Arizona Department of Real Estate bulletin

              Commissioner Elaine Richardson.
Governor Janet Napolitano appointed
Elaine Richardson as the new Commissioner
for the Department of Real Estate in February
of 2003. She was confirmed by the State Sen-ate
on May 8, 2003. Prior to her appointment,
Commissioner Richardson served ten years in
the Arizona Legislature as a state senator for
six years and a state representative for four
years. She was a very active legislator, having
served as Chair of the Senate Judiciary Com-mittee
as well as a member of the Health,
Transportation, Natural Resources and
Environment and the Banking and Insur-ance
Committees during her tenure.
As a legislator, Commissioner
Richardson sponsored over 32 bills di-rectly
related to real estate and has been
the only Democrat to receive the Legisla-tor
of the Year Award given to her by the
Arizona Association of Realtors in 1996,
for her work on behalf of homeowners
and small businesses. A commercial real
estate broker by trade, Ms. Richardson
has also been a small business owner
since 1978.
Commissioner Richardson is
committed to a hands-on approach
evaluation of the Department of Real Es-tate
to improve the quality of services,
while keeping in line with the Depart-ment’s
mission. 􀂌􈰠
Welcome New Commissioner
Elaine Richardson!
New Deputy Commissioner Ronald Passarelli
Our Mission
The purpose of the
Department is to protect
the public interest
through licensure and
regulation of the real
estate profession in the
State of Arizona.
Welcome New Commissioner Elaine Richardson 1
New Deputy Commissioner Ron Passarelli 1
Trust Accounting—Can You Trust Your Methods? 2
Commissioner’s Corner 3
Don’t Ask Home Inspectors to Break the Law! 4
Administrative Actions 7
Inside this issue:
Ronald Passarelli is the new Deputy
Commissioner for the Department of Real Es-tate.
Mr. Passarelli was educated at the Uni-versity
of Notre Dame, and has had a rich array
of professional experience in real estate devel-opment,
architecture, urban planning, design,
project management, and public service at the
local and state levels.
Prior to his appointment with the
Department, he was self-employed, offer-ing
civic design and strategic planning
consulting services to a variety of clients.
Mr. Passarelli’s professional and public
service background is an asset to the De-partment.
We are glad to have him
aboard! 􀂌􈰠
Volume 29, Issue 1
B u l l e t i n
A ri zona Depar tmen t o f Rea l E s t a te
T h e
Spring 2003
For many people, trust accounting can be a compli-cated
experience. Some brokers tend to procrastinate and
hope it will go away, which can only complicate the problem.
The designated broker bears the ultimate responsibility for all
trust account funds and record keeping. Brokers should have
a good knowledge and understanding of the requirements and
reports even when they hire accountants, bookkeepers and
employees to do the work on their behalf. A.R.S. 32-2151; 32-
2174 and 32-2175, as well as Commissioner’s Rule R4-28-
303 are among the statutes and rules that apply to trust ac-counts
and related records.
Brokers are required to maintain a complete record of
all monies received. Records must be kept in accordance with
generally accepted accounting principles. Brokers may
choose to handle trust accounting either manually or by com-puter.
No matter which method of accounting is used, the bro-ker’s
records must include a properly descriptive receipts and
disbursement journal (commonly known as a checkbook or
check register) AND a client ledger (an individual breakdown
of the funds held for each party such as each owner, tenant,
buyer). One of the more common violations occurs when cli-ent
ledgers are not maintained properly.
For every deposit, withdrawal, transfer and check
there must be a record. Deposit slips are required to be de-scriptive
including the date, amount and names of all parties to
the transaction. In the case of computerized trust account re-cords
for property management, names of parties to the de-posit
are not required to be written on the deposit slip if the
computer program provides the necessary information for
each deposit. For property management funds, should the
broker and owner agree, money can be deposited directly to
the owner’s account instead of a trust account. If this is the
case, the broker is NOT required to have a trust account; how-ever
the broker is not to have any access to the owner’s ac-count
either.
Brokers are required to maintain a trust account rec-onciliation
and client ledger balance on a monthly basis. In
many cases when a broker has a shortage or overage in their
trust account, it is because they have not reconciled the ac-count
on a monthly basis. One of the most prudent methods
of catching and correcting any bank or employee errors is by
monthly reconciliation. In many cases where an employee
has converted or embezzled funds from a trust account, the
broker has had no involvement in or knowledge of the monthly
reconciliation process.
Trust account reconciliation has a two-part require-ment.
One part is the bank statement and the receipts and
disbursements journal. The second part is the adjusted bal-ance
and the client ledger balance. As with any bank account,
a statement is received from the banking institution, which re-flects
all activity within the account for the given period, usu-ally
monthly. Any checks written and not cleared must be ac-counted
for, as are any deposits, transfers and withdrawals.
