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388 DOS 09

 

STATE OF NEW YORK

DEPARTMENT OF STATE

OFFICE OF ADMINISTRATIVE HEARINGS

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In the Matter of the Complaint of

 

DEPARTMENT OF STATE

DIVISION OF LICENSING SERVICES,

 

                   Complainant,                 DECISION

 

         -against-

 

BRICE DAVID,

 

                   Respondent.

 

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    The above matter was heard by the undersigned, Scott NeJame, on June 4, 2008 at the office of the Department of State located at 123 William Street, New York, New York.

 

    The respondent, having been advised of his right to be represented by an attorney, chose to represent himself.

 

    The complainant was represented by David A. Mossberg, Esq.

 

COMPLAINT

 

    The complaint alleges that the respondent, a licensed real estate salesperson: failed to cooperate with a Department of State investigation; failed to deposit earnest funds into an escrow account; provided real estate services without being associated with a licensed real estate brokerage; and collected commissions without the knowledge of his broker.

 

FINDINGS OF FACT

 

    1) The notice of hearing and a copy of the complaint were served on the respondent by certified mail at the respondent’s residence address and at a previous business address, apparently both posted on or about March 27, 2008 (State’s Ex. 1). The complainant presented no evidence regarding completion of that service. The complainant again served the notice of hearing and copy of the complaint on the respondent at his residence address by certified mail posted on April 7, 2008 (State’s Ex. 1). The complainant presented no evidence regarding completion of that service.

 

    2) The respondent was licensed as a real estate salesperson associated with The Tyger Realty Holding Corp. at 2664 Broadway, New York, New York for the period of February 28, 2007 to September 19, 2007 (State’s Ex. 2). His license expired on February 28, 2009 and has not been renewed.

 

    3) Although not established when or for how long, the respondent became associated with Citi Habitats prior to July 6, 2007. Citi Habitats never filed a change of association form for the respondent with the Department of State and before it did, the respondent resigned. His resignation was effective July 6, 2007 (State’s Ex. 3).

 

    4) On or about July 7, 2007, the respondent showed Gul Rukh Rahman (“Ms. Rukh Rahman”) a studio apartment located at 58 West 72nd Street and took a $365 deposit from her, $65 of which was a credit check fee. The respondent filled out or had Ms. Rukh Rahman fill out a Citi Habitats “client information form” containing her personal information and addresses, the apartment she was shown, and a description of the deposit given (State’s Ex. 4). The respondent subsequently informed her that she did not get the apartment and that it was being rented out to a relative of the owner.

 

    5) Ms. Rukh Rahman did not immediately receive a refund of her deposit from the respondent and therefore, in the week of July 10, 2007, she contacted Citi Habitats to complain about not receiving a refund. On or about July 16, 2007, Citi Habitats refunded $300 to Ms. Rukh Rahman (State’s Ex. 5).

 

    6) The customer service manager for Citi Habitats, Seth Fineberg, filed a complaint with the Department of State (State’s Ex. 6) and testified at the hearing. In his complaint and at the hearing, he stated that there were two or three occasions wherein the respondent, after he resigned from the company, showed apartments to and took money from clients, used Citi Habitats’ client information form, told the clients that they did not get the apartments, and then failed to return the deposits received. Mr. Fineberg indicated that the total amount of money involved in the complaint was $600 (which likely represented two clients’ worth of deposits) (State’s Ex. 6). Other than Ms. Rukh Rahman, no evidence of additional complaints was presented at the hearing.

 

    7) The respondent testified at the hearing and I found him to be credible. He testified that he did continue to work as a real estate salesperson for about one and one half to two weeks after he resigned from Citi Habitats. He claimed that he gave cash refunds to all three of the customers for whom he worked, including Ms. Rukh Rahman. No evidence was offered conflicting with this testimony.

