ALJDEC - Licensing

25F-043-REL · Department of Real Estate · 2025-08-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of the Real Estate License of:

A RENEE WOOD, holder of license number BR508186000,

and

WERTH REALTY, LLC, holder of entity license number LC578321000,

Respondents

No. 25F-043-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 17, 2025

APPEARANCES: Assistant Attorney General Lynette Evans for the Arizona Department of Real Estate. Attorney Colin Bell for Respondents.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

EXHIBITS ADMITTED INTO EVIDENCE: Department Exhibits 1 through 21.

_____________________________________________________________________

FINDINGS OF FACT

1. On or about February 6, 2023, the Department issued an original real estate broker license to A Renee Wood (“WOOD”). WOOD’s license expiration date is February 28, 2025.

2. On or about August 25, 2006, the Department issued an entity license to Werth Realty, LLC (“WERTH REALTY”). WOOD has been the Designated Broker of WERTH REALTY since its inception. WERTH REALTY’s license expiration date is February 28, 2025.

3. On January 31, 2024, the Department received a consumer complaint filed via the Department’s Message Center from James Benson (“BENSON”). BENSON was a former employee of WERTH REALTY. BENSON alleged that WERTH REALTY’s Designated Broker, WOOD, fraudulently collected management fees and embezzled funds.

4. On or about February 1, 2024, the complaint was assigned to Department’s Compliance Specialist Kathy Van Fredenberg (“VAN FREDENBERG”).

5. By letter dated February 2, 2024, VAN FREDENBERG notified WOOD of the initiation of an audit and requesting certain specific information to begin the audit. VAN FREDENBERG also sent WOOD a message via the Department’s Message Center notifying WOOD of the audit.

6. On February 5, 2024, WOOD replied via the Department’s Message Center that she was in the process of selling her company and changing professions due to the stress. WOOD noted that she could provide documents regarding “his continued harassment and unprofessionalism.”

7. On or about March 8, 2024, WOOD provided VAN FREDENBERG with several documents requested for the audit, including, but not limited to, individual owner ledgers. The individual owner ledgers showed the beginning balances, the cash flows, and the “actual ending cash” balances for individual properties.

8. On review, VAN FREDENBERG found that the submitted documents included the following thirty-seven (37) individual owner ledgers which reflected negative balances:

