True
Copies of any Contracts Engaging the Appraiser’s Services,
Appraisal Reports, and Supporting Data Assembled and Formulated
by the Appraiser in Preparing Appraisal Reports.
Section 475.629
Obstruction or hindering A person may not obstruct or hinder in any
manner the enforcement of this section or the performance of any
lawful duty by any person acting under the authority of this
section…
Section 475.626(1)(e)
Real Estate Enforcement:
What We Do To Protect You
Bullet Proof Your Practice – FREAB
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Look up Licensee
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Attend a Meeting
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http://www.myfloridalicense.com/dbpr/
Next FREC Meeting: November 13, 14, 2012
Next FREAB Meeting: December 3, 4, 2012
Document and Disclose
Real Estate Enforcement:
What We Do To Protect You
Bullet Proof Your Practice – FREC
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Disclose, Disclose, Disclose
Keep Your Records
Don’t entrust others with your records
Maintain control of the escrow account
Prepare/review monthly account
reconciliations
Real Estate Enforcement:
What We Do To Protect You
Case Study #1
Facts:
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Respondent was the listing agent for a
property listed at 1827 SW 18th Avenue in
Miami
The property was initially listed for $285,000
The property sold for $350,000
Real Estate Enforcement:
What We Do To Protect You
Case Study #1
Facts:
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Respondent represented the buyer in a
property located at 447 Aragon Avenue
The property was listed for $545,000
Respondent submitted an offer to purchase
the property for $595,000
Real Estate Enforcement:
What We Do To Protect You
Case Study #1
Facts:
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Respondent represented the buyer in the
purchase of property located at 1852 SW
10th Street
The property was listed for $450,000
Respondent’s buyer placed an offer to
purchase the property for $499,000
Respondent’s buyer purchased the property
for $515,000
Real Estate Enforcement:
What We Do To Protect You
Case Study #1
Facts:
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Respondent represented a buyer in the
purchase of property located at 903 Red
Road
The property was listed for $499,000
Respondent’s client purchased the property
for $549,000
Real Estate Enforcement: What
We Do To Protect You
Case Study #1
Facts:
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Respondent represented the buyer in the
purchase of property at 3707 Le Jeune
Road
The property was listed $525,000
The property was purchased for $575,000
Real Estate Enforcement:
What We Do To Protect You
Case Study #1
Facts:
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Respondent represented the buyer in the
purchase of property located at 1631 SW
13th Avenue
The property was listed at $390,000
The property was purchased for $500,000
Real Estate Enforcement:
What We Do To Protect You
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Case Study #1
Administrative Complaint Charge:
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Brokerage business records.—Each broker shall keep and
make available to the department such books, accounts, and
records as will enable the department 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.
Real Estate Enforcement:
What We Do To Protect You
Case Study #1
Administrative Complaint Charge:
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The Respondent did not keep
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Listing agreements
Offers to purchase
Counter offers
Contracts
Checks
ANYTHING!
Real Estate Enforcement:
What We Do To Protect You
Case Study #1
Outcome:
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Administrative Judge found for the
Department (a win!)
License revoked
Real Estate Enforcement:
What We Do To Protect You
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Case Study #2
 Facts in Administrative Complaint:
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Husband and wife (sellers) had two properties. In
2006, Respondent entered into listing agreements
with the sellers to list one of the properties at
$359,000, and the other at $350,000
In June 2006, Sellers entered into purchase contracts
for the two properties, one for the amount of $329,000
and one for the amount of $325,000
Without telling the Sellers, Respondent raised the
listing price for each property to $450,000
Real Estate Enforcement:
What We Do To Protect You
 Case
Study #2
 Administrative Complaint Charge:
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475.25(1)(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.
Real Estate Enforcement:
What We Do To Protect You
 Case
Study #2
 Elements of Fraud:
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Misrepresentation of material fact
Maker of statement knew it was false
Maker intended another to act or rely on it
Injury or damages
Real Estate Enforcement:
What We Do To Protect You
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Case Study #2
 What Happened at Closing of Properties:
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Sellers all along thought each property was being
sold for about $350,000
At some point, the transactions were assigned to a
new buyer.
