1163 DOS 07
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-
STEVEN J. POSA, and
MARCO INTERNATIONAL LLC,
Respondent.
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The above noted matter came on for hearing before the undersigned, Scott NeJame, on February 13, 2007 at the office of the Department of State located at 123 William Street, New York, New York.
The respondents did not appear.
The complainant was represented by Associate Attorney Whitney A. Clark, Esq.
COMPLAINT
The complaint alleges that respondents licensed real estate broker: placed advertisements for land and homes for sale in the State of Florida which indicated, falsely, that Brita Realty was the New York brokerage associated with those listings; demanded and collected deposits from Harold Persaud (“Mr. Persaud”) without having shown him any properties or submitted any offers on his behalf; falsely represented to Mr. Persaud that after he paid a deposit, the respondents would fly him, free of charge, to Florida to view available properties; failed and/or refused to return Mr. Persaud’s deposit; failed to satisfy a lawfully obtained judgment; failed and refused to cooperate with complainant’s investigation; and made a material misstatement on his renewal application.
FINDINGS OF FACT
1) The notice of hearing together with a copy of the complaint was served on the respondents by certified mail delivered on November 30, 2006 (State’s Ex. 1).
2) Respondent Steven J. Posa (“Respondent Posa”) is a licensed real estate broker representing Marco International LLC for the period of July 29, 2005 to July 29, 2007 (State’s Ex. 2).
Insurance Department
3) Respondent Posa was previously licensed as an insurance broker with the New York State Insurance Department. On August 30, 1991, respondent Posa admitted: demonstrating untrustworthiness and/or incompetency by issuing an insurance premium transmittal check which was dishonored by the bank; using, as a regular business practice, an insufficient and misleading form for their service fee agreements; and commingling in a single bank account premium funds with other funds. He agreed to pay a $1,000 fine. On October 7, 1993, respondent Posa admitted issuing seven checks transmitting premiums that were dishonored by the banks on which they were drawn and overdrawing his premium account on eighteen occasions, and agreed to pay a $1,500 fine (State’s Ex. 17).
4) On January 29, 2003, the Superintendent of Insurance issued a final determination and order finding (by virtue of its own findings as well as accepting and adopting the findings of the Hearing Officer’s conclusions and recommendations) that respondent Posa: demonstrated untrustworthiness by failing to make a timely application to the New York Automobile Insurance Plan (“NYAIP”); demonstrated untrustworthiness by issuing a $775 check to the NYAIP that was dishonored by the bank; and failed to cooperate with a Department of Insurance Investigation. The Superintendent ordered respondent Posa to pay a $10,000 fine within twenty days or all licenses issued to him by the Insurance Department would be revoked. Due to his failure to comply with the Superintendent’s determination, respondent Posa’s insurance broker license was revoked effective March 10, 2003 (Hearing transcript, p. 26; State’s Ex. 17).
Renewal Application
5) On his renewal application dated January 25, 2005, respondent Posa answered “no” to question #1: “Since your last renewal, ...has any license...held by you or a company in which you are or were a principal been revoked, suspended, or denied by any state, territory or governmental jurisdiction or foreign country for any reason?” (State’s Ex. 19).
Persaud Matter
6) In November 2004, Harold Persaud (“Mr. Persaud”) saw respondent Posa’s advertisements in the Cricket International and West Indian newspapers offering properties for sale in Florida. All of the ads contained either respondent Posa’s name and cell phone number or respondent Posa’s cell phone number solely (State’s Ex. 3). Some of the ads set forth Brita Realty’s name and address, sometimes with Bishnu Melaram as “owner/broker,” but all of those ads with Brita Realty’s name on them contained respondent Posa’s cell phone number (with no other telephone number listed). Some of the ads listed Brita Realty as the agency in the New York area to call and Gramuglia Real Estate as the agency in New Jersey to call, but the phone number for both those agencies was listed as respondent Posa’s cell phone number (State’s Ex. 3; See also, State’s Ex. 4). Some of the ads also set forth the name Black Stallion Developers of Florida LLC, of which respondent Posa is the sole manager/member, and a “fly and buy program” (State’s Ex.’s 3 and 20).