a. 114 E. Mohave Rd.: -$5,448.03 as of January 25, 2021

b. 114 E. Mohave Rd.: -$7,101.95 as of February 25, 2021

c. 114 E. Mohave Rd.: -$7,472.54 as of March 25, 2021

d. 114 E. Mohave Rd.: -$5,917.36 as of April 25, 2021

e. 114 E. Mohave Rd.: -$11,549.96 as of May 24, 2021

f. 114 E. Mohave Rd.: -$16,028.66 as of June 24, 2021

g. 114 E. Mohave Rd.: -$15,736.87 as of July 26, 2021

h. 114 E. Mohave Rd.: -$15,073.26 as of August 26, 2021

i. 114 E. Mohave Rd.: -$13,837.58 as of September 27, 2021

j. 9082 E. Sugar Sumac St.: -$233.13 as of January 25, 2021

k. 9082 E. Sugar Sumac St.: -$206.81 as of February 25, 2021

l. 9082 E. S ugar Sumac St.: -$160.74 as of March 25, 2021

m. 9082 E. Sugar Sumac St.: -$409.71 as of April 25, 2021

n. 9082 E. Sugar Sumac St.: -$147.11 as of May 24, 2021

o. 9082 E. Sugar Sumac St.: -$210.89 as of June 24, 2021

p. 9082 E. Sugar Sumac St.: -$801.76 as of July 26, 2021

q. 9082 E. Sugar Sumac St.: -$458.22 as of August 25, 2021

r. 3121-3129 Terra Alta: -$498.03 as of January 25, 2021

s. 2120 N. Treat Ave.: -$1,066.96 as of February 25, 2021

t. 2120 N. Treat Ave.: -$259.08 as of March 25, 2021

u. 2120 N. Treat Ave.: -$531.19 as of June 25, 2021

v. 320 E. Mohave Rd.: -$3,344.38 as of February 25, 2021

w. 4223 E. Megan Dr.: -$222.57 as of March 25, 2021

x. 4223 E. Megan Dr.: -$3,391.57 as of April 25, 2021

y. 4223 E. Megan Dr.: -$2,408.14 as of May 24, 2021

z. 4223 E. Megan Dr.: -$3,344.57 as of June 24, 2021

aa. 4223 E. Megan Dr.: -$594.57 as of July 26, 2021

bb. 4223 E. Megan Dr.: -$594.57 as of August 25, 2021

cc. 4223 E. Megan Dr.: -$682.14 as of September 27, 2021

dd. 5680 E. 32nd St.: -$1,230.55 as of June 24, 2021

ee. 5680 E. 32nd St.: -$1,701.53 as of July 26, 2021

ff. 5680 E. 32nd St.: -$2,691.60 as of August 26, 2021

gg. 8255 N. Oracle #209: -$715.84 as of June 24, 2021

hh. 4421 E. 32nd St.: -$479.94 as of August 25, 2021

ii. 2137 N. Bell Ave.: -$3,816.22 as of August 25, 2021

jj. 2137 N. Bell Ave.: -$4,101.17 as of September 27, 2021

kk. 7041 E Strike Eagle Way: -$189.87 as of September 27, 2021,

9. The negative owner balances in individual owner ledgers are an indication that WERTH REALTY transferred monies between owner’s accounts that were owned by different persons and failed to use monies belonging to WERTH REALTY’s clients for the purpose for which the monies were intended.

10. After receiving the March 8, 2024 submitted documents and following VAN FREDENBERG’s review and initial findings, the Department partnered with Triple Tied Out® (“TTO”) to perform a digital audit of WERTH REALTY’s client trust fund account.

11. On or about May 16, 2024, WOOD was notified of the Department partnering with TTO. The Department’s notification included a request for WOOD to provide TTO with the name, phone number, and email address of a designated staff member that TTO could communicate with to assist with the audit, and to provide that information by May 20, 2024.

12. As of May 20, 2024, WOOD had failed to provide TTO the name and contact information of the designated staff member.

13. On or about May 29, 2024, VAN FREDENBERG sent a subpoena duces tecum that required WOOD to produce “all of the document(s), written statement(s), contract(s), book(s), record(s), information, compilation(s), and report(s) that are in the possession of [WOOD] and [WERTH REALTY]” no later than June 12, 2024. Further, the subpoena duces tecum required WOOD to provide TTO with the contact information for a designated staff member by June 12, 2024.

14. On June 11, 2024, WOOD provided TTO the contact information for the designated staff member who would assist in the audit. WOOD indicated to TTO that she would be the designated contact.

15. On June 11, 2024, TTO messaged WOOD introducing itself and attaching to the message “the manual instructions that you will need to follow explicitly as of April 30, 2024 or April 2024.” TTO requested the following information be provided by June 19, 2024:

a. “Bank account page screenshot.”

b. “Attachment section screenshot for each bank account reconciliation report for

each bank account (for the month of April 2024).”

c. “Bank statement for each bank account (for the month of April 2024).”

d. “Trust account balance report (as of the bank statement day of the month of April 2024).”

e. “General ledger report (for all time and all properties).”

f. “Security deposit funds detail report (as of the bank statement day of the month

of April 2024).”

g. “Financial diagnostics page.”

TTO also providing the specific online GOOGLE drive to which the documents should be uploaded.

16. WOOD did not provide the requested documents to TTO by June 19, 2024. On June 19, 2024, WOOD requested an extension to submit the items requested, giving the following reason: “I linked the trust bank account to appfolio thinking it would make it easier but instead has created more issues and time consuming to correct the way the system now wants us to.”

17. TTO denied the request advising WOOD that the bank reconciliation was only one of the request reports and that the other requested reports could still have been provided. TTO further noted that the original due date had allowed sufficient time to generate all requested reports.

18. The Department did not receive the requested reports by June 19, 2024.

19. On or about June 25, 2024, the Department hosted a virtual meeting with WOOD. WOOD, VAN FREDENBERG, TTO representative Taylor Hou (“HOU”), and Audit and Investigation Manager Bret Biesenthal attended the meeting. HOU demonstrated to WOOD how the requested reports could be generated in the property management system used by WERTH REALTY. At the meeting, WOOD verbally confirmed she was given instructions on generating the requested reports and how the reports could be upload to TTO.

20. On or about June 25, 2024, the Department sent a subpoena duces tecum to WOOD again requiring that WOOD produce “all of the document(s), written statement(s), contract(s), book(s), record(s), information, compilation(s), and report(s) that are in the possession of [WOOD] and [WERTH]” with a new deadline of July 10, 2024. Further, the subpoena duces tecum required WOOD to provide TTO with the specific documentation TTO had previously requested.