 

OPINION AND CONCLUSIONS OF LAW

 

    I- The Department of State retains jurisdiction to conduct this proceeding even though the respondent’s real estate salesperson’s license has expired. Albert Mendel & Sons, Inc. v. NYS Department of Agriculture and Markets, 90 AD2d 567, 455 NYS2d 867 (3rd Dept. 1982); Main Sugar of Montezuma, Inc. v. Wickham, 37 AD2d 381, 325 NYS2d 858 (3rd Dept. 1971). The respondent may renew his license anytime before February 28, 2011 merely by submitting an application and the applicable fee. Real Property Law §441(2).

 

    II- The complaint charges the respondent with failing to cooperate with a Department of State investigation by providing misleading information about his having returned earnest funds to customers. This charge must be dismissed because there was no evidence presented establishing that the respondent failed to make refunds to any customers.

 

    III- In order for a real estate salesperson to receive a license and pocket card and to act as a salesperson, Real Property Law §§441(1-A) and 441-a(1) require that salesperson to be associated with a particular real estate broker. In this case, the respondent violated those statutes by, in at least one instance (Ms. Rukh Rahman), holding himself out as a salesperson being associated with Citi Habitats after he resigned from that agency. Footnote

 

    IV- As a real estate salesperson, the respondent was not permitted to receive and retain any deposit monies tendered by customers. A salesperson must deliver any deposits he receives to his broker, or at least, the money must be deposited into the broker’s escrow account. By retaining the deposit Ms. Rukh Rahman gave to him (until he refunded it to her in cash), the respondent demonstrated incompetency in violation of Real Property Law §441-c.

 

    V- Since the respondent refunded the $300 deposit back to Ms. Rukh Rahman, the charge that he retained an unearned commission is dismissed.

 

    VI- Where a broker or salesperson has received money to which he is not entitled, he may be required to return it, together with interest, as a condition of retention of his license. Donati v. Shaffer, 83 NY2d 828, 611 NYS2d 495 (1994); Kostika v. Cuomo, 41 NY2d 673, 394 NYS2d 862 (1977); Zelik v. Secretary of State, 168 AD2d 215, 562 NYS2d 101 (1st Dept. 1990); Edelstein v. Department of State, 16 AD2d 764, 227 NYS2d 987 (1st Dept. 1962). Because the respondent failed to immediately refund Ms. Rukh Rahman’s deposit, thereby causing Citi Habitats to make the refund (in order to maintain their good name with their customers), I am requiring the respondent to make restitution to Citi Habitats.

 

    VII- In assessing what sanction to impose against the respondent, I have taken in mitigation the following facts: the respondent admitted showing apartments to and taking deposits from customers after resigning from Citi Habitats; he apologized for his actions, which he admitted was a stupid decision he made; he worked for only one and one half to two weeks as a salesperson after he resigned; and he spoke to the three customers and his former manager at Citi Habitats, Howard, and arranged with two of those customers to pick their deposits up at Citi Habitats’ offices, and he personally gave Ms. Rukh Rahman her deposit back.

 

DETERMINATION

 

    WHEREFORE IT IS HEREBY DETERMINED THAT respondent Brice David has violated Real Property Law §§441(1-A) and 441-a(1) and demonstrated incompetency in violation of Real Property Law §441-c. Accordingly, pursuant to Real Property Law §441-c, he is ordered to pay a fine of $1,000 to the Department of State on or before May 15, 2009. Further, the respondent is ordered to pay restitution in the amount of $300 to Citi Habitats by May 15, 2009, and if he pays said restitution after May 15, 2009, he is ordered to pay the $300 plus interest at the legal rate for judgments (currently 9%) from May 15, 2009. Should the respondent ever re-apply for a license as a real estate broker or salesperson, no action shall be taken on such application until he has paid the fine and restitution in full. He is directed to send a certified check or money order for the fine payable to “Secretary of State,” and proof of payment of the restitution to Citi Habitats, by certified mail, to Norma Rosario, Department of State, Division of Licensing Services, Alfred E. Smith Building, 80 South Swan Street, 10th Floor, Albany, NY 12201.

 

 

 

 

                                      Scott NeJame

                                Administrative Law Judge

 

Dated: April 20, 2009