DEPARTMENT OF STATE

OFFICE OF THE SECRETARY OF STATE

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In the Matter of

EDUL N. AHMAD, and

CENTURY 21 AHMAD REALTY,

                                    Appellants,

                        -against- 

DEPARTMENT OF STATE

DIVISION OF LICENSING SERVICES,

                                    Respondent.

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DECISION ON APPEAL AND

APPLICATION FOR A STAY

            31 DOSAPP 08

            In a written opinion by the Department of State’s Office of Administrative Hearings (OAH) on August 6, 2008 (990 DOS 08), Administrative Law Judge Scott NeJame (the ALJ) determined that EDUL N. AHMAD and CENTURY 21 AHMAD REALTY violated 19 NYCRR § 175.17 and demonstrated untrustworthiness by distributing solicitations to persons listed on a cease-and-desist list maintained by the Department of State, and suspended Appellants’ real estate broker’s licenses for a period of one (1) month beginning on October 1, 2008 (see ALJ’s Decision, 990 DOS 08, at pp. 3-4).

            Appellants’ attorney submitted a letter appealing the ALJ’s Decision to the Secretary of State and requesting a stay pending appeal.

            Respondent has submitted a Memorandum of Law in Opposition to Appeal.

STATEMENT OF FACTS

                  For the purposes of this appeal, the Department of State makes the following findings of fact:

            1.         Appellant Edul N. Ahmad (License No. 31AH0808322) was duly licensed as a corporate real estate broker for the period of July 19, 2006 to July 19, 2008 (State’s Ex. 2) and is currently licensed as such for the period of July 19, 2008 to July 19, 2010 (ALJ’s Decision, 990 DOS 08, at p. 2). Appellant Century 21 Ahmad Realty (License No. 109919527) is the principal office with which Appellant Edul N. Ahmad is related.

            2.         Appellants hired a company named City Wide Distributors (hereinafter referred to as “City Wide”) to distribute a booklet entitled “Real Estate Times” (hereinafter referred to as the Booklet) to “banks, supermarkets and homes” in the areas around Appellants’ place of business, including Woodhaven, Ozone Park, Richmond Hill, Cypress Hills, and East New York (State’s Ex. 7) between July 31, 2007 and August 14, 2007 (State’s Ex. 8).

            3.         The Booklet included the name and address of Century 21 Ahmad Realty, Inc. and/or photograph(s) of Appellant Edul N. Ahmad on the cover and on almost every page, and contained advertisements with statements such as “LIST YOUR HOME WITH US & SELL FAST” and “We Buy Homes and Vacant Land (Lots) - ALL CASH” (State’s Ex. 3).

            4.         Appellants did not instruct City Wide to restrict deliveries of the Booklet in any fashion (Transcript at pp. 16-19 and p. 25).

             5.         Maria Thomson and Robert Thomson (hereinafter referred to as the “Thomsons”) reside in Woodhaven, in Queens County (Transcript, at p. 34). The Thomsons’ residence is located within one of the areas in which City Wide Distributors was hired to distribute the Booklets for Appellants. The Thomsons’ residence is also located within a cease-and-desist zone established by the Department of State pursuant to Real Property Law § 442-h(3). The Thomsons’ names and address are contained on the cease-and-desist list for Queens County dated July 30, 2007 (State's Ex. 3 and 4).

            6.         On or about August 2, 2007, the Thomsons found a copy of the Booklet pushed into the slot of the front door of their home (Transcript at p. 35, State’s Ex. 3). The Thomsons filed the complaint dated August 7, 2007 (State’s Ex. 3) which ultimately led to this proceeding.

            7.         In a prior proceeding (2006-3572), Respondent charged Appellant Edul N. Ahmad with soliciting the same property owned by the Thomsons for sale in violation of the cease-and-desist order. On February 16, 2007, Appellant Edul N. Ahmad admitted the allegations, affirmed that the violations were corrected, and agreed to and paid a $750 fine (State’s Ex. 11).

OPINION

The ALJ’s Determinations are Supported by Substantial Evidence

            The burden of proof in an administrative disciplinary proceeding is on the party that initiated the proceeding (see State Administrative Procedure Act [SAPA] § 306(1)). The ALJ’s decision must be based upon the record, and must be “supported by and in accordance with substantial evidence” (SAPA § 306(1)). For the reasons set forth below, the Department of State finds that Respondent carried its burden of proving by substantial evidence that Appellants solicited residential property owners listed on a cease-and-desist list, and the Department of State finds that the ALJ’s determination is supported by and in accordance with substantial evidence.