21. By letter date July 10, 2024, Colin Bell (“BELL”) notified the Department that he represented WOOD with regard to the matter. BELL requested an extension along with background information regarding the matter, and he requested a meeting with the Department.

22. On July 12, 2024, the Department provided to BELL an explanation of the background and granted an extension to July 19, 2024 for production of the subpoenaed documents.

23. On July 19, 2024, BELL emailed the Department regarding the matter. BELL indicated that WOOD’s files were all paper and that created a production issue for her. BELL noted that they had developed a basic strategy to comply with the Department’s request. BELL advised that WOOD was in the process of scanning all the documents in her property management files for 2023, and then for 2022, to submit to TTO.

24. On July 28, 2024, the Department advised BELL that it had requested the information from WOOD for the month of April 2024, and not documents from 2022 and 2023. The Department noted that WOOD had previously indicated she had downloaded documents from AppFolio which would be an online system, and noted that WOOD had been shown how to utilize that information and chose a date range to then upload to TTO.

25. On July 31, 2024, BELL advised the Department that WOOD had uploaded “monthly statements, receipts, and invoices by property for each month in 2022.”

26. By letter dated August 20, 2024, the Department sent a preliminary audit report to WOOD. The Department requested a response to the following inconsistencies it had found within the information provided to date:

a. “An email received from Ms. Wood’s attorney, Mr. Colin Bell, on Friday, July 19th, 2024, states that Ms. Wood’s “files are paper, not digital, which means she has to scan every page and upload it.” The files the Department received from Ms. Wood are from the software program AppFolio.

b. “A subpoena was sent on June 25th, 2024, for information and the following items were not submitted:

i. Attachment section screenshot for each bank account reconciliation

report for eac h bank account (for the requested month - April 2024)

ii. General ledger report (for all time and all properties – You can put in a

date range so that it only displays the past three (3) years)

iii. Financial Diagnostics page from AppFolio”

c. “Based on the information Ms. Wood provided, there is a shortage as of

4/26/2024 of $30,816.24. (Expected balance in bank: $334,884.65 but bank balance as of 4/26/2024 was $304,068.41.”)

d. “Nine (9) owner account breakdowns that have been provided reflect negative

balances as of 4/30/2024.”

The Department requested that WOOD provide a written request to the stated inconsistencies, as well as a corrective action plan to resolve the items noted on or before September 4, 2024.

27. On September 4, 2024, BELL provided the Department with its responses in “Action Items” and also provided Wood’s “Corrective Action Plan.”

28. On September 24, 2024, TTO provided the Department with a report of their specific findings based on the documents that had been uploaded to the GOOGLE drive.

29. VAN FREDENBERG completed her review of the TTO reports and the information that had been provided to the Department. In regard to the TTO report, VAN FREDENBERG noted the following:

a. Per an AppFolio screenshot provided by [WERTH] REALTY, WERTH REALTY

had one client trust account identified as a Wells Fargo account ending in 9224. The ADRE audit form provided by WOOD on March 8th, 2024 stated the brokerage had only one account identified as a Wells Fargo account ending 9224. “None” was written in the space provided for the Operating Accounts section of form. The client trust account’s purpose is for, and only for, the placement of monies entrusted to the broker in the broker’s capacity. Failure to maintain an Operating Account for brokerage related operating expenses indicated that brokerage operating expenses were paid directly through the client trust account, resulting in the commingling of broker personal monies with client monies.

b. As of April 30, 2024, Wells Fargo #9224 bank statement showed an ending

balance of $330,625.32.

c. A “Trust Account Balance Sheet” dated April 30, 2024, provided by the WOOD, indicated a total of $317,213.35 in Property Owner funds and $223,535.58 in Tenant Security Deposits. The property owner funds and security deposits had a combined balance of $540,778.93. This resulted in the trust account being underfunded $210,153.61.

d. A screenshot of the bank accounts screen from AppFolio dated 6/19/2024,

submitted by WOOD, states the last reconciliation was performed 6/30/2023. This indicated that monthly reconciliations were not performed for 12 months.

e. The “Trust Account Balance” sheet provided by WOOD depicted negative owner balances. This indicated the funds of property owners with positive balances were used to cover owners with negative balances.

