Realtors who were Arrested Still have Licenses

Even as California steps up its enforcement for real estate industry professionals, fraud suspects continue to retain their state licenses to do business.  Do we really have to rely on Google to tell us which RE professionals are crossing legal lines?

From the Ventura County Star
February 26, 2011
By Stephanie Hoops

Even though the U.S. Justice Department arrested 14 local residents in connection with mortgage fraud last summer, the Realtors in the group retain their state licenses to conduct business.

State law prevents a Realtor’s license from being immediately revoked upon arrest because of due process rights.

“So you can have someone who’s been indicted, someone who’s been arrested and in some cases someone who’s been convicted and they’re appealing the conviction and until that adjudication is completed, we have to abide by the law,” said California Department of Real Estate spokesman Tom Pool.

At least eight of the 14 people arrested and indicted by a federal grand jury in the mortgage fraud crackdown are listed as Realtors in good standing, according to the Department of Real Estate’s website. The others involved had various ties to the industry or didn’t match names listed on the site.

Lilibell Meza of Fillmore, one of the suspects arrested by the Justice Department, recently listed a Port Hueneme condominium for sale. Dickson said he was bidding on it until he realized she was facing federal charges. He learned about the arrest after doing an Internet search. However he didn’t find it on the state’s real estate site, which lists Meza’s license “in good standing,” with no reference to the pending case.

Real Estate Commissioner Jeff Davi acknowledged consumers cannot rely on his department’s website for a complete picture of whom they’re dealing with.

“Now we’re saying you have to do Google searches,” he said.

Davi said he is interested in seeing change come from the Legislature because his department has no way to alert the public about similar arrests occurring up and down the state.

“I don’t want to run rampant over people’s rights and due process but for someone to have a real estate license for months or even a year while they’re waiting for a prosecution, it does cause harm to the public,” he said. “Obviously, the legislation has to come. It’s not something I can do.”

Davi’s office is hoping legislators will move a bill before the end of the month.

Pool said more information about a potential legislative change could be gleaned by contacting the California State Assembly Committee on Business and Professions.

Phone and e-mail messages seeking comment from the committee’s chief consultant, Ross Warren, were not returned.

Real estate licenses aren’t the only ones given such protection by state law. The licenses remain in good standing for other professionals, such as doctors and lawyers who are charged with crimes.

Meza’s attorney, Donald Randolph of Santa Monica, said she remains innocent until found guilty.

Randolph said Meza has begun transferring her clients to another real estate agent and argues she has a “minimal and insignificant role in the case.” Meza is “implicated in only one of many alleged fraudulent deals,” according to court filings.

The cases against Meza and the other Realtors arrested last summer are scheduled to be tried in November. She has not withdrawn her license, Randolph said, and he would not advise her to because there’s nothing in the federal court process that prevents her from continuing to practice as a Realtor.

“The burden of proof is always — I repeat always — on the prosecution,” he said. “That’s also a part of our constitutional rights guaranteed every citizen.”

Although that may be true in the criminal system, prosecutors point out the burden of proof is often different in administrative settings.

Miles Weiss, who heads the Ventura County district attorney’s real estate fraud division, said the Department of Real Estate should have the power to suspend a person’s license and the licensee should have the burden of proving a suspension is not warranted.

“To put it another way,” he said, “the burden of proof should be shifted from the Department of Real Estate to the licensee to show that the charged criminal acts were in no way related to the performance as a real estate professional.”

Thousand Oaks Realtor Jim Keith chairs the county’s professional standards committee and has heard some of the people arrested by the Justice Department are still in business. Keith said he’d support a change in the law allowing for suspended licenses during the adjudication process.