ALJDEC

01F-0001251-BFS · Department of Building and Fire Safety · 2001-10-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: Convened on June 8, 2001, but Continued to September 6, 2001. The record was then held open for Conclusion until October 5, 2001.

APPEARANCES: Assistant Attorney General M. Elizabeth Burns represented the Department of Building and Fire Safety. Witness Donna L. Grant, Office of Manufactured Housing, Department of Building and Fire Safety (Department) appeared. On June 8, 2001, Qualifying Party for Respondent, Matthew Madrid, appeared to argue for a continuance. However, on September 6, 2001, no person appeared on behalf of Respondent Radiant Manufactured Homes. ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn _____________________________________________________________________ Evidence and testimony were presented regarding a Complaint and, based upon review of the hearing record, the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. Respondent Radiant Manufactured Homes holds a Class D-8B license [License No. 7442] issued by the Department. This Respondent is a dealer of manufactured homes, both new and repossessed. Respondent’s annual License Certificate was issued on April 10, 2000. Hearing record, Exhibits 1 and 2. 2. On February 12, 2001, the Department received a written complainant regarding Respondent’s business practices with regard to a repossessed home. The complaining party, Chase Manhattan Mortgage Corporation, filed a letter of complaint indicating that the escrow check [drawn on a Wells Fargo Bank account] in payment, from Respondent, had been returned insufficient funds. Hearing Exhibit 4. 3. On February 12, 2001, the Department’s Investigator (“Investigator”), Donna Grant went to the Wells Fargo Bank at which Respondent’s escrow account was located (according to the Authorization Form which Respondent had filed with the Department on April 3, 2000). Hearing Exhibit 5. The Bank’s representative informed Investigator Grant that the account was closed on April 30, 2000 and that a second account had been opened, but had also been closed on December 27, 2000. Hearing Exhibit 7. 4. On February 12, 2001, Investigator Grant drove to the Respondent’s business location on 99th Avenue in Peoria, Arizona. She found that office location locked, with a notice on the door of a new phone number for Respondent. Hearing Exhibit 7. 5. Investigator Grant scheduled an audit with Respondent for February 26, 2001. This appointment time was later changed to March 9, 2001. Hearing Exhibit 7. 6. In preparation for the audit, Investigator compiled information from monthly reports which had been submitted to the Department from Respondent, and began to review them. Five or six months showed no sales or were not received, and five months showed sales transactions. The parties named on the Investigator’s list were: H. Britton; J. Cameron; M. Bubbico; D. McMahon; S. Andrews; and L. Solis. Hearing Exhibit 9. This listing was provided to Respondent at the time of the audit. 7. For each transaction and in the dealer’s general records, the Department expects to see several items: a listing agreement; an offer to purchase, with a contract for any needed services; the contract with the price; a duplicate receipt book with all earnest monies reflected; validated deposit slips of deposits made to the trust account; bank statements; client ledger journal; and proof of “consummation”, i.e., proof that that the title has been conveyed to the new purchaser. 8. At the audit, Investigator Grant asked for all records of the sales made, and found only scanty transaction records, sketchy trust account records and check registers with withdrawals. Hearing Exhibit 8. 9. During the audit, Investigator Grant compiled information which was available from Respondent’s records. Hearing Exhibit 8. Generally, as to most transactions, requisite information was not available or could not be tracked completely to the end of the transactions. Some transactions were repossessions. For the various transactions, the audit review showed: lack of sales listing agreements, lack of offers to purchase, lack of transaction, lack of deposits amounts coordinating with earnest monies recorded; the mixture of monies received and deposited; lack of accurate delineations of withdrawals from the escrow accounts; untimely withdrawals of escrow account monies; lack of consummations for the transactions; unknown “escrow” accounts (no Authorization Form on file in the Department); and several overdrawn and closed bank accounts. 10. On March 9, 2001, Investigator Grant completed her audit investigation report (“Report”). See Hearing Exhibit 10. This Report details, for a given statutory provision, the failures or deficiencies of Respondent and its records as to all the transactions. The Report was reviewed, at the time of the audit, with Respondent. Investigator Grant testified that Respondent indicated to her that he would do everything in his power to follow the Arizona laws, and that the laws in Colorado had been different for a license he had had there. The Report had indicated that certain information was required to be submitted to the Department and certain information to the purchasers or banks (consummation documents).

