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675 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-
JOY H. GOLDBERG,
Respondent.
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The above noted matter came on for hearing before the undersigned, Roger Schneier, on October 27, 2008 and April 20, 2009 at the office of the Department of State located at 123 William Street, New York, New York.
The respondent was represented by Alexander E. Sklavos, Esq., One Old Country Road, Suite 200, Carle Place, NY 11514.
The complainant was represented by David Mossberg, Esq.
COMPLAINT
The complaint alleges that respondent Real Estate Broker and Notary Public: Assisted another person in engaging in a real estate fraud; breached her fiduciary duties to her client by advising him that he did not need an attorney to represent him at a closing; incorrectly executed an agency relationship disclosure form; and provided false and misleading information to a Department of State investigator, thereby demonstrating untrustworthiness and/or incompetency and engaging in notarial misconduct.
FINDINGS OF FACT
1) Notices of hearing together with a copy of the complaint were served on the respondent by certified mail (State’s Ex. 1).
2) The respondent is, and at all times hereinafter mentioned was, duly licensed as a Real Estate Broker d/b/a Accurate Realty at 1174 St. Johnland Road, Kings Park, NY 11754, and duly commissioned as a Notary Public at the same address (State’s Ex. 2).
3) In or about October 4, 2006 Julio Alejandro, Jr. was facing foreclosure on the home he owned and in which his niece and her family resided at 48 E. Locust Street, Central Islip, New York. Having learned of the pending foreclosure the respondent wrote to Mr. Alejandro on the letterhead of Accurate Capital Corp., the mortgage brokerage company which she operates, and offered him her assistance in avoiding foreclosure (State’s Ex. 7).
4) Mr. Alejandro’s command of the English language is limited, so he relies on his niece, whom he considers to be like a daughter, to advise and assist him in business matters requiring an understanding of English.
5) Acting on behalf of her uncle Ms. Morales contacted the respondent. When the respondent concluded that it would not be possible to refinance the mortgage it was decided that the best course to protect Mr. Alejandro would be for him to sell the house to a third party who could obtain financing and who would allow Ms. Morales to continue to live in the house pending its re-sale, the profit from which would be given to Ms. Morales so that she could purchase an apartment. With that in mind the respondent prepared, and Mr. Alejandro signed, an exclusive right to sell listing agreement with Accurate Realty providing for the payment of a commission of 3.357% on, pursuant to a contract dated October 20, 2006 (State’s Ex. 4), a sales price of $320,000.00, which commission was rounded up to $10,475.00 (State’s Ex. 3). Prior to taking the listing the respondent consulted with an appraiser who gave her an oral appraisal and, on October 23, 2006, issued a written report valuing the property at the listing price (State’s Ex. 8).
6) Ms. Morales arranged for Valentin Sanchez, for whom she had previously provided child care, to act as the purchaser. The respondent provided both Mr. Alejandro and Mr. Sanchez with an agency relationship disclosure statement dated October 20, 2006. In both the section relating to the buyer and the section relating to the seller she indicated that she was acting as agent of the seller and as the buyer’s agent, and she also completed the sections disclosing that she was acting as a dual agent (State’s Ex. 5).
7) The understanding was that title would be transferred to Mr. Sanchez and Ms. Morales jointly and that approximately $20,000.00 would be set aside for Ms. Morales to pay the bills pending re-sale of the house. Although reluctant, Mr. Alejandro agreed to the scheme on the urging of Ms. Morales.
8) The respondent arranged for financing and a closing was held on November 28, 2006, at which time Accurate Realty received a commission of $10,475.00 paid from the seller’s proceeds (State’s Ex. 6, Resp. Ex. A).
9) At the closing Mr. Sanchez was required to produce a check for the contract down payment of $65,000.00, which he did (State’s Ex. 9). However it was understood by the parties and the respondent that the check was not intended to be negotiated.
10) According to the closing statement the gross amount due from the buyer was $336,850.00, covering the purchase price and settlement charges, and that was paid for by way of the $65,000.00 deposit (which was never intended to be negotiated), a new loan of $255,000.00, and a seller’s concession of the $16,850.00, the amount of the settlement charges allocated to the buyer. The gross amount due the seller was $320,000.00 which, after deduction for the illusory deposit, settlement charges of $2,955.00 (including application and processing fees of $725.00 paid to Accurate Capital Corp.), a mortgage payoff of $203,392.55, and the respondent’s commission, left $38,177.45 due the seller (Resp. Ex. A). Mr. Alejandro did not receive the $38,177.45, but a sum of money, the amount of which is unclear from the evidence, was set aside and used to facilitate Ms. Morales’ continued occupancy of the house. In spite of the underlying agreement Ms. Morales was eventually ejected from the house because, she testified, she rebuffed Mr. Sanchez’s attempt to force himself on her.
11) Mr. Alejandro was represented at the closing by Robert E. Baumann, Jr., Esq., whose services had been recommended by the respondent. The evidence does not establish who drew the contract of sale, however, as Mr. Baumann was not retained until sometime thereafter, his testimony that it was not him is credible. Although the contract states that the seller’s attorney was to hold the deposit in escrow Mr. Baumann testified that he never saw the check, and in that testimony he indicated that he was not aware of the escrow provision.
