ALJDEC decisions subject to certification as final

21F-268-REL · Department of Real Estate · 2021-07-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of the Application for Original Real Estate Salesperson License of:

RICHARD ST. ROSE, holder of License No. SA695623000 (Candidate),

Petitioner

No. 21F-268-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 8, 2021

APPEARANCES: Petitioner Richard St. Rose appeared on his own behalf. The Arizona Department of Real Estate was represented by Assistant Attorney General Holly Wan.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

_____________________________________________________________________

FINDINGS OF FACT

In March 2021, Petitioner Richard St. Rose submitted to the Arizona Department of Real Estate (Department) a Salesperson Application Form to be licensed as a real estate salesperson, in which Petitioner answered “yes” to the following questions:

Has the Applicant . . . .

Had a professional or occupational license or registration of ANY kind denied, suspended, restricted, or revoked? (Drivers License/CDL not included)

Had/Have an administrative order and/or ANY other disciplinary action taken against ANY license issued to them by any local, state, or federal regulatory agency including the Arizona Department of Real Estate?

With the application, Petitioner disclosed that in a decision (Decision) filed on September 27, 2012, the California Department of Real Estate (California Department) revoked Petitioner’s broker license and the corporation license for Epifany Properties, Inc. (Epifany), the property management company for which Petitioner was the designated broker officer.

Petitioner also submitted a written narrative to the Department describing the disciplinary action taken against his license by the California Department.

Petitioner was issued a broker license in California in November 2004. His license revocation was effective on October 18, 2012.

The Decision revoked Petitioner’s license on the grounds of several violations, including violations of Sections 10159.2 (broker supervision); 10177(g) (negligence); and 10177(h) (reasonable broker supervision) of the California Business and Professions Code (the Code) and Section 2725 (broker supervision) under Title 10, Chapter 6, of the California Code of Regulations (Regulations).

The Decision stated under the “Findings of Fact” that in April and May 2011, the California Department conducted an audit of Epifany’s records.

The records examined under the audit were for the period of January 1, 2009, through March 31, 2011.

The audit revealed several violations of the Code of Regulations; the most significant violations listed in the Decision included:

Trust fund shortages (in one instance a combined account shortage of $207,754.81; and in a different instance, an account shortage of $12,281.11) where the owners did not provide written consent for balances to be reduced to an amount below existing aggregate trust fund liabilities;

Allowed trust funds to be used to pay Petitioner’s personal debts, including, but not limited to rent on Petitioner’s personal residence, the purchase of a personal automobile, and gambling debts;

Allowed an unlicensed person to withdraw funds from trust accounts;

Commingled broker funds with trust account funds;

Failed to maintain adequate trust account records, failed to designate trust accounts as trust accounts, failed to maintain adequate control records for trust accounts, and failed to conduct monthly reconciliations of accounts;

Allowed an unlicensed person to enter into lease/rental agreements on behalf of Epifany;

Used a form of advance fee agreement that was not provided to the California Department for review and approval prior to its use; and

Failed to disclose its license identification number on Epifany’s website as related to real estate property management activities.

On or about April 16, 2021, the Department issued an Intent to Deny Application letter to Petitioner. The Department notified Petitioner that his prior behavior was a violation of A.R.S. § 32-2153(B)(7) and (B)(10).

On or about May 10, 2021, Petitioner filed a timely appeal with the Department.

At hearing, Petitioner argued that he did not perform any of the problematic conduct identified in the Decision. Rather, Petitioner asserted that his only wrongful conduct was a failure to supervise those people that were under him. Petitioner argued that the failure to supervise at that time did not provide the Department with a reason to deny his application.

CONCLUSIONS OF LAW

The Department bears the responsibility to protect the public through its enforcement of licensing statutes. See Sigmen v. Ariz. Dept. of Real Estate, 169 Ariz. 383, 388, 819 P.2d 969, 974 (Ct. App. 1991). This matter lies within its jurisdiction.

This case was properly brought before the Office of Administrative Hearings for adjudication pursuant to Title 2, Chapter 19, Article 1, of the Arizona Administrative Code (A.A.C.).

Pursuant to A.R.S. § 41-1092.07(G)(2) and A.A.C. R2-19-119(B), Petitioner bears the burden of proof in this matter to establish that she is rehabilitated and meets statutory qualifications for a real estate salesperson license. The standard of proof is by a preponderance of the evidence. See A.A.C. R2-19-119(A).

A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). It 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).

A.R.S. § 32-2153(B) provides, in pertinent parts, as follows:

The commissioner may suspend or revoke a license, deny the issuance of a license, issue a letter of concern to a licensee, issue a provisional license or deny the renewal or the right of renewal of a license issued under this chapter when it appears that the holder or applicant has:

. . . .

7. Not shown that the holder or applicant is a person of honesty, truthfulness and good character.

. . . .

10. Violated any federal or state law, regulation or rule that relates to real estate or securities or that involves forgery, theft, extortion, fraud, substantial misrepresentation, dishonest dealings or violence against another person or failure to deal fairly with any party to a transaction that materially and adversely affected the transaction. This paragraph applies equally to violations of which the licensee was convicted in any lawful federal or state tribunal and to any admissions made in any settlement agreement by the licensee to violations.

The Board properly concluded that Petitioner violated a state law, regulation, or rule relating to real estate when he failed to provide proper supervision as a broker as detailed in the Decision. Such conduct provided a basis to deny Petitioner’s application pursuant to A.R.S. § 32-2153(B)(10).

The Department properly relied on the findings of the California Department to determine that Petitioner was not a person of honesty, truthfulness, or good character in violation of A.R.S. § 32-2153(B)(7).

The legislature has charged the Department with protecting the public and consumers who deal with licensed salespersons when it issues licenses. It would not fulfill that statutory mandate by licensing Petitioner as a real estate salesperson at this time.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that the Department affirm its decision to deny Petitioner’s application for a real estate salesperson’s license at this time and dismiss this appeal.

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 shall be five days from the date of the certification.

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-137160-45720000Done this day, July 22, 2021.

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner

Arizona Department of Real Estate

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-137160-45720000