11. On March 23, 2001, the Department issued its Citation and Complaint (“Citation”) in this matter. The Citation sets forth sixteen Counts and the details therewith as to alleged failures or deficiencies of Respondent. The Citation indicates alleged violations of Arizona Revised Statutes (A.R.S.) §§41-2180.A, 41-2180.D, 41-2180.E, 41-2180.G, 41-2180.H.7 and 8, and 41-2180.J. The Citation requires a written “Verified Answer” from Respondent no later than ten days after service/receipt of the Citation. 12. On April 3, 2001, Respondent filed a letter to the Department, requesting an extension of time to provide “adequate documents to possibly have the majority of complaints reversed or dropped.” Respondent’s letter asks “for your understanding and cooperation as I am waiting for Banks to send me relative information.” Respondent’s letter indicates that he had “requested all documents from these lenders several times. These documents include copies of the actual loan documents, title transfer information and proof of payoff as these lenders were selling their own repossed (sic) mobile homes.” 13. On April 25, 2001, the Department issued its Notice of Hearing in this matter, indicating that a hearing upon the charges made in the Citation would take place in the afternoon on June 8, 2001 with this Tribunal. 14. On May 14, 2001, the Department sent out a License renewal form to Respondent, for renewal of the License back to April 9, 2001. The annual License fee was $105.00. 15. In June 2001, Respondent’s qualifying party, Matthew M. Madrid, filed the renewal form and paid the annual fee. 16. The Department issued a new License Certificate on June 7, 2001, to be effective until April 9, 2002. 17. On June 7, 2001 Respondent filed its ex-parte letter request to this Tribunal for a continuance of the matter. Respondent recites the reason for a continuance being “to allow myself to provide adequate information to all parties involved. It has become difficult to retrieve certain documents as I am relying on Lenders to send the relative information. I an very confident that I will have all necessary documents within 45-60 days. I will without a doubt be able to appear in court on any specified date that you may schedule within the time frame stated above.

18. By ORDER dated June 7, 2001, faxed to the parties, the Respondent’s request for a continuance was Denied. The morning of the hearing, counsel for the Department filed a Stipulation for Continuance, indicating that Respondent had indicated a willingness to provide critical documentation which could assist in the adjudication of the Citation. The Department indicated its belief that a brief continuance would not have a prejudicial effect on the parties. 19. The hearing convened on June 8, 2001. The parties presented their arguments with regard to a Continuance of the matter. The Department indicated that it had received, on June 7, 2001, some documents and had also given its Exhibits to Respondent. The Department expressed its belief that a review of the documents might resolve, for dismissal, some Counts and that the matter might be resolved through a Consent Agreement. The Department also provided a copy of two faxed documents, from Respondent, both entitled Addendum to Answer, one longer than the other and one being signature dated June 7, 2001. 20. By ORDER dated June 15, 2001, the matter was continued for a hearing to be held on September 6, 2001. 21. On Respondent’s failure to supply a required report and applicable fees, the Department issued a Citation and Complaint alleging those failures. After Respondent’s failure to respond to the Department’s August 3, 2001 Citation and Complaint, the Department issued, on August 23, 2001, its Order of Suspension of Respondent’s License, effective that date. Hearing Exhibit 3. 22. At the time set for continued hearing, and for fifteen minutes thereafter, as well as the entire time of the conducted hearing, neither Respondent’s qualifying party nor any person on Respondent’s behalf arrived for the hearing in this matter. 23. The Department presented its documentation and testimony of Investigator Donna L. Grant. 