            The Secretary of State is empowered to establish cease-and-desist zones, within which it is impermissible for real estate brokers and salespersons to solicit certain listed owners of residential real estate (see Real Property Law § 442-h(3)). 19 NYCRR § 175.17(c)(1) provides:

“No licensed real estate broker or salesperson shall solicit the sale, lease or the listing for sale or lease of residential property from owner of residential property located in a designated cease-and-desist zone if such owner has filed a cease-and-desist notice with the Department of State indicating that such owner or owners do not desire to sell, lease or list their residential property and do not desire to be solicited to sell, lease or list their residential property.”

            The term “solicitation” is defined as “. . . an attempt to purchase or rent or an attempt to obtain a listing of property for sale, for rent or for purchase” (19 NYCRR § 175.17(d)(1)). The same regulation makes it clear that a “solicitation” need not be made in person:

“Solicitation shall include but not be limited to use of the telephone, mails, delivery services, personal contact or otherwise causing any solicitation, oral or written, direct or by agent: (i) to be delivered or presented to the owner or anyone else at the owner’s home address; (ii) to be left for the owner or anyone else at the owner’s home address; or (iii) to be placed on any vehicle, structure or object located on the owner’s premises” (19 NYCRR § 175.17(d)(1)).

            The Booklet included advertisements with statements such as “LIST YOUR HOME WITH US & SELL FAST” and “We Buy Homes and Vacant Land (Lots) - ALL CASH.” Distribution of the Booklet constitutes an attempt to purchase property and an attempt to obtain listings of property for sale and, accordingly, constitutes a “solicitation.”

            Appellants hired City Wide to distribute the Booklets to banks, supermarkets and homes in certain specified areas, including Woodhaven (State’s Ex. 7). The invoice produced by City Wide specified “7/31 - 8/14/07” as the “invoice date” and states that the distribution was to include specified areas, including Woodhaven, for a total fee of $4,750 (State’s Ex. 8).

            Appellants admit that they hired City Wide to distribute the Booklet. In response to the complaint filed by the Thomsons, Appellants submitted (1) a letter from Appellant Ahmad dated September 7, 2007 stating that the Booklet is “literature . . . that we have contracted an outside Company called Citywide Distributors to distribute in the Queens area” (State’s Ex. 5), and (2) a letter from City Wide dated September 7, 2007 which expressly confirms “that we are a distribution company and are contracted by Century 21 Ahmad Realty to distribute booklets with homes for sale” (State’s Ex. 6).

            A finding that City Wide delivered the Booklets on behalf of Appellants is supported by substantial evidence in the record.

             The Thomsons, who reside in Woodhaven, Queens County, found a copy of the Booklet stuffed under the mail slot of their home on or about August 2, 2007 (State’s Ex. 3; Transcript, at p. 9), a date falling within the period covered by City Wide’s invoice (State’s Ex. 8). A finding that the Booklet was left at the Thomsons’ home by City Wide, acting as Appellants’ delivery service, is supported by substantial evidence in the record. Using a delivery service to leave a copy of the Booklet for the Thomsons or anyone else at the Thomsons’ home address constitutes a “solicitation” by Appellants (see 19 NYCRR § 175.17(d)(1)).

            Since the Thomsons’ home is located within a cease-and-desist zone established by the Department of State pursuant to Real Property Law § 442-h(3), and since the Thomsons’ names and address are contained on the cease-and-desist list for Queens County dated July 30, 2007 (State's Ex. 3 and 4), placement of the Booklet in the mail slot of the Thomsons’ home constituted an illegal solicitation in violation of Real Property Law § 442-h(3).

