ALJDEC decisions subject to certification as final
21F-366-REL · Department of Real Estate · 2022-06-30
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
In the Matter of the Real Estate License of:
Ivan M. Kobey, License No. BR014452000 and Real Estate Instructor No. 1802,
and
Educational Systems, holder of Real Estate School License No. S07-0018
RESPONDENTS.
No. 21F-366-REL
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: June 10, 2022
APPEARANCES: Assistant Attorney General Holly Wan appeared on behalf of the Arizona Department of Real Estate. Michael Denious, Esq. appeared on behalf of Respondents Ivan M. Kobey and Educational Systems.
ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson
_____________________________________________________________________
FINDINGS OF FACT
1. On May 2, 2022, the Arizona Department of Real Estate (Department) issued a Notice of Hearing and Complaint (Notice) setting the above-captioned matter for hearing on June 10, 2022, by the Office of Administrative Hearings, in Phoenix, Arizona.
2. The Notice provided that the issue set for determination was whether grounds existed to revoke the real estate licenses held by Respondents Ivan M. Kobey and Educational Systems.
3. A hearing was held on June 10, 2022.
4. At hearing, the Department presented the testimony of its Senior Investigator, Bret Biesenthal, and its Compliance Officer, Lauren Abril. The Department submitted Exhibits 1 through 11. Mr. Kobey testified on behalf of himself and presented the testimony of Joseph Paradise, a former student at Educational Systems. Mr. Kobey submitted Exhibits 2 (pgs.1-7), 3 (pgs.1-5), 6, and 9.
5. On January 3, 1999, the Department issued real estate instructor certificate, number 1802, to Mr. Kobey.
6. On June 15, 2005, the Department issued real estate broker license number BR014452000 to Mr. Kobey. The real estate broker license is set to expire on June 30, 2023.
7. On June 26, 2007, the Department approved a real estate school certificate, number S07-0018, to Educations Systems. Mr. Kobey is the administrator for Educational Systems.
8. In November of 2019, Mr. Kobey entered into a Consent Oder with the Department. The facts connected to the 2019 Consent Order established:
In May of 2019, the Department conducted an audit on Educational Systems.
As a result of the audit, Mr. Kobey entered into a Consent Oder which established that Mr. Kobey and Educational Systems were in violation of statutes and rules, including Respondents’ failure to maintain student attendance records as required.
The Respondents were assessed a civil penalty; Mr. Kobey was issued and approved for a two year provisional real estate instructor’s certification where he was required to submit quarterly affidavits.
The School was approved with a two year provisional real estate school certificate and was required to submit quarterly declarations, copies of all sign-in-sheets, and certificates issued for all classes taught by any Educational Systems instructor during each quarter.
9. In April of 2021, the Department held a video interview with Mr. Kobey in preparation for a follow-up audit to review, confirm, and monitor Respondents’ compliance with the 2019 Consent Order.
10. In April of 2021, Bret Wiesenthal notified Mr. Kobey of the purpose of the video interview. Mr. Biesenthal requested that Mr. Kobey provide class records for Educational Systems. Mr. Kobey provided the records in the Department’s Exhibits 5 through 11.
11. In June of 2021, as a part of the follow-up audit, the Department conducted an in-person interview with Mr. Kobey. Mr. Biesenthal and Ms. Abril were present for the in-person interview. During the interview, the Department discussed the illegibility of the records of Educational Systems and the lack of a refund policy in the student contracts. Educational Systems’s contracts show “Educational Systems refund policy will be determined on a case by case basis.” See the Department’s Exhibit 5.
12. During the June 2021 interview, Mr. Kobey revealed that the students at Educational Systems were responsible for maintaining the sign-in-sheets. See the Department’s Exhibit 6. The students would hold onto the sign in sheets, take them home, and bring them to class each day. See id.
13. The student attendance records showed inconsistent dates of attendance. See the Department’s Exhibit 7. Educational Systems issued a Pre-licensure Education Certificate to Erin Barratt for the completion of a course that shows a start date of November 25, 2019 and an end date of May 28, 2020. See the Department’s Exhibit 7, Bates 038. However, the attendance records for Ms. Barrat show a start date of November 2, 2019 and an end date of June 28, 2020. See the Department’s Exhibit 7, Bates 034-037.
14. The notification that Educational Systems provided regarding its classes showed the name and date of the classes. However, the start times for the courses overlapped. See the Department’s Exhibit 9, Bates 048. Furthermore, the post-licensing courses lasted 12 hours. See the Department’s Exhibit 9, Bates 049. Ms. Abril explained that it is not normal for post-licensing courses to last 12 hours. In addition, Educational Systems provided more than one location for a course. See the Department’s Exhibit 10. However, Ms. Abril admitted on cross-examination that the Department can follow up with the school to find out more specific information about start and stop times. The Department concluded that Educational Systems did not provide 14-day advanced notice of its courses.