24. The Department verbally moved for several amendments in the Citation: a. In Count II, for Steve Andrews, an amount of $500.00 (not $1,500.00) receipted on November 29, 2000 (not unknown date). b. In all Counts where applicable, change name to “Lucy” (not Luey). c. In Count IV, remove R. Britton, D. McMahon and S. Andrew from the purchasers affected. d. Delete Count VI. e. In Count XVI, remove R. Britton, D. McMahon and S. Andrew from the purchasers affected. The Department indicated that these changes were being made, based on documentation submitted from Respondent on June 7, 2001. No written amended Citation was received by this Tribunal, and it is unknown whether any amended Citation was issued by the Department to Respondent. 25. The Department’s Complaint, Count I, alleges that Respondent failed to maintain a trust or escrow account with a financial institution in Arizona from December 28, 2001 until February 15, 2001. This failure is an alleged violation of A.R.S. §§41-2180.A, 41-2186.1 and 41-2186.6. 26. The Department’s Complaint, Count II, alleges that Respondent failed to deposit all received earnest monies into Respondent’s escrow account: for S. Andrews on four separate occasions, totaling $5,000.00; for D. McMahon on two occasions, totaling $800.00; for M. Bubbico on one occasion, in the amount of $3,000.00; and, for J. Cameron on two occasions, totaling $20,200.00. These failures are alleged violations of A.R.S. §§41- 2180.A, 41-2186.1 and 41-2186.6. 27. The Department’s Complaint, Count III, alleges that Respondent failed to deposit all received earnest monies into Respondent’s escrow account no later than the close of the second banking business day: for J. Cameron, the sum of $1,600.00, received on June 6, 2000 and June 1, 2000 but both not deposited until June 26, 2000; and, for L. Solis-Minjarez, the sum of $21,440.00, received on unknown date, but not deposited until October 25, 2000 and November 22, 2000. These failures are alleged violations of A.R.S. §§41-2180.E, 41-2186.1 and 41-2186.6. 28. The Department’s Complaint, Count IV, alleges that Respondent failed to maintain a complete record of all earnest monies received which contain provisions for entering when the transaction was completed, (i.e., consummated): for L. Solis-Minjarez; for M. Bubbico; for J. Cameron. These failures are alleged violations of A.R.S. §§41-2180.H.7, 41-2186.1 and 41- 2186.6. 29. The Department’s Complaint, Count V, alleges that Respondent failed to maintain a complete record of all earnest monies received which contain provisions for entering the date and payment for all the good and services the dealer has contracted to provide (i.e., evidence of when the earnest monies were withdrawn from the trust or escrow account): for L. Solis-Minjarez; for M. Bubbico; for R. Britton; for J. Cameron; for D. McMahon; and, for S. Andrews. These failures are alleged violations of A.R.S. §§41-2180.H.8, 41-2186.1 and 41-2186.6. 30. The Department’s Complaint, Count VII, alleges that Respondent failed to retain a complete record of all earnest monies received which contain provisions for entering: the amount received; from whom the money was received; the date of receipt; the place of deposit; the date of deposit; and, the daily balance of the trust fund deposit for each transaction. These failures are alleged violations of A.R.S. §§41- 2180.H.1, 41-2180.H.2, 41-2180.H.3, 41-2180.H.4, 41-2180.H.5, and 41- 2180.H.6, 41-2186.1 and 41-2186.6. 31. The Department’s Complaint, Count VIII, alleges that Respondent failed to utilize the funds for the purpose for which they were received in the transaction for L. Solis-Minjarez. The Complaint alleges that the escrow account check issued by Respondent on November 30, 2000 for $18,900.00, to Chase Manhattan Mortgage Corporation (“Chase”) was returned insufficient funds, and, as of March 2001, Chase still had not been paid. This failure is an alleged violation of A.R.S. §§41-2180.L, 41-2186.1 and 41-2186.6. 32. The Department’s Complaint, Count IX, alleges that Respondent failed to utilize the funds for the purpose for which they were received in the transaction for M. Bubbico. The Complaint alleges that with no purchase agreement for this transaction, Respondent had indicated to the Department that the home was an Indy-Mac repossession, and that the purchase price had been $18,000.00, which Respondent had received from M. Bubbico. The Complaint alleges that Respondent has failed to show any evidence that the lienholder, Indy-Mac, had been paid. This failure is an alleged violation of A.R.S. §§41-2180.J, 41-2180.L, 41-2186.1 and 41- 2186.6. 