There will be adjustments needed for such things as interest,
bank charges and returned items to the account. By taking
the bank statement balance, subtracting outstanding checks
and disbursements, adding outstanding deposits and receipts
and offsetting the necessary adjustments, an adjusted balance
is determined. This should be the balance in the broker’s re-ceipts
and disbursements journal for the same date as the
ending date on the bank statement. The adjusted balances
should be the same and should then be compared to the client
ledger balance. If they are not the same, then an overage or
shortage may exist. In other words, what the broker has in the
trust account and what the broker owes to the various parties
should always be the same.
When these balances are not in agreement, research
must be done to determine the error or problem. When this is
done promptly, it is easier to find and correct the error or prob-lem,
than when it is left undone or not resolved. By comparing
the three figures, fraudulent action is easier to determine. For
example, the receipts and disbursements journal and bank
statement could be in balance and reconciled; however the
broker could owe more money to clients than the broker has in
the trust account. This usually is a sign of errors, commin-gling,
conversion of funds and/or other violations.
The broker may have their own money, not to exceed
five hundred dollars, in a trust account. This is usually for
such things as bank charges, fees and minimum balances.
This is NOT considered commingling. The broker cannot,
however, use a client’s trust account to manage properties in
which the broker is a principal. If interest is earned on a trust
(Continued on page 4)
Trust Accounting — Can You Trust Your Methods?
By Lynda Gottfried
VOLUME 29, ISSUE 1 Page 2
Commissioner’s Corner
By Commissioner Elaine Richardson
VOLUME 29, ISSUE 1 Page 3
Due to discrepancies
inadvertently made in the
Spring 2003 Bulletin article
titled, "Homeowner's Insurance
Raises Disclosure Questions,"
the Arizona Department of
Real Estate has decided to
remove this article. It does not
reflect the Department's policy
or interpretation of law on the
subject of homeowner's
insurance.
Please watch for a more
comprehensive article on this
topic in a future Bulletin.
I am delighted to have been appointed to serve as
your Commissioner for the Arizona Department of Real Es-tate.
Our mission at the Department of Real Estate is to pro-tect
the public interest through licensure and regulation. I feel
it is imperative that the Department be an accessible, effective
and professional resource when dealing with both the public
and real estate professionals.
The reception I have received in our community has
been very warm and inviting. It is my hope to hear from you
as we seek new ways to improve our department and its ser-vices.
We are in an extraordinary time in our industry with
growth continuing to be pivotal in our state’s economy. We
will be instituting stakeholder meetings to look at issues of
concern. We have a target date of the middle of June for the
first of these meetings. I feel this is a first step in reaching out
to our community for a healthy working relationship, which is
one of the many steps that contributes to a healthy economy.
Look in future bulletins for my section titled Commis-sioner’s
Corner, where I will address many hot topics and
respond to issues as they arise.
Since the Department of Real Estate is a statewide
agency, there are different issues that affect licensees in both
rural and urban areas. Therefore, we have mapped out a se-ries
of visits throughout the state, from Page to Patagonia, in
order to listen to your concerns in each diverse area. Our first
trip is scheduled to Yuma at the end of May. Please let me
know if there is an event in your area that you feel would be
beneficial for our Department to attend.
I am excited about working with each of you to make
the Arizona Department of Real Estate responsive and effec-tive.
I will ask that you help us to help you by sharing your
thoughts and keeping our dialogue open. Until next time….
Commissioner Richardson responds to her own
emails and can be contacted at erichardson@re.state.az.us.
􀂌􈰠
Don’t Ask Home Inspectors to Break the Law!
By Cindy Ferrin
Did you know that if a real estate person asks home
inspectors to pay to place their brochures in their real estate
offices, that they are asking the home inspector to break the
law? The Department of Real Estate receives inquiries from
home inspectors and instructors requesting that we educate
real estate professionals. So here is the scoop:
A.A.C. R4-30-301.01 (B)(1), under the Home Inspec-tor
Rules of Professional Conduct, states that “a certified
home inspector shall not : pay or receive, directly or indi-rectly,
in full or in part, a commission or compensation as a
referral or finder’s fee.”
Based upon this rule, if a Certified Home Inspector
pays a real estate office or broker to place their brochures in
the real estate office, the Arizona Board of Technical Regis-tration
may take disciplinary action against the license of the
Certified Home Inspector.
Please consider the above administrative rule when
you are working with a Certified Home Inspector so that you
are not asking them to break a rule and suffer disciplinary ac-tion!
􀂌􈰠
VOLUME 29, ISSUE 1 Page 4
Trust Accounting — Can You Trust Your Methods?
(Continued from page 2)
account, the funds must be removed at least once every
twelve months. If interest is retained by the broker (with writ-ten
authorization such as in a property management agree-ment,)
that which puts the broker over the five hundred dollar
amount would have to be removed more frequently. If the
interest is to be paid to the owners or tenants, it should be
disbursed per the terms of the property management agree-ment.