            Certain statements in the letters submitted by Appellants form the basis for many of the arguments put forth by counsel for the Appellants both at the hearing and now on this appeal. Yet even if these statements are true, they do not negate the essential elements of Appellants’ violations, viz., that Appellants caused an improper solicitation to be delivered to owners of residential real property which is located in a cease-and-desist zone and which is listed on the cease-and-desist list for that zone. For example:

•          Appellant Ahmad’s September 7, 2007 letter asserts that “(t)o the best of my knowledge these booklets are [placed] in commercial areas to be picked up by individuals” (State’s Ex. 5). On appeal, Counsel for Appellants asserts that Appellant Ahmad “. . . hired a distributor to place these booklets into commercial establishments” (letter of appeal from Gail A, Adams, Esq., dated August 14, 2008, at p. 1). These assertions may be true, but they tell only half of the story. The record establishes that City Wide was hired to distribute the Booklets to “banks, supermarkets and homes in the areas . . . including Woodhaven” (State’s Ex. 7, emphasis added) and, indeed, one of the Booklets was placed at the Thomsons’ home.

•          Appellant Ahmad’s September 7, 2007 letter asserts that the Booklets were not “mailed or distributed from (Appellants’) office.” This assertion may be true, but it is irrelevant. The record shows that the Booklets were distributed by a delivery service hired by Appellants. As previously discussed, Appellants admit hiring City Wide to distribute the Booklets.

•          In its letter dated September 7, 2007, City Wide states that “(i)n the event any of these booklets are placed in any homes or stores that are on the ‘Cease-and-desist’ list, it would have been done by City Wide Distributors, and not by Century 21 Ahmad Realty.” Once again, this may be a true statement but, once again, it tells only half of the story. The other half of the story, which is established by the same letter, as well as other evidence in the record, is that Appellants hired City Wide to place the Booklets in homes and stores in specified areas.

            Counsel for Appellants, referring to City Wide’s letter, argues that the distributor “expressed that it was their fault that the booklet was mistakenly delivered to the [Thomsons’] home” (letter of appeal from Gail A, Adams, Esq., dated August 14, 2008, at p. 2). City Wide’s letter expresses no such thing. The letter states that City Wide was hired to distribute the Booklet, and that it did so. The letter does not state, or even suggest, that City Wide was in any way at “fault” for delivering the Booklet to homes on the cease-and-desist list.

            Further, even if City Wide’s September 7, 2007 letter were interpreted in the tortured manner urged by Counsel for Appellants, any suggestion that Appellants are not responsible for the delivery of the Booklet to the Thomsons’ home is negated by other evidence introduced at the hearing. Respondent’s Investigator testified at the hearing that he interviewed Patrick Buonocore, the President of City Wide, and that Mr. Buonocore confirmed to the Investigator that City Wide was hired by Century 21 Ahmad Realty to distribute the Booklet (Transcript, at p. 15), that City Wide’s employees distributed the Booklet in the Thomsons’ neighborhood (Transcript, at p. 16), that no restrictions were placed “as to where not to deliver the solicitations” (Transcript, at pp. 16-17), that it was possible to preclude delivery to selected addresses, upon payment of an additional fee (Transcript, at p. 17), and that in this case, Appellants did not elect to pay the extra fee to have certain addresses excluded from the soliciting, and Appellants did not ask City Wide to exclude specified addresses from the soliciting (Transcript, at p. 18 and p. 25).

            The veracity of the investigators statement is bolstered by the absence of any delivery restrictions for the distribution area encompassing the Thomsons’ property, or for any other distribution area, on City Wide’s invoice, and the absence of any indication on that invoice that any extra fee for delivery restrictions was imposed (State’s Ex. 8). Further, by letter dated August 22, 2007, Respondent advised Appellant Ahmad of the complaint filed by the Thomsons (see State’s Ex. 5, in which Appellant Ahmad acknowledges receipt of Respondent’s August 22, 2007 letter). However, even being informed that the Thomson had filed a complaint regarding the solicitation delivered to their home, Appellants paid City Wide’s invoice in full by check dated September 4, 2007 (State’s Exhibits 5 and 8). Had Appellants requested restrictions on the addresses to which City Wide was to distribute the Booklets, it seems very unlikely that Appellants would have paid the invoice—which would have included the extra fee for the delivery restrictions—in full when they (Appellants) knew not only that the restriction instructions had not been followed but that a complaint had been filed against Appellants as a result.