33. The Department’s Complaint, Count X, alleges that Respondent failed to utilize the funds for the purpose for which they were received in the transaction for J. Cameron. The Complaint alleges that Respondent’s records indicated that a Redman manufactured home was purchased by J. Cameron. The Complaint alleges that Respondent had indicated to the Department that the home was an Indy-Mac repossession, and that the purchase price had been $21,800.00. The Complaint alleges that Respondent has failed to show any evidence that the lienholder, Indy-Mac, had been paid. This failure is an alleged violation of A.R.S. §§41-2180.L, 41- 2186.1 and 41-2186.6. 34. The Department’s Complaint, Count XI, alleges that Respondent failed to retain true copies of purchase agreements for a period of three years for purchasers: R. Britton, D. McMahon, and M. Bubbico. This failure is an alleged violation of A.R.S. §§41-2180.K, 41-2186.1 and 41-2186.6. 35. The Department’s Complaint, Count XII, alleges that Respondent failed to hold all received earnest monies in Respondent’s escrow account until the transaction was consummated and a proper accounting was made for the L. Solis-Minjarez transaction. The Complaint alleges that Respondent deposited $14,727.57 on October 25, 2000 and withdrew it the same day. The Complaint alleges that Respondent deposited $6,712.50 on November 22, 2000 and withdrew it the same day. The Complaint alleges that Respondent also withdrew $1,964.53 on November 24, 2000. The Complaint alleges that, as of March 22, 2001, the L. Solis-Minjarez transaction still has not been consummated. These actions and failures are alleged violations of A.R.S. §§41-2180.I.1, 41-2180.I.2, 41-2186.1 and 41-2186.6. 36. The Department’s Complaint, Count XIII, alleges that Respondent failed to hold all received earnest monies in Respondent’s escrow account until the transaction was consummated and a proper accounting was made for the R. Britton transaction. The Complaint alleges that Respondent deposited $8,100.00 on April 12, 2000; $500.00 on April 19, 2000; and, $5,000.00 on April 19, 2000. The Complaint alleges that Respondent withdrew monies: $4,400.00 on April 17, 2000, $5,000.00 on April 19, 2000, $596.97 on May 9, 2000, $526.09 on May 16, 2000; $2,600.00 on May 23, 2000; $771.40 on June 1, 2000; $30.00 on June 21, 2000; and, $25.00 on June 22, 2000. The Complaint alleges that, as of March 23, 2001, there is no evidence to show that the R. Britton transaction has been consummated. These actions and failures are alleged violations of A.R.S. §§41-2180.I.1, 41-2180.I.2, 41-2186.1 and 41-2186.6. 37. The Department’s Complaint, Count XIV, alleges that Respondent failed to hold all received earnest monies in Respondent’s escrow account until the transaction was consummated and a proper accounting was made for the M. Bubbico transaction. The Complaint alleges that Respondent deposited $2,000.00 on September 8, 2000 and $1,300.00 on September 21, 2000. The Complaint alleges that Respondent withdrew $12,775.00 on September 21, 2000. The Complaint alleges that the remainder of the earnest monies were withdrawn in various amount from the escrow account no later than September 28, 2000, with the balance for the account on September 28, 2000 being only $193.00. The Complaint alleges that, as of March 23, 2001, there is no evidence to show that the M. Bubbico transaction has been consummated. These actions and failures are alleged violations of A.R.S. §§41-2180.I.1, 41-2180.I.2, 41-2186.1 and 41-2186.6. 38. The Department’s Complaint, Count XV, alleges that Respondent failed to hold all received earnest monies in Respondent’s escrow account until the transaction was consummated and a proper accounting was made for the J. Cameron transaction. The Complaint alleges that Respondent deposited $1,600.00 on June 26, 2000. The Complaint alleges that Respondent withdrew $1,500.00 on June 28, 2000, $30.00 on July 10, 2000 and $69.79 on July 18, 2000. The Complaint alleges that the remainder of the earnest monies were withdrawn in various amount from the escrow account no later than July 28, 2000, with the balance for the account on July 28, 2000 being a negative $108.84. The Complaint alleges that, as of March 23, 2001, there is no evidence to show that the J. Cameron transaction has been consummated. These actions and failures are alleged violations of A.R.S. §§41-2180.I.1, 41-2180.I.2, 41-2186.1 and 41-2186.6. 39. The Department’s Complaint, Count XVI, alleges that Respondent failed to provide evidence that all agreed goods and services [mentioning, the title transfer] have been provided to the purchasers: M. Bubbico, L. Solis-Minjarez, and J. Cameron. These failures are alleged violations of A.R.S. §§41-2186.1, 41-2186.6, and 41-2186.19. 