30. VAN FREDENBERG’s review of WERTH REALTY client trust account found a transaction posted on April 23, 2024, in the amount of $212.90 with a reference of “Tucsonelecez-Pay Utilitypmt Werth Realty LLC). This transaction indicated that WERTH REALTY paid utility bills direct from the client trust account.

31. On December 13, 2024, the Department issued a Cease and Desist Order (“ORDER”) pursuant to Ariz. Rev. Stat. §§32-2154 (A) and 32-2122 (A). The Department ordered WOOD to take the following actions:

(a) Within five days, to return all client funds held by the Respondents on behalf the each of the Respondents’ clients. Said funds include, but are not limited to; rents collected, reserves held and all security and other deposits. Along with the returned funds, the Respondents shall provide each client a full accounting of the funds being returned and account for any shortage or missing funds.

(b) Within 2 days of returning the client funds, the Respondents shall provide the Department with a copy of each full accounting sent to the clients.

(c) Immediately upon receipt of this order, Respondents shall return to all clients original or copies of property management documents including copies of all rental agreements or related documents for current and previous tenants as specified in A.R.S. §32-2173 (B)(1) and (2).

32. On January 9, 2025, the Department issued its Notice of Hearing setting the matter for administrative hearing in February 2025. After a continuance, the matter convened for hearing on June 17, 2025.

33. At the time of hearing, BELL waived WOOD’s appearance. As a result of her non-appearance, WOOD did not present any evidence disputing the Department’s evidence.

34. At hearing, BELL argued that WOOD is in the process of securing a new designated broker and selling the business. BELL argued that the Cease and Desist Order is no longer necessary, and should be vacated, because WOOD has taken the appropriate steps to disassociate from the business and is intending to retire as soon as the business is sold.

CONCLUSIONS OF LAW

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

2. Pursuant to Ariz. Rev. Stat. § 32-2154, if it appears that any person has engaged, is engaging or is preparing to engage in any act, practice or transaction that constitutes a violation of Title 32, Chapter 20, the Department may issue an order directing any person to cease and desist from engaging in the act, practice or transaction or doing any act in furtherance of the act, to make restitution or to take appropriate affirmative action to correct the conditions resulting from the act, practice or transaction.

3. Ariz. Rev. Stat § 32-2151, Disposition of monies; trust fund accounts; deposit requirements; broker duties, provides as follows:

(B) The following minimum requirements apply to each broker's trust fund account:

1. The broker shall make deposits to trust fund accounts by deposit slips. Receipts or other documentation shall identify each transaction, the date and the amount of each deposit and the names of parties involved in the transaction represented by the deposit, and monies shall be used only for the purpose for which the monies were deposited.

2. The broker shall retain a complete record of all monies received in connection with a real estate transaction electronically or in the main or branch office of the designated broker in this state or at an off-site storage location in this state if the broker provides prior written notification of the street address of the off-site storage location to the department. A broker's records shall be kept according to generally accepted accounting principles and shall include properly descriptive receipts and a disbursement journal and client ledger. The broker shall keep any computerized records in a manner allowing reconstruction in the event of destruction of electronic data.

3. On a monthly basis the broker must complete a three-way reconciliation between the trust fund account bank statements, client ledgers and trust fund account ledgers and provide an explanation for any variation.

(C) A variation that is caused by any of the following acts or omissions is a violation of this chapter: . . .

2. Allowing advance payment of monies belonging to others to be deposited in the broker's personal account or to be commingled with personal monies. For the purposes of this paragraph, it is not commingling if a broker deposits personal monies of not more than $5,000 to keep the account open or to avoid charges for an insufficient minimum balance. . . .

5. Failing to regularly complete a three-way reconciliation as required by subsection B, paragraph 3 of this section.

6. Transferring monies between accounts that are owned by different persons unless each person consents in writing.

7. Failing to create checks and balances.

4. Ariz. Rev. Stat § 32-2153(A) provides that the commissioner may suspend or revoke a license if it appears that the holder or applicant, within five years immediately preceding, in performing or attempting to perform any acts authorized by the license or by this chapter, has: . . .

(16) Comingled the monies or other property of the licensee’s principal or client with the licensee’s own or converted these monies or property to the licensee or another.

(17) Failed or refused on demand to produce any document, contract, book, record, information, compilation or report that is in the licensee's possession or that the licensee is required by law to maintain concerning any real estate, cemetery or membership camping business, services, activities or transactions involving or conducted by the licensee for inspection by the commissioner or the commissioner's representative.