7) Mr. Persaud dialed the telephone number for what he believed to be the Brita Realty or Gramuglia Real Estate brokerage, but respondent Posa answered. Respondent Posa gave Mr. Persaud the option of meeting him at Brita Realty in Queens or Gramulgia Real Estate in New Jersey. Mr. Persaud made an appointment with respondent Posa for November 11, 2004 to meet at Gramulgia Real Estate in New Jersey. However, on his way to the appointment, respondent Posa called Mr. Persaud on his cell phone and arranged to meet him at a restaurant instead. At the restaurant, respondent Posa described the “fly and buy program,” stating that he has lots of homes in Florida for sale, that he would fly Mr. Persaud with a group of people to Florida to look at homes to purchase, and that Mr. Persaud had no obligation to buy if he didn’t like any of the homes. Pursuant to respondent Posa’s request, Mr. Persaud tendered a $7,000 check to respondent Posa to insure that he was “serious” (Hearing transcript, p. 7; State’s Ex. 5).
8) At no time did Bishnu Melaram (“Mr. Melaram”), owner and broker of record for Brita Realty, have a relationship with respondent Posa or his company, Black Stallion Developers of Florida LLC, for the sale of property in Florida, nor did Mr. Melaram at any time authorize, consent or give permission to respondent Posa to use his or Brita Realty’s name in any advertisements. At no time did Mr. Melaram authorize or pay for any ad referred to in State’s Exhibit 3. Further, the Cricket International told complainant’s investigator, Jack Bilello (“Inv. Bilello”), that the subject “advertisements were booked via email by an individual named Steve (no last name given.) of Black Stallion Developers of Florida LLC during the period October 2004- January 2005" (Hearing transcript, pp. 12-16; State’s Ex.’s 9 and 11).
9) On December 19, 2004, respondent Posa met with Mr. Persaud again, told him that he booked a flight to Florida and requested a further deposit of $2,500, which Mr. Persaud paid (State’s Ex. 5).
10) At no time did respondent Posa fly Mr. Persaud to Florida. After becoming suspicious, Mr. Persaud demanded the return of his deposit, but respondent Posa never provided one.
11) On September 7, 2005, Mr. Persaud obtained a civil judgment in the Superior Court of New Jersey against respondent Posa in the amount of $14,500. Mr. Persaud also filed that judgment in the Queens County Clerk’s Office (State’s Ex. 6). At no time did respondent Posa satisfy or pay any part of that judgment.
Department of State Investigation
12) On September 13, 2005, Inv. Bilello sent respondent Posa two letters, one to his home address in Queens County, and the other to a post office box in Floral Park, New York, both requesting that he respond to the complaint filed by Mr. Persaud (State’s Ex. 12). On September 16, 2005, Inv. Bilello spoke with respondent Posa, in which he voiced his objection to the complainant looking into Mr. Persaud’s complaint and indicating that he would not cooperate with the complainant’s investigation because the transaction in question occurred during a period of time that he was not licensed by the Department of State (Hearing transcript, p. 18).
13) In fact, respondent Posa was licensed as a corporate real estate broker representing Kingswood Realty Inc. during the time that he dealt with Mr. Persaud (State’s Ex. 13).
14) On September 23, 2005, Inv. Bilello sent respondent Posa letters by certified and first class mail to his home and business addresses requesting that he appear for an interview on October 7, 2005 and bring with him a statement and documents pertaining to Mr. Persaud’s complaint (State’s Ex. 14). Respondent Posa neither appeared for nor called to cancel the interview.
15) On October 12, 2005, Inv. Bilello sent respondent Posa letters by certified and first class mail to his home and business addresses requesting that he appear for an interview on October 20, 2005 and bring with him a statement and documents pertaining to Mr. Persaud’s complaint (State’s Ex. 15). Respondent Posa neither appeared for nor called to cancel the interview.
16) On March 21, 2006, Inv. Bilello sent respondent Posa letters by certified and first class mail to his home and business addresses requesting that he appear for an interview on March 31, 2006 and bring with him a statement and documents pertaining to Mr. Persaud’s complaint (State’s Ex. 16). Respondent Posa neither appeared for nor called to cancel the interview.