40. As to Count I, the Department’s records showed that Respondent had completed an Authorization Form on April 3, 2000 for an escrow account at Wells Fargo Bank. On February 12, 2001, the Bank’s representative advised Investigator Grant that account had been closed on April 30, 2000. The Bank’s representative advised that another account had been opened, but had also been closed on December 27, 2000. The Department presented no Authorization Form for this second Wells Fargo account. Until the time of the Audit, March 9, 2001, no other Authorization Form was provided by Respondent to the Department; this Form indicates an account at Bank One. See Hearing Exhibit 13. The Department’s Investigation showed that an escrow account was opened by Respondent at Bank One on February 23, 2001, and as of May 1, 2001 contained $45.55. See Hearing Exhibit 14. 41. As to Count II, the Investigator’s March 9, 2001 audit paperwork shows failures as noted in the Department’s allegations for the S. Andrews, D. McMahon and M. Bubbico transactions. However, with regard to the J. Cameron’s transaction, the audit paperwork shows a receipt, and a does show a deposit, in the same amount [$19,800.00], but has no dates listed for either. The allegation as to the non-deposit of the $19,800 is not shown with the evidence submitted to the hearing. Additionally, the audit paperwork shows a cash down amount of $2,000.00, and several receipts that add up to $2,000.00, but only $1,600.00 deposited. The allegation as to non-deposit of the $400.00 is shown. 42. As to Count III, the Investigator’s audit paperwork shows failures as noted in the Department’s allegations for the J. Cameron transaction. However, with regard to the L. Solis-Minjarez transaction, it is unknown when the monies were received, and therefore, it cannot be known whether the deposits were, or were not, made no later than the close of the second banking business day after receipt. 43. As to Count IV, the Investigator’s audit paperwork shows no consummation documentation for the L. Solis-Minjarez, M. Bubbico, and J. Cameron transactions. Additionally, the lien holder, Indy Mac, informed the Department that it had never received the payment (inferring, no close or consummation) from Respondent on the M. Bubbico transaction. See Hearing Exhibit 16. The original Chase complaint is of the same nature: Chase did not receive funds in payment (again, inferring, no close or consummation) from Respondent on the L. Solis-Minjarez transaction. See Hearing Exhibit 4. The allegation of no consummation documentation is shown. 44. As to Count V, the Investigator’s audit paperwork contains little information regarding withdrawals made on the escrow accounts. For two transactions, no withdrawals are noted as being related to: S. Andrews and D. McMahon. For the other four persons’ transactions, there are some withdrawals, but little detail as to a reason for the withdrawal or the good or service being paid for which ties back to that person’s transactions. The allegation of incomplete records of payments received and withdrawn for applicable goods and services is shown. 45. Count VI has been deleted from the Department’s Complaint. 46. As to Count VII, the Investigator’s March 9, 2001 audit paperwork shows some failures as noted in the Department’s allegations for the S. Andrews, D. McMahon and M. Bubbico transactions. There were eight instances of failures to make a subsequent deposit to the earnest money account and no dates of deposits. There also appears to be several instances of inadequate records regarding the receipt of particular amounts of monies; this would entail failure to have actual duplicate receipts and notations on the dates of receipt. The allegation as to retain complete records for all earnest monies is shown. However, the failure to maintain a daily balance of a trust fund deposit was not shown with the evidence submitted to the hearing; no copies of Complainant’s actual records were submitted. 47. As to Count VIII, the Investigator’s audit paperwork shows failures as noted in the Department’s allegations for the L. Solis-Minjarez transaction. The October 25, 2000 monies she provided to Complainant were withdrawn on October 25, 2000. Later, Complainant issued a check to the lien holder, Chase, which was returned for insufficient funds and no check was subsequently reissued for payment to Chase. Chase has not been paid on this transaction. 