At all times, the broker should maintain a record of all
broker funds and transactions and include the balance as a
part of the monthly reconciliation.
A broker may choose to add other parties as author-ized
signors on their trust account. If a trust account is used
for property management only, the broker may authorize a
licensee under that broker’s license or an unlicensed person
in their direct employ to have signatory authority. If the per-son
is an unlicensed person, they must be a bona fide officer,
member, principal or employee of the property management
firm. If the trust account is used for sales/earnest or any other
combination of uses, the broker may only grant signatory au-thority
to a licensee under that broker’s license. Of course,
the broker remains responsible for any money handled by
others.
Records related to property management trust ac-counts
are to be maintained by the broker for a period of three
years. This includes bank statements, canceled checks or
bank generated check images, deposit slips, receipts and dis-bursement
journals, client ledgers and all other related re-cords.
Records related to sales and other real estate transac-tions
are to be kept for a period of five years. As a result, it is
also required to maintain trust account records for sales for a
five-year period. In the event that a trust account is used for
both property management and sales, the five-year record-keeping
rule applies.
Trust account records are to be kept at the broker’s
main office or at an off-site storage location. In the event they
are kept somewhere other than the main office, the broker is
required to notify the Department of Real Estate, in writing, of
the street address of the storage location. Also, brokers are
required to notify the Department, in writing, within 10 days of
opening, closing or relocating a trust account.
When a broker is involved in trust accounting, he or
she bears the responsibility of managing other parties’ mon-ies.
This means that prompt and accurate accounting is not
only prudent, it is required. 􀂌􈰠
© 2003, ARIZONA DEPARTMENT OF REAL ESTATE. THE ARIZONA REAL ESTATE BULLETIN, OR “THE
BULLETIN,” IS SCHEDULED TO BE PUBLISHED 6 TIMES A YEAR AND IS AVAILABLE FROM THE WEB SITE
ABOVE. FIRST-CLASS MAIL SUBSCRIPTIONS ARE AVAILABLE FOR $10 PER YEAR.
ARTICLES REPRINTED FROM OTHER PUBLICATIONS DO NOT NECESSARILY REFLECT THE POLICIES OF OR
INTERPRETATIONS OF LAW BY THE ARIZONA DEPARTMENT OF REAL ESTATE.
THE ARIZONA DEPARTMENT OF REAL ESTATE IS AN EQUAL EMPLOYMENT OPPORTUNITY , REASONABLE
ACCOMMODATION AGENCY.
The Bulletin
An official publication of the State of
Arizona, Department of Real Estate.
Main Office:
2910 N. 44th Street, Ste 100
Phoenix, Arizona 85018
Phone (602) 468-1414
Fax (602) 468-0562
Southern Arizona Office:
400 W. Congress, Ste 523
Tucson, Arizona 85701
Phone (520) 628-6940
Fax (520) 628-6941
Janet Napolitano
Governor
Elaine Richardson
Commissioner
Ronald Passarelli
Deputy Commissioner
Liz Carrasco
Editor
Real Estate Advisory Board
R.L. Brown, Chair
Richard C. Allen, Vice-Chair
Gary Patrick Brasher
Eugene E. Cox
Vicki L. Cox-Golder
Gary Lee
Vince Pellerito
Lisa A. Suarez
Felipe Andres Zubia
DON’T FORGET YOUR SIGNS!
A.R.S. 32-2126.B states that, “each designated
broker ...shall cause a sign to be affixed at the entrance
to the broker's place of business, in a place and position
clearly visible to all..., with the name of the broker, the
name under which the broker is doing business..., and
sufficient wording to establish that the person is a real
estate broker…”
Remember — any licensee who has a
broker’s license, even if you work out of your home or
do not only engage in brokering, is required to show
a clearly visible sign. Don’t get caught without one!
VOLUME 29, ISSUE 1 Page 5
I ’m a
Li c en s ed
Br o k e r !
Do you have an article idea?
If you would like to submit
an article to be considered
for inclusion in The Bulletin,
please send your article to
the Editor via email at
lcarrasco@re.state.az.us.
Submissions must be in MS
Word format and less than
500 words.
Submissions of guest writers
may not necessarily reflect
the mission of the
Department.
Don’t forget — You can also use our full
service Southern Arizona office!
Location: Tucson
Hours: 8:00 a.m. to 5:00 p.m.
Monday through Friday
Address: 400 W. Congress, Ste. 523
Phone 520.628.6940
Please feel free to stop by !
Do yourself a favor...
Need to renew your license? Avoid the long lines!
Mark your calendar to renew in the 2nd or 3rd weeks of
the month — traffic is usually slower in volume!
Why wait until the end of the month?
Your time