OPINION AND CONCLUSIONS OF LAW
I- The holding of an ex parte quasi-judicial administrative hearing was permissible, inasmuch as there is evidence that notice of the place, time and purpose of the hearing was properly served. Patterson v. Department of State, 36 AD2d 616, 312 NYS2d 300 (3rd Dept. 1970); Roy Staley v. Division of Licensing Services, 14 DOS App 01; Matter of the Application of Rose Ann Weis, 118 DOS 93; See also, Verdell v. DeBuono, 262 AD2d 812, 691 NYS2d 679 (3rd Dept. 1999); Jacoby v. New York State Board for Professional Medical Conduct, 295 AD2d 655, 743 NYS2d 192 (3rd Dept. 2002).
II- The complaint alleges that the respondents placed ads for land and homes for sale in Florida which falsely indicated that Brita Realty was the New York brokerage associated with those ads. The record clearly establishes that, without any authority, consent or permission from Brita Realty or its representative broker, respondent Posa advertised Brita Realty as the New York brokerage selling Florida properties along with a “fly and buy program.” As such, respondent Posa engaged in dishonest and misleading advertising and demonstrated untrustworthiness in violation of Real Property Law §441-c.
Respondent Posa’s advertisements were also a demonstration of fraud. In order to establish the commission of fraud, the complainant must establish that the respondent made an untrue representation of fact with knowledge that it was untrue or under circumstances that it was recklessly made, with the intent to deceive and for the purpose of inducing the other party to act on it, and that it was relied on to the injury or damage of the other party. 60A NY Jur 2d, Fraud and Deceit, §14; New York University v. Continental Insurance Company, 81 NY2d 308, 639 NYS2d 283 (1995). In this case, respondent Posa knew that he had no permission to use Brita Realty’s name for his own ads but used that name to induce potential buyers to call and inquire about the properties for sale. Respondent Posa further deceived the public by using his own cell phone number instead of the phone number for Brita Realty. Respondent Posa accomplished his fraud on Mr. Persaud, who responded to the ad by calling who he believed to be the Brita Realty brokerage.
III- Respondent Posa demonstrated further fraud and untrustworthiness by requesting Mr. Persaud to make two deposits totaling $9,500 without having shown him any properties or submitting any offers on his behalf, by making false representations to him regarding his “fly and buy” program, and by telling him that he had booked a flight for him to fly to Florida. It is apparent from the record that respondent Posa had no intention of flying Mr. Persaud to Florida to view available properties nor did he have pre-conceived properties available for sale that he intended to show Mr. Persaud. Respondent Posa’s representations were either untruthful or recklessly made solely to induce Mr. Persaud to tender money to him, money which he had no intention of returning. Respondent Posa completed his untrustworthy and fraudulent actions against Mr. Persaud by failing to refund his deposits after Mr. Persaud made requests for same.
IV- "The failure to pay a judgment which has been lawfully obtained, without a showing that he is unable to do so, is a demonstration of untrustworthiness by a real estate broker. Department of State v. Feldman, 113 DOS 80, conf'd. sub nom Feldman v. Department of State, 81 AD2d 553, 440 NYS2d 541 (1981); Division of Licensing Services v. Shulkin, 40 DOS 90; Division of Licensing Services v. Janus, 33 DOS 89." Division of Licensing Services v. Harrington, 123 DOS 93, at p. 4. By failing to satisfy Mr. Persaud’s $14,500 New Jersey Superior Court judgment against him, respondent Posa demonstrated untrustworthiness.
V- Real Property Law §442-e(5) states:
The secretary of state shall have the power to enforce the provisions of this article and upon complaint of any person, or on his own initiative, to investigate any violation thereof or to investigate the business, business practices and business methods of any person, firm or corporation applying for or holding a license as a real estate broker or salesman, if in the opinion of the secretary of state such investigation is warranted. Each such applicant or licensee shall be obliged, on request of the secretary of state, to supply such information as may be required concerning his or its business, business practices or business methods, or proposed business practices or methods.