15. As a result of the 2021 Audit, the Department found:
a. Educational Systems does not clearly state their refund policy in their contracts.
b. Educational Systems does not maintain adequate student attendance records.
c. Educational Systems does not provide a 14-day notice
to the Department before holding its courses as required
16. Mr. Biesenthal opined at hearing that students keeping records presents two problems: (1) students can alter records, and (2) the records are not available for a random audit.
17. Ms. Abril explained at hearing the Department intends to withdraw Respondents’ licenses due to Respondents’ inability to maintain legible records and Respondents’ maintenance of inconsistent records. See Ms. Abril’s testimony on the Hearing Audio Record (1300 2022-06-10).AAC at 41:00 to 1:25:27 minutes, and the Department’s Exhibit 8. Ms. Abril asserted that Department needs ensure that students have met the requisite number of hours to qualify for licensure. Ms. Abril believed that Mr. Kobey has shown that he cannot be regulated.
18. At hearing, Mr. Kobey explained that during the longer pre-licensure courses, he teaches for about 2-3 hours and takes a break. Then, Mr. Kobey will start again for 2-3 hours. Mr. Kobey explained that his hands shake when he holds a pen. Mr. Kobey explained that he did not know why the courses were listed in the Department’s Exhibit 9 had such long blocks of time. Mr. Kobey agreed that it could have been a mistake. Mr. Kobey sends out the 14 day notices of the courses himself. Mr. Kobey explained that the Agency Law & Ethics course shown on the Department’s Exhibit 9, Bates 049, should have been from 8:00 a.m. to 10:30 a.m.
19. Mr. Kobey explained that he contracted the West Nile virus in September of 2021. When Mr. Kobey was sick, he experienced memory lapses.
20. Mr. Kobey testified to the effect that he is willing to do what is necessary to improve. Teaching is a passion for Mr. Kobey.
21. Joseph Paradise has known Mr. Kobey since about 2014. Mr. Paradise has taken courses from Mr. Kobey for pre-licensure and post-licensure requirements. Mr. Paradise believes that Mr. Kobey’s knowledge base is incredible. Mr. Paradise enjoyed the flexibility of Mr. Kobey’s courses. Mr. Paradise has recommended several individuals to Mr. Kobey’s school. Mr. Paradise does not believe that Mr. Kobey’s memory lapses affect his ability to teach. Mr. Paradise is not a real estate instructor and he does not operate a school.
CONCLUSIONS OF LAW
Because at all times relevant to this matter, Mr. Kobey and Educational Systems were subject to the provisions of Title 32, Chapter 20, Arizona Revised Statutes, the Department has jurisdiction over this matter.
Because this matter is disciplinary in nature, the Department bears the burden of proof to establish cause to discipline Respondents’ license by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”
The evidence presented at hearing shows that Educational Systems provided 14 days advance notice to the Department of the dates and names of the courses to be taught at Educational Systems. Ms. Abril provided credible testimony that the Department could contact the school to clarify time discrepancies. The Department failed to establish by a preponderance of the evidence that Mr. Kobey and/or Educational Systems violated A.R.S. § 32-2135(H)(1).
The Department established by a preponderance of the evidence that
Mr. Kobey failed to maintain proper certification of student attendance, which is a violation of A.R.S. § 32-2135(C)(2).
The Department established by a preponderance of the evidence that Mr. Kobey failed to exercise reasonable supervision over the activities for which a license is required for an owner, administrator, or instructor in the schools’ employ, which is a violation of A.R.S. § 32-2135(A)(26).
The Department established by a preponderance of the evidence that Mr. Kobe failed to maintain a record of each student attending the school to include the dates of attendance, in violation of A.A.C. R4-28-404(D)(2).
The preponderance of the evidence shows that Respondents failed to include in its enrollment agreement, a statement of the refund policy, which is a violation of A.R.S. § 32-2153(A)(3).
8. The Department established grounds to withdraw the licenses issued to
Mr. Kobey and Educational Systems as set forth above, pursuant to A.R.S. §§ 32-2153(A)(3) and (A)(26), 32-2135(C)(2), A.A.C. R4-28-404(D)(2), and R4-28-404(E)(4).
RECOMMENDED ORDER
Based on the foregoing,
It is recommended that on the effective date of the Order entered in this matter, the Commissioner withdraw Mr. Kobey’s certificate of approval as a real estate instructor, license number 1802.
It is further recommended that on the effective date of the Order entered in this matter, the Commissioner withdraw the certificate of approval as a real estate school number S07-0018 held by Educational Systems.
Done this day, June 30, 2022.
/s/ Velva Moses-Thompson
Administrative Law Judge
Transmitted electronically to:
Louis Dettorre, Commissioner
Arizona Department of Real Estate
By Miranda Alvarez
Legal Secretary