            The credibility determinations of an ALJ are accorded due deference by the Secretary of State when resolving matters on appeal (see Anzalone v Division of Licensing Services, 9 DOS APP 08 (“In reviewing the determination of an ALJ, the Secretary of State retains plenary authority to reverse or modify decisions, but accords due deference to the ALJ in terms of fact-findings and credibility assessments”); see also Matter of Simpson v Wolanski, 38 N.Y.2d 391, 394 (1975)). In this case, the ALJ expressly found Appellants’ assertion that “it was the fault of City Wide Distributors for delivering the booklets to any homes or stores on the cease-and-desist list . . . [to be] lacking in credibility” (ALJ’s Decision, 990 DOS 08, Findings of Fact no. 5, at p. 2). The Department of State sees no reason whatsoever to overrule the ALJ’s determination that Appellant’s assertion lack credibility.

            Considering the evidence presented in totality and according due deference to the credibility assessments made by the ALJ, it is determined that Respondent’s established by substantial evidence that Appellant Ahmad ordered an unrestricted distribution of solicitations encompassing the Thomson’s property, that the Thomson’s property was so solicited, and that Appellants knowingly violated 19 NYCRR § 175.17(c)(1) and demonstrated untrustworthiness in violation of Real Property Law § 441-c.

Propriety of the Penalty Imposed

            Where a licensed broker has actual knowledge of a violation at the time of its occurrence, the penalty of license suspension may be imposed (see Roberts Real Estate, Inc. v. New York State Department of State, 80 NY2d 116, 119 (1992); see also Real Property Law § 442-c)). Appellants’ violated the prohibition against solicitation of residential property owners on a cease-and-desist listing maintained by the Department of State. Appellant Ahmad ordered the unrestricted distribution of solicitations within the Woodhaven area containing the Thomson’s property. As the record demonstrates that Appellant Ahmad placed the order for the unrestricted distribution of solicitations in the area of Woodhaven including the Thomson’s property, actual knowledge of the violation at the time of its occurrence has been established. Therefore, suspension is a permissible penalty for the violation found.

            Appellants contend that it was improper for the ALJ to consider Appellants’ prior violation of 19 NYCRR § 175.17 “without examining the totality of those acts.” The record demonstrates, however, that the ALJ considered the entirety of the circumstances surrounding Appellants’ prior violation. The evidence introduced at this hearing as State’s Ex. 11 included the underlying complaint dated November 1, 2006, Mr. Ahmad’s letter of explanation dated November 26, 2006, the formal Complaint dated February 2, 2007 issued by Respondent, the case notes of Respondent’s Complaint Review Unit, the solicitation itself, and the plea agreement entered into by Appellant Ahmad. Therefore, Appellants’ contention that the ALJ only superficially considered their prior violation is contravened by the documents contained in the record itself.

            Appellants also argue that “Mr. Ahmad paid a fine to settle the [prior violation] because it was a direct mail solicitation to the complainant in question” and that the prior case was not “even similar to this case” because this case “involved a complainant who discovered a booklet in her mail slot” and the booklet “did not contain a postmark or any label directly addressed to the complainant” (letter of appeal from Gail A. Adams, P.C. dated August 14, 2008, at p. 1). The fact that Appellants used the United States Postal Service to distribute illegal solicitations in one instance, and used a private delivery service in another, is a distinction without a difference. Solicitation of a person on the cease-and-desist list is prohibited without regard to the manner in which the solicitation is distributed (see 19 NYCRR § 175.17(d)(1)).

            The prior case and the circumstances surrounding the prior case are clearly relevant to this matter and to the penalty to be imposed herein. On February 16, 2007, Appellants pled guilty to illegal solicitation and paid a $750 fine; yet, less than six months later, Appellants caused another illegal solicitation to be delivered to the same residence. Further, when Appellant Ahmad signed the first plea agreement in the prior case, he expressly affirmed that the “violation(s) have been corrected” (State’s Ex. 11); however, Appellants’ “corrective” measures have proved so ineffective (or non-existent) that Appellants illegally solicited the same residence less than six months later. Under the circumstances, the ALJ could properly determine that Appellants view the payment of a fine as a minor “cost of doing business,” with the risk of being required to pay another fine well worth the reward of listings and other business to be generated by blanket, unrestricted distribution of solicitations in areas covered by cease-and-desist lists. A proper weighing of these factors leads to the determination, as reached by the ALJ, that suspension, rather than another fine, is the appropriate sanction.

            Appellants also argue that the ALJ “misinterpreted” the case of Vito v. Jorling, 197 AD2d 822 (1993) in fashioning the penalty imposed.