Respondent Posa lied to the investigator by claiming that he was not licensed by the Department of State at the time of the transaction in question and he repeatedly failed to respond to the investigator’s letters scheduling interviews and requesting documents. Respondent Posa thereby violated Real Property Law §442-e(5) and demonstrated untrustworthiness.
VI- It has been previously held that acts of the type for which the applicant's insurance license was revoked are a demonstration of untrustworthiness, and that there is a direct relationship between those acts and a license as a real estate broker, a person who may have occasion to handle, hold in escrow, and pay over to third parties substantial sums of money received from and/or for clients. Department of State v. Eich, 39 DOS 86 (1986), conf'd. sub nom Eich v. Shaffer, 136 AD2d 701, 523 NYS2d 902 (2nd Dept. 1988); Fogel v. Department of State, 209 AD2d 615, 619 NYS2d 104 (2nd Dept. 1994); Department of State v. Feliciano, 268 DOS 96 (1996); Department of State v. Larsen, 78 DOS 93 (1993).
Respondent Posa’s past untrustworthy actions as an insurance broker–i.e., commingling funds, issuing checks that were dishonored by the bank and failing to cooperate with a Department of Insurance investigation–relate directly to his present actions as a real estate broker–i.e., converting deposit monies paid by Mr. Persaud and failing to cooperate with a Department of State investigation. The fact that respondent Posa was deemed untrustworthy as an insurance broker tends to establish, and in this case, accentuates, his unfitness as a real estate broker.
VII- Fraudulent practices "...as used in relation to the regulation of commercial activity, is often broadly construed, but has generally been interpreted to include those acts which may be characterized as dishonest and misleading. Since the purpose of such restrictions on commercial activity is to afford the consuming public expanded protection from deceptive and misleading fraud, the application is ordinarily not limited to instances of intentional fraud in the traditional sense. Therefore, proof of an intent to defraud is not essential." Allstate Ins. Co. v. Foschio, 93 AD2d 328, 462 NYS2d 44, 46-47 (2nd Dept. 1983) (citations omitted). A single fraudulent practice may be the basis for the imposition of disciplinary sanctions. Division of Licensing Services v. Linfoot, 60 DOS 88, conf'd. sub nom Harvey v. Shaffer, 156 AD2d 1013, 549 NYS2d 296 (4th Dept. 1989).
Respondent Posa made a material misstatement on his real estate broker renewal application dated January 25, 2005 when he failed to disclose his revocation of insurance broker license by the Insurance Department. By doing so, he engaged in a fraudulent practice and demonstrated untrustworthiness.
VIII- There is no evidence establishing that respondent’s Posa’s actions in this case were made for or on behalf of respondent Marco International LLC. Therefore, the charges against Marco International LLC are dismissed. However, it is noted that absent a licensed real estate broker representing the limited liability company, Marco International LLC cannot act or hold itself out as a real estate broker or brokerage in New York State.
DETERMINATION
WHEREFORE IT IS HEREBY DETERMINED THAT respondent Steven J. Posa has committed fraud and fraudulent practices, has engaged in dishonest and misleading advertising, has demonstrated untrustworthiness in violation of Real Property Law §441-c, has made a material misstatement on his real estate broker renewal application, and has violated Real Property Law §442-e(5). Accordingly, pursuant to Real Property Law §441-c, all real estate broker licenses issued to Steven J. Posa are revoked, effective immediately. Should he ever re-apply for a license as a real estate broker or salesperson, no action shall be taken on such application until he shall have produced proof satisfactory to the Department of State that he has satisfied the September 7, 2005 New Jersey Superior Court judgment against him of Harold Persaud in the amount of $14,500. The respondent is directed to send his license certificates and pocket cards, by certified mail, to Kathy Scarcella, Customer Service Unit, Department of State, Division of Licensing Services, Alfred E. Smith Building, 80 South Swan Street, 10th Floor, Albany, NY 12201.
WHEREFORE, IT IS FURTHER DETERMINED THAT the charges herein against Marco International LLC are dismissed.
Scott NeJame
Administrative Law Judge
Dated: June 1, 2007