ALJDEC - Licensing

24F-188-REL · Department of Real Estate · 2024-07-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of the Real Estate Activities of:

MARIA KOVRIG, holder of broker license number BR51012000,

and

ESM PROPERTIES, LLC, holder of entity license number LC668959000

Respondents

No. 24F-188-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 1, 2024

APPEARANCES: Assistant Attorney General Raya Gardner appeared on behalf of the Arizona Department of Real Estate (Department). Respondent did not appear.

ADMINISTRATIVE LAW JUDGE: Amy M. Haley

EXHIBITS ADMITTED INTO EVIDENCE: Department’s exhibits 1-12 were admitted.

_____________________________________________________________________

FINDINGS OF FACT

On September 12, 2016, the Department issued real estate broker license number BR5101521000 to Maria Kovrig (Respondent). Respondent’s license is scheduled to expire on September 30, 2024.

On November 10, 2016, the Department issued entity license number LC668959000 to ESM Properties, LLC (ESM). ESM’s license is scheduled to expire on September 30, 2024. Respondent is the sole manager of ESM, a manager-managed entity, and has served as its Designated Broker since November 10, 2016.

On January 2, 2024, the Department received a complaint from James Frawley (Frawley) against Respondent in connection with her property management activities involving Frawley’s properties in Tucson, Arizona.

Frawley identified himself as the owner of four (4) properties for which Respondent provided property management services.

In the complaint, Frawley alleged the Respondent had been conducting property management services for him, including collecting rent from tenants residing in his properties for eighteen (18) months. Frawley further alleged that Respondent had collected rental payments for three (3) months in the amount of approximately $40,000.00 without providing him with the funds before she became completely unresponsive to any attempts to communicate.

In support of the allegations in his complaint, Frawley submitted email correspondence between Respondent and himself indicating that Respondent was conducting property management services for Frawley and was aware that she was in possession of funds belonging to Frawley.

Frawley further submitted additional emails he sent to Respondent that contained no response from Respondent.

On January 11, 2024, Department Senior Investigator Steven Hooper (Hooper) sent Respondent a letter via mail and the Department’s message center notifying her of the allegations and requesting a response by January 18, 2024. Respondent did not respond by the deadline.

On January 24, 2024, the Department sent another letter via certified mail requesting a response by January 31, 2024. Respondent did not respond by the deadline and the letter was returned to the Department as undelivered.

On February 9, 2024, the Department sent another certified letter to Respondent’s home and business address on file and through the Department’s message center. Respondent read the message but did not respond.

Hooper later learned that Respondent sold her residence in March of 2023, but failed to inform the Department of her change of address within 10 days. The residence that was sold was the same as the home mailing address the Department had on file.

Upon further investigation into Respondent’s business address on record, the Department was unable to determine if it existed at a physical location or was in operation. The ESM business address was found to be attached to a Canadian owned metal testing facility, Base Met Labs, rather than ESM. Hooper was unable to determine if ESM was ever located at the business address on file with the Department.

On February 23, 2024, the Department spoke with Respondent on the phone and she indicated that she had seen messages on the message center but had not had an opportunity to review them. The Department advised her that she would need to do so and respond by February 26, 2024. Respondent failed to do so.

On March 20, 2024, the Department issued a Cease and Desist to Respondent ordering her to cease engaging in any real estate activity. Respondent did not appeal the Cease and Desist.

The Department presented its case through the testimony of Hooper and submitted twelve exhibits.

CONCLUSIONS OF LAW

The Commissioner has jurisdiction over Respondent and the subject matter in this case.

The Notice of Hearing that the Department mailed to Respondent at her addresses of record and email address was reasonable, and Respondent is deemed to have received notice of the hearing.

The Department bears the responsibility to protect the public through its enforcement of licensing statutes. This matter lies within its jurisdiction.

Pursuant to Ariz. Rev. Stat. Title 32, Chapter 20, the Department has the authority and duty to regulate all persons engaged in the business of, or acting in the capacity of, a real estate broker or salesperson, and to enforce all statutes, rules, and regulations relating to real estate.

Pursuant to Ariz. Rev. Stat. § 32-2153, the Commissioner has jurisdiction to deny, suspend, or revoke a broker or salesperson’s license for violations of rules and regulations.

Pursuant to Ariz. Rev. Stat. § 41-1092.07(G)(2) and Ariz. Admin. Code R2-19-119(B), the Department has the burden of proof in this matter. The standard of proof is 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.” A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

The evidence of record established that Respondent, through actions as stated in the preceding Findings of Fact, disregarded or violated rules adopted by the commissioner, in violation of Ariz. Rev. Stat. § 32-2153(A)(3).

Respondent, through actions as stated in the preceding Findings of Fact, failed, within a reasonable time, to account for or to remit any monies, to surrender to the rightful owner any documents or other valuable property that comes into the licensee’s possession and that belongs to others, in violation of Ariz. Rev. Stat. § 32-2153(A)(9).

ESM, through actions as stated in the preceding Findings of Fact, as a licensed broker, failed to exercise reasonable supervision and control over the activities for which a license is required of a corporation, limited liability company or partnership on behalf of which the broker acts as designated broker, in violation of Ariz. Rev. Stat. § 32-2153(A)(21).

Respondent and ESM, through actions as stated in the preceding Findings of Fact, demonstrated incompetence to perform any duty or requirement of a licensee under or arising from Chapter 20, in violation of Ariz. Rev. Stat. § 32-2153(B)(7).

Respondent, through actions as stated in the preceding Findings of Fact, failed to respond during the course of an investigation or audit by providing documents or written statements, in violation of Ariz. Rev. Stat. § 32-2153(B)(10).

Respondent, through actions as stated in the preceding Findings of Fact, failed to notify the Department in writing within 10 days of any change in residential address or residential mailing address, in violation of Ariz. Admin. Code R4-28-303(D)(3).

Respondent and ESM, through actions as stated in the preceding Findings of Fact, failed to notify the Department in writing within 10 days of any change in business address, in violation of Ariz. Admin. Code R4-28-303(E)(4).

The practice of real estate is governed by adherence to statutes and rules and requires the utmost care by a licensed real estate agent. Respondent’s actions demonstrate her unwillingness or inability to comply with the Commissioner’s orders, demonstrating that Respondent cannot be regulated at this time.

The evidence of record established that grounds exist to discipline Respondent’s real estate broker’s license pursuant to Ariz. Rev. Stat. § 32-2153(A)(3), (A)(9), (A)(21) and Ariz. Rev. Stat. § 32-2153(B)(7) and (B)(10) and Ariz. Admin. Code R4-28-303(D)(3) and (E)(4) by way of revocation.

RECOMMENDED ORDER

Respondent’s real estate broker’s license number BR5101521000 shall be revoked on the effective date of the Order entered in this matter. ESM’s entity license number LC668959000 shall be revoked on the effective date of the Order entered in this matter.

Pursuant to A.R.S. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.

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 will be forty (40) days from the date of that certification.

Done this day, July 21, 2024.

/s/ Amy M. Haley

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Susan Nicolson, Commissioner

Arizona Department of Real Estate

By: OAH Staff