OPINION AND CONCLUSIONS OF LAW
I- As the party which initiated the hearing, the burden is on the complainant to prove, by substantial evidence, the truth of the charges in the complaint. State Administrative Procedure Act (SAPA), §306(1). Substantial evidence is that which a reasonable mind could accept as supporting a conclusion or ultimate fact. Gray v Adduci, 73 N.Y.2d 741, 536 N.Y.S.2d 40 (1988). "The question...is whether a conclusion or ultimate fact may be extracted reasonably--probatively and logically." City of Utica Board of Water Supply v New York State Health Department, 96 A.D.2d 710, 465 N.Y.S.2d 365, 366 (1983)(citations omitted).
II- While the sale and refinancing of Mr. Alejandro’s house did not involve a straw buyer, as has been the case in several matters which has recently come before the tribunal, it did, never the less, involve fraudulent conduct. The contract called for a $65,000.00 deposit and the closing statement indicated that the deposit had been applied to the purchase price. However no such deposit was ever paid. Rather, Mr. Sanchez was required to produce at the closing a check for the deposit which it was understood by the parties and the respondent, would not be negotiated. The apparent result is that the mortgage lender was induced to make a loan under false pretenses. The respondent’s participation in that transaction was a demonstration of untrustworthiness which so taints the transaction as to require that the respondent divest herself of the $10,475.00 commission paid to her out of the funds due Mr. Alejandro. Further, it is appropriate to require her to pay interest on that money as a condition for the retention of her license. Donati v Shaffer, 83 NY2d 828, 611 NYS2d 495 (1994); Kostika v Cuomo, 41 N.Y.2d 673, 394 N.Y.S.2d 862 (1977); Zelik v Secretary of State, 168 AD2d 215, 562 NYS2d 101 (1990); Edelstein v Department of State, 16 A.D.2d 764, 227 N.Y.S.2d 987 (1962).
III- The complaint alleges that the respondent breached her fiduciary duties to Mr. Alejandro by telling him that he did not need an attorney. The evidence, however, establishes that she referred him to Mr. Baumann. The charge is, therefore, dismissed.
IV- The agency relationship disclosure form which the respondent provided to Mr. Alejandro and Mr. Sanchez was improperly completed. The respondent was acting as a dual agent and so indicated on the disclosure form. However, she also completed sections of the form on which she indicated she was acting as agent of the seller and as agent of the buyer. It does not appear, however, that this error in completing the form could have possibly misled either Mr. Alejandro or Mr. Sanchez into believing that the respondent was representing him alone. Thus, while her conduct was a violation of Real Property Law §443 and a demonstration of incompetency, it does not, by itself, warrant the imposition of a penalty greater than that to be imposed for her other, much more serious, misconduct.
V- It is alleged that the respondent provided false and misleading information to the complainant’s investigator when she told him that the listing price of the house was based on an appraisal. While it is true that the written appraisal was not produced until after the listing was taken, the evidence establishes that prior to taking the listing the respondent had obtained an oral appraisal. Thus, at worst there was a misunderstanding, not an attempt to mislead. Therefore, the charge of failing to cooperate with the investigation is dismissed.
VI- In setting the penalty for the respondent’s violations I have considered that while her participation in the transaction was a serious act of untrustworthiness, there is no evidence that this was more than an isolated transaction. I have concluded, therefore, that while her conduct does warrant the suspension of her license it is not sufficient to justify its revocation for this first violation.
VII- There are no documents in evidence which indicate that the respondent acted as a Notary Public in the subject transaction. However, her participation in a fraudulent mortgage transaction in which she was a party to a gross misrepresentation as to the terms of that transaction was an act of misconduct which does reflect on the question of whether the respondent is of sufficiently good moral character to be commissioned as a Notary Public (Executive Law §130) and calls for the imposition of a suspension of her commission.
DETERMINATION
WHEREFORE, IT IS HEREBY DETERMINED THAT Joy H. Goldberg has violated Real Property Law §441-c, has demonstrated untrustworthiness and incompetency, and has engaged in an act of misconduct, and accordingly, pursuant to Real Property Law §441-c and Executive Law §130, her license as a Real Estate Broker, UID #37GO0860233, and her commission as a Notary Public, UID #01GO6026203, are suspended for a period commencing on August 1, 2009 and terminating three months after the receipt by the Department of State of her license certificate and pocket card and of her Notary Public identification, and upon termination of the suspensions the license and commission shall be further suspended until she produces proof satisfactory to the Department of State that she has refunded the sum of $10,475.00 plus interest from November 28, 2006 at the legal rate for judgements (currently 9% per year) to Julio Alejandro, Jr., and she is directed to send her license certificate and pocket card and Notary Public identification by certified mail addressed to Norma Rosario, Department of State, Division of Licensing Services, P.O. Box 22001, Albany, New York 12201-2201.
Roger Schneier
Administrative Law Judge
Dated: June 19, 2009