48. As to Count IX, the Investigator’s audit paperwork shows failures as noted in the Department’s allegations. Seventy percent of the monies deposited from M. Bubbico’s transaction were withdrawn, but that lien holder, Indy-Mac, has not been paid. This allegation is shown. 49. As to Count X, the Investigator’s audit paperwork shows failures as noted in the Department’s allegations. Some monies deposited from J. Cameron’s transaction were withdrawn and used for various general business expenses, including phone and fees to the Department. However, the J. Cameron transaction was an Indy-Mac repossession, and there is no evidence that Indy-Mac has ever been paid. 50. As to Count XI, the investigator’s audit paperwork shows failures to have any copies of the purchase agreements for the R. Britton and D. McMahon transactions. The paperwork shows there was a purchase agreement for the M. Bubbico transaction; however, that purchase agreement was not dated. Complainant has been in business since April 2000. Therefore, although there can be no finding that Complainant filed to retain copies for the statutory period of three years, it can be determined that having no copy of a purchase agreement in the dealer records is a failure to retain a copy. 51. As to Count XII, the Investigator’s audit paperwork shows failure to hold monies in escrow until consummation and proper accounting, as noted in the Department’s allegations for the L. Solis-Minjarez transaction. The purchase agreement was apparently for $21,447.50. Ms. Solis-Minajarez apparently made three payments to Complainant, totaling $21,447.50. Approximately sixty-six percent of the total monies she apparently provided to Complainant were withdrawn on October 25, 2000 [the same amount had been deposited that same day]. However, on November 30, 2000, Complainant issued a check in the amount of $18,900.00 to the lien holder, Chase, which was returned for insufficient funds. 52. As to Count XIII, the Investigator’s audit paperwork shows failure to hold monies in escrow until consummation and proper accounting, as noted in the Department’s allegations for the R. Britton transaction. There is no purchase agreement and the purchase price is unknown with certainty. Mr. Britton apparently made three payments to Complainant, totaling $13,600.00 in April 2000. Approximately ten withdrawals were made between April and June 2000. Most of the checks written against this account or monies appear to be general business related expenses being paid: fees to the Department, city taxes and a city of Peoria permit. There are several other withdrawals of large amounts with no comment or detail notations as to reason for the withdrawals. There is no indication that the seller has ever been paid on this transaction. 53. As to Count XIV, the Investigator’s audit paperwork shows failure to hold monies in escrow until consummation and proper accounting, as noted in the Department’s allegations for the M. Bubbico transaction. The purchase agreement was for $18,000.00. Mr. Bubbico apparently made three payments to Complainant, totaling $18,000.00 in September 2000. One payment for $3,000.00 was not deposited into an escrow account. On September 21, 2000 [the day after the last payment], approximately seventy percent of the money was withdrawn. Complainant’s bank records for the particular account show an ending balance for September 2000 to be only $193.00. See Hearing Exhibit 12. There is no evidence that the Lien holder, Indy-Mac, has been paid. 54. As to Count XV, the Investigator’s audit paperwork shows failure to hold monies in escrow until consummation and proper accounting, as noted in the Department’s allegations for the J. Cameron transaction. The purchase agreement was originally $21,800.00, and a $2,000.00 cash down amount was indicated. The cash down amount was later changed to $600.00. Mr. Cameron apparently made four payments to Complainant, totaling $21,800.00. Two payments are accounted for in June 2000. Two other payments apparently had receipts, but without dates being noted. Two days after the first deposit of $1,600.00, a withdrawal of $1,500.00 was made. Three other withdrawals were made, which appear to be for general business expenses. Complainant’s bank records for the particular account show an ending balance for July 2000 to be a negative $108.84. See Hearing Exhibit 12. There is no evidence that the Lien holder, Indy-Mac, has been paid.