At the closing, sellers first learned of the increased
listing price to $450,000 for each property
Also at the closing, the assigned ‘buyer’ showed up,
looked like someone dragged off the street
Real Estate Enforcement:
What We Do To Protect You
 Case
Study #2
 What Happened at Closing (Continued):
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Also at the closing, it came to light that the
bank did not know about the original contract
on each property for $350-something, they
only saw the contracts at $450.
Sellers refused to complete the sale of these
two properties.
Real Estate Enforcement:
What We Do To Protect You
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Case Study #2
 What Was the Extra Hundred Thousand For:
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In early stages Respondent told Sellers they’d use
‘creative financing’ – buyer wanted to make
improvements and they’d have to give back twenty or
thirty thousand above selling price.
Addendum - any difference in purchase price and
appraisal value would be used to repair house.
Big difference between twenty thousand and one
hundred thousand. Houses also didn’t require one
hundred thousand worth of repairs
Real Estate Enforcement:
What We Do To Protect You
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Case Study #2
 HUD:
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HUD said sellers would receive roughly $412,000 per
property, which was simply not true. They were only
getting 350-something. Title company said an
addendum to the HUD would state what sellers would
really be getting. When sellers’ attorney asked why
that couldn’t go in the HUD, she was told cause the
lender couldn’t see the addendum
Real Estate Enforcement:
What We Do To Protect You
 Case
Study #2
 Missing Players in Action:
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The appraiser in this case is now somewhere
in Panama
Mortgage broker closed his office and
disappeared
Real Estate Enforcement:
What We Do To Protect You
 Case
Study #2
 Listing Price:
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Generally, someone’s trying to get a loan at a
higher amount, so when the lender is making
the loan they check the listing. If they don’t
correlate, loan won’t go through. So if the
listing price is above what it’s selling for,
someone’s pocketing extra money
Real Estate Enforcement:
What We Do To Protect You
 Case
Study #2
 Witnesses at Trial:
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Sellers
Sellers’ attorney
Respondent’s broker
Expert Witness
• Why we use expert
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Respondent
Real Estate Enforcement:
What We Do To Protect You
 Case
Study #2
 Administrative Law Judge’s Ruling:
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In my proposed recommended order, I limited
suggested charges to misrepresentation,
concealment and breach of trust
Judge found him guilty of concealment, but
not the other two. He relied on a couple of
cases, has to do with intent
Real Estate Enforcement:
What We Do To Protect You
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Case #2
 Cases Judge Relied Upon:
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Munch v. DBPR, 592 So. 2d 1136 (1st DCA 1992)
• Real estate salesman was receiving commissions on behalf
of condo association, which broker didn’t know about.
Realtor thought he was acting as community association
manager, not real estate salesman.
• For there to be “misrepresentation, concealment and breach
of trust” in violation of 475.25(1)(b) there must be wrongful
intent or scienter.
• No intent to deceive here.
Real Estate Enforcement:
What We Do To Protect You
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Case #2
 Cases Judge Relied Upon:
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Morris v. DBPR, 474 So. 2d 841 (5th DCA 1985)
• Broker accused of fraud for passing a worthless check for
property he wanted to personally buy
• Court found no evidence of fraudulent intent, because
deposit was made on a Saturday, and even though
insufficient funds on that day broker could have deposited
sufficient funds on that Monday had he wanted to go through
with the deal (he didn’t)
Real Estate Enforcement:
What We Do To Protect You
 Case
#2
 Administrative Law Judge’s Ruling:
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Judge didn’t find Respondent guilty of fraud
for the following reasons:
• Complaint didn’t charge him that way, no notice
• Insufficient evidence to prove Respondent was
aware of fraudulent activity
Real Estate Enforcement:
What We Do To Protect You
 Case
#2
 Penalty:
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Judge in his Recommended Order issued:
One year suspension, $1000 fine, costs of
investigation
Commission upped penalty to revocation
Department of Business & Professional Regulation
Division of Real Estate
REAL ESTATE ENFORCEMENT:
WHAT WE DO TO PROTECT YOU