. . .

(21) As a licensed broker, failed to exercise reasonable supervision over the activities of salespersons, associate brokers or others under the broker's employ or 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 under section 32-2125.

22. Demonstrated negligence in performing any act for which a license is required.

5. Ariz. Rev. Stat § 32-2153(B) provides that the commissioner may suspend or revoke a license if it appears that the holder or applicant has: . . .

(3) Made any substantial misrepresentation. . . .

(7) Demonstrated incompetence to perform any duty or requirement of a licensee under or arising from this chapter. For the purposes of this paragraph, "incompetence" means a lack of basic knowledge or skill appropriate to the type of license the person holds or a failure to appreciate the probable consequences of the licensee's action or inaction.

6. Ariz. Rev. Stat § 32-2175(C), Property Management Records, provides:

Property management firms shall keep all financial records pertaining to clients for at least three years from the date each document was executed, including bank statements, canceled checks or bank generated check images, deposit slips, bank receipts, receipts and disbursement journals, owner statements, client ledgers and applicable bills, invoices and statements.

7. Ariz. Rev. Stat. § 32-2160.01(A) provides, in pertinent part, as follows:

Any licensee who is subject to the jurisdiction of the department and who has violated any provision of this chapter or any rule or order adopted or issued by the commissioner ... may be assessed a civil penalty by the commissioner, after a hearing, in an amount not to exceed one thousand dollars for each infraction.

8. WOOD and WERTH REALTY, through actions described in Findings of Facts, failed to perform a trust fund account bank reconciliation and client ledger balance on a monthly basis. This is in violation of Ariz. Rev. Stat. § 32-2151(B)(3).

9. WOOD and WERTH REALTY, through actions described in Findings of Facts, converted the monies or other property to the licensee or another, in violation of Ariz. Rev. Stat. §§32-2153(A)(16) and 32-2151(C).

10. WOOD and WERTH REALTY through actions described in Findings of Facts, failed to produce documents, contract, book, record, information, compilation or report that the licensee is required by law to maintain concerning any real estate activities or transactions involving or conducted by the licensee for inspection by the commissioner or the commissioner’s representative, in violation of Ariz. Rev. Stat. § 32-2153(A)(17).

11. WOOD and WERTH REALTY, through actions described in Findings of Facts, failed to keep records of all financial records pertaining to clients for at least three years, in violation of Ariz. Rev. Stat. § 32-2175(C).

12. WOOD and WERTH REALTY, through actions described in Findings of Facts, failed to exercise reasonable supervision over the activities for which a license is required of a corporation, limited liability company, or partnership, in violation of Ariz. Rev. Stat. § 32-2153(A)(21).

13. WOOD and WERTH REALTY, through actions described in Findings of Facts, demonstrated negligence in performing any act for which a license is require, in violation of Ariz. Rev. Stat. § 32-2153(A)(22).

14. WOOD and WERTH REALTY, through actions described in Findings of Facts, failed to perform any duty or requirement of a licensee by failing to maintain an adequately funded trust account. This is in violation of Ariz. Rev. Stat. § 32-2153(B)(7).

15. Based on the hearing record, the Administrative Law Judge concludes that the Department has demonstrated by a preponderance of the evidence that WOOD and WERTH REALTY, through the above described actions, violated the above cited statutory provisions. Based on the hearing record, the Administrative Law Judge further concludes that the Department took appropriate action in issuing the Cease and Desist Order. Finally, the Administrative Law Judge concludes that imposition of civil penalties is warranted.

RECOMMENDED ORDER

IT IS ORDERED that the Department’s December 13, 2024 Cease and Desist Order is affirmed.

IT IS ORDERED that A. Renee Wood is assessed a $7,000.00 civil penalty.

IT IS ORDERED that the real estate broker license of A. Renee Wood,

No. BR508186000, is revoked.

IT IS ORDERED that the real estate entity license of Werth Realty LLC,

No. LC578321000, is revoked.

Pursuant to Ariz. Rev. Stat. § 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, August 7, 2025.

/s/ Kay A. Abramsohn

Administrative Law Judge

Transmitted electronically to:

Susan Nicolson, Commissioner

Arizona Department of Real Estate

Colin Bell, Esq.

Arizona Law Group

[email redacted]

Lynette Evans, Esq.

Office of the Attorney General

[email redacted]

By: OAH Staff