55. As to Count XVI, the Investigator’s audit paperwork shows no consummation information for five or six transactions. At the hearing, the Department removed three transactions, indicating that it had received evidence from Complainant with regard to those three. The remaining no- consummation transactions: M. Bubbico, L. Solis-Minjarez, and J. Cameron. This allegation is shown. APPLICABLE LAW 1. A.R.S. §41-2180.A requires, in summary, that each dealer who is licensed and who sells manufactured homes for use as residential dwellings shall maintain a trust account or an escrow account with a financial institution or escrow agent in Arizona and shall deposit all earnest money received for the sale of manufactured homes in such account. The statute goes on to provide that the Department shall conduct an audit of the trust or escrow account once every two years. 2. A.R.S. §41-2180.E requires that all earnest monies be deposited in the escrow or trust account no later than the close of second banking day after receipt. 3. A.R.S. §41-2180.H requires that a complete record be retained by the dealer of all earnest received , with provision for entering certain specific items. Subsection H, numbers 1 through 8 list out the items: the amount received; from whom the money was received; the date of receipt; the place of deposit; the date of deposit; the daily balance of the trust fund account deposit of each transaction; when the transaction has been completed; and, the date and payment for all goods and services the dealer had contracted to provide. 4. A.R.S. §41-2180.I requires that all earnest monies deposited in the trust or escrow account be held in that account until one of two conditions is completed: 1) an application for a title transfer has been made; or, 2) the transaction is consummated or terminated and a complete accounting is made. 5. A.R.S. §41-2180.J provides that once the condition(s) in Subsection I is completed, the earnest money deposit shall be conveyed to the lending institution or the dealer, broker, purchaser, seller, manufacturer or lienholder, as applicable. 6. A.R.S. §41-2180.K requires that the dealer shall retain, for three years, true copies of purchase agreements, earnest money receipts, depository receipts, evidence of delivery documents and evidence of consummation of sale or termination of sale. 7. A.R.S. §41-2180.L provides that deposits referred to in A.R.S. §41-2180 shall not be utilized for any purpose other than the transaction for which they were provided. 8. A.R.S. §41-2186 generally provides, in the following portions, that a holder of a license or a person listed on a license shall not commit the following acts or omissions: 1. Failure in any material respect to comply with the provisions of this article or article 2 of this chapter. xxx 6. The doing of a wrongful or fraudulent act by a licensee … xxx 19. Failure to provide all agreed goods and services.

CONCLUSIONS OF LAW 1. As to Count I, the evidence and testimony showed that Respondent had not maintained a trust or escrow account from December 28, 2000 until February 23, 2001. This is a violation of A.R.S. §§41-2180.A, 41-2186.1 and 41-2186.6. 2. As to Count II, the evidence and testimony showed that Respondent failed to deposit all earnest monies received into Respondent’s trust or escrow account(s). These failures are violations of A.R.S. §§41-2180.A, 41- 2186.1 and 41-2186.6. 3. As to Count III, the evidence and testimony showed that Respondent failed to deposit all received earnest monies into Respondent’s trust or escrow account(s) no later than the close of the second banking business day for the J. Cameron transaction. This failure is a violation of A.R.S. §§41-2180.E, 41-2186.1 and 41-2186.6. 4. As to Count IV, the evidence and testimony showed that Respondent failed to maintain a complete record of all earnest monies received with specific information regarding consummation of transactions. These failures are violations of A.R.S. §§41-2180.H.7, 41-2186.1 and 41-2186.6. 5. As to Count V, the evidence and testimony showed that Respondent failed to maintain a complete record of all earnest monies received with specific information regarding the date and payment for all the good and services the dealer has contracted to provide (i.e., tracking of, and the reason for, earnest monies being withdrawn from the trust or escrow account). These failures are violations of A.R.S. §§41-2180.H.8, 41-2186.1 and 41-2186.6. 