ALJDEC decisions subject to certification as final

14F-DI-185-REL · Department of Real Estate · 2015-01-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 7, 2015 APPEARANCES: No one appeared for Respondent; Lynette Evans, Esq. for the Department of Real Estate ADMINISTRATIVE LAW JUDGE: Thomas Shedden _____________________________________________________________________ FINDINGS OF FACT 1. On November 4, 2014, the Arizona Department of Real Estate (“Department”) issued a Notice of Hearing and Complaint setting the above-captioned matter for hearing at 1:00 p.m. January 7, 2015, at the Office of Administrative Hearings in Phoenix, Arizona. 2. The Notice of Hearing provided that hearing was being held to determine whether grounds exist to impose a civil penalty or other discipline against Respondent Dale M. Gorny and Arizona Prime Estates, LLC. 3. No representative was present for Respondent at the scheduled hearing time. At that time, the Department provided the tribunal with an email from Ms. Gorny showing that Respondent “will not be able to attend the hearing. Proceed as you will.” Consequently, the hearing was convened in Respondent’s absence. 4. The Department presented the testimony of senior auditor Daniel Jones. 5. Ms. Gorny holds license No. BR030036000, which is set to expire on September 30, 2015. Arizona Prime Estates, LLC holds license No. LC576357000, which is set to expire on September 30, 2015. 6. At all times pertinent to this matter, Ms. Gorny was the designated broker for, and sole manager of, Arizona Prime Estates, LLC.[1] 7. In December 2013, the Department conducted an audit of Respondent. 8. Mr. Jones provided credible testimony showing that: a. Respondent had not kept all the records it was required to keep; b. Respondent’s trust accounts had not been properly reconciled and were not being reconciled on a monthly basis; c. Respondent’s trust accounts had a deficiency of $92,812.90, and were essentially insolvent;[2] d. Respondent had commingled funds; e. Respondent had converted trust account funds for personal use, including making mortgage payments on property for which Ms. Gorny was a part owner; f. Respondent had paid operating expenses from the trust account; g. Respondent had paid an unlicensed individual for work for which a license is required; h. Respondent’s property management agreements did not meet the statutory requirements. See also Exhibit 3 (audit report). 9. Ms. Gorny submitted to the Department a Broker Audit Declaration, dated September 17, 2013, that contained false information, including statements to the effect that she had balanced and reconciled Respondent’s trust accounts as required by the Arizona Revised Statutes and that she had made payments only to properly licensed individuals. 10. In a letter to the Department dated January 7, 2014, Ms. Gorny acknowledged that Respondent’s trust accounts had deficiencies. 11. Mr. Jones testified that the Department had issued to Respondent a Cease and Desist Order that was not appealed by Respondent. 12. The Department requests that a $4000 civil penalty be imposed against Respondent and that Ms. Gorny’s and Arizona Prime Estates, LLC’s licenses be revoked. CONCLUSIONS OF LAW 1. The Department bears the burden of persuasion. Ariz. Rev. Stat. § 41-1092.07(G)(2) and (G)(3). 2. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 3. A preponderance of the evidence is “[e]vidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (6th ed. 1990). 4. The preponderance of the evidence shows that Respondent violated Ariz. Rev. Stat. section 32-2153(A)(16) both by commingling money in its trust accounts and by converting trust account money to Ms. Gorny. 5. The preponderance of the evidence shows that Respondent demonstrated negligence and incompetence in performing acts and duties for which a license is required, which are violations of Ariz. Rev. Stat. sections 32-2153(A)(22) and (B)(8). 6. The preponderance of the evidence shows that Respondent failed to maintain a complete record of each transaction as required by Ariz. Rev. Stat. section 32-2153(A)(18). 7. The preponderance of the evidence shows that Ms. Gorny violated Ariz. Rev. Stat. section 32-2153(A)(16) by failing to exercise reasonable supervision and control over the activities for which a license is required of a limited liability company. 8. The Department has authority to revoke Respondent’s licenses and to assess against Respondent a civil penalty of up to $1000 per violation of statute. Ariz. Rev. Stat. §§ 32-2153, 32-2160.01. 9. Considering the facts and circumstances of this matter, the Administrative Law Judge concludes that Ms. Gorny’s and Arizona Prime Estates, LLC’s licenses should be revoked and that Respondents should be assessed a $4000 civil penalty. ORDER IT IS ORDERED that Dale M. Gorny’s license No. BR030036000 is revoked; IT IS FURTHER ORDERED that Arizona Prime Estates, LLC’s license No. LC576357000 is revoked; IT IS FURTHER ORDERED that Dale M. Gorny and Arizona Prime Estates, LLC must pay to the Department a civil penalty of $4000 within fifteen days of the effective date of the Order entered in this matter. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order is five days after the date of that certification. Done this day, January 21, 2015.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner Arizona Department of Real Estate ----------------------- [1] As of the hearing date, Ms. Gorny was no longer the designated broker for Arizona Prime Estates LLC and her license was inactive. [2] Mr. Jones testified that the audit report (Exhibit 3), which shows a deficiency of $85,049 was in error, and that the correct amount was $92,812.90.

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