            The fact that the Appellants were offered the opportunity to settle this case by pleading no contest to the charges and paying a $1,000 fine was reflected in documentation entered into evidence at the hearing as State’s Ex. 12. In his Decision, the ALJ indicated in setting the penalty to be imposed, he considered the fact that a plea offer had been made and rejected (ALJ’s Decision, 990 DOS 08, at p. 3). The ALJ also stated that “(w)here such an offer of settlement has been refused or not accepted . . . and the [accused licensees] have subsequently been found guilty, it is proper to impose a fine (or sanction) higher than that which was asked for in the settlement offer” (ALJ’s Decision, 990 DOS 08, at pp. 3-4, citing Vito v. Jorling). However, while the ALJ cited Vito v. Jorling for the proposition that it is proper to impose a sanction which is higher than that offered in a rejected plea offer, the ALJ did not state that Vito v. Jorling mandates the imposition of a higher sanction. Stated another way, the fact that Respondent would have accepted the payment of a $1,000 fine to resolve this case prior to the hearing does not preclude Respondent from seeking, or the ALJ from imposing, a higher sanction; it is proper, albeit not required, that a higher sanction be imposed.

            It should also be noted that Respondent’s Complaint against Appellants in this matter requested “Revocation and/or suspension of [Appellant’s] license as a Real Estate Corporate Broker; . . . (t)he maximum fine permitted by law; . . . (and) such other and further relief as the tribunal deems just and proper” (State’s Ex. 1, emphasis added). Appellants were on notice that additional or higher sanctions were being sought, and might be imposed.

             It is lawful for a penalty which exceeds a rejected offer of settlement to be imposed following an administrative hearing (see Kleen Food Store v D’Angelo, 222 AD2d 1110, 1110 (1995) (“the fact that respondents proposed a less severe sanction in its settlement offer, which petitioner rejected, does not warrant modification of the penalty imposed”). The penalty imposed, however, must not be so disproportionate to the nature and severity of the violation, the harm done to the public, and the public interest in preventing future violations as to shock the conscious and one’s sense of fairness (see Vito v Jorling, 197 AD2d 822, 825).

            Appellant Ahmad solicited a property included on a cease-and-desist maintained by the Department of State within 6 months of Appellants’ payment of $750 in settlement of a prior violation of the same prohibition. Despite their knowledge of the prohibition on certain solicitations, Appellants made no effort to restrict the distributions of their solicitations. Considering the totality of the evidence, the nature and severity of the violation, and the public interest in preventing future violations, it is determined that the one month suspension imposed by the ALJ is not so disproportionate to the offense as to be shocking to one’s sense of fairness.

            The Department of State notes the collateral effects of suspension of a representative real estate broker’s license. Appellants state that Century 21 Ahmad Realty “employs fifty (50) full-time agents” who work under Appellant Ahmad’s license. The suspension of a broker’s license operates to suspend the license of each real estate salesperson associated with that broker, pending the salesperson’s change of association or expiration of the suspension period imposed upon the broker’s license (see Real Property Law § 441-d). Recognizing the potential effect of the penalty imposed on such associated salespersons, and understanding that additional time may aid such salespersons in properly planning for any adjustments required by the penalty imposed herein, the effective date of the one month suspension imposed upon Appellants’ license shall be modified to commence on November 1, 2008.

DETERMINATION

            Appellants’ application seeking a stay pending final judgment on appeal is hereby denied.

            The Administrative Law Judge’s determination that Appellants Edul N. Ahmad and Century 21 Ahmad Realty violated 19 NYCRR § 175.17 and demonstrated untrustworthiness in violation of Real Property Law § 441-c is hereby affirmed.

            The penalty imposed by the ALJ is hereby modified as follows: Appellants’ license as a real estate broker shall be suspended for a period beginning on November 1, 2008 and terminating on the later of (1) November 30, 2008 or (2) one month after the Respondent’s receipt, by certified mail, of Appellants’ license certificate and pocket card. Appellants are directed to send their license certificate and pocket card by certified mail to Kathy Scarcella, Customer Service Unit, Department of State, Division of Licensing Services, Alfred E. Smith Building, 80 South Swan Street, 10^th Floor, Albany, NY 12201.

So ordered on:

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                                                                                    Daniel E. Shapiro

                                                                                    First Deputy Secretary of State