6. As to Count VII, the evidence and testimony showed that Respondent failed to retain a complete record of all earnest monies received with specific information regarding: the amount received; from whom the money was received; the date of receipt; the place of deposit; the date of deposit; and, the daily balance of the trust fund deposit for each transaction. These failures are violations of A.R.S. §§41-2180.H.1, 41- 2180.H.2, 41-2180.H.3, 41-2180.H.4, 41-2180.H.5, and 41-2180.H.6, 41-2186.1 and 41-2186.6. 7. As to Count VIII, Count IX and Count X, the evidence and testimony showed that Respondent failed to utilize the funds for the purpose for which they were received in at least three transactions: for L. Solis- Minjarez; for M. Bubbico; and, for J. Cameron. These failures are violations of A.R.S. §§41-2180.L, 41-2186.1 and 41-2186.6. Additionally, the evidence and testimony showed that Respondent did not convey the earnest deposit to the lending institution(s) pursuant to A.R.S. §41- 2180.J. These failures are violations of A.R.S. §§41-2180.J, 41-2180.L, 41- 2186.1 and 41-2186.6. 8. As to Count XI, the evidence and testimony showed only that Respondent failed to retain true copies of purchase agreements for several purchasers (R. Britton, D. McMahon, and M. Bubbico). Respondent has not been in business for three years, and cannot, technically, be in violation of a statutory provision requiring copies to be maintained for three years. Therefore no violation is found with regard to A.R.S. §41-2180.K. 9. As to Count XII, Count XIII, Count XIV, and Count XV, the evidence and testimony showed that Respondent failed to hold all received earnest monies in Respondent’s escrow account until the transaction was consummated and a proper accounting was made for several transactions: the L. Solis- Minjarez transaction; the R. Britton transaction; the M. Bubbico transaction; and, the J. Cameron transaction. In each of these transactions, there is no evidence to show that the transaction has been “consummated” with payment either to the seller or the lienholder. These actions and failures are violations of A.R.S. §§41-2180.I.1, 41-2180.I.2, 41-2186.1 and 41-2186.6. 10. As to Count XVI, the evidence and testimony showed that Respondent failed to produce evidence that all agreed goods and services, and, specifically, the title transfer, have been provided to the purchasers M. Bubbico, L. Solis-Minjarez, and J. Cameron. These failures are violations of A.R.S. §§41-2186.1, 41-2186.6, and 41-2186.19. 11. A.R.S. §41-2186 grants the Department the authority to take disciplinary action of suspension, revocation, place on probation or penalize a license who is guilty of or commits statutorily prohibited acts or omissions. 12. Respondent’s multiple acts and omissions in violation of Arizona statute as to each of the transactions it conducted, and its’ persistent failures to comply with applicable Arizona statute, over which a qualifying party is tested prior to issuance of a license, are manifest demonstrations of the qualifying party’s disregard of the law and the public policy set forth to protect Arizona citizenry. In this case, the Qualifying Party, Matthew Madrid’s failure to appear at the formal administrative hearing with regard to this matter is a grievous aggravating factor forcing the recommendation herein.

RECOMMENDED ORDER In view of the foregoing: IT IS RECOMMENDED that the Class D-8B license, License No. 7442, of Respondent Radiant Manufactured Homes, be REVOKED; and IT IS RECOMMENDED that a statutory PENALTY be imposed in the amount of $42,000.00, which is calculated at the amount of $1,000.00 for each particular transaction’s violations, as evidenced to the undersigned by the hearing record; and IT IS RECOMMENDED that no business license in this arena be approved or issued to Matthew Madrid, or to any other party named on Respondent’s license, in the future. RECOMMENDED and DATED this day, October 24, 2001.

______________________________________ Kay A. Abramsohn Administrative Law Judge

Transmitted by mail this _____ day of October, 2001, to:

Department of Building and Fire Safety N. Eric Borg, Director ATTN: Shawna Blank East Virginia, Suite 100 Phoenix, AZ 85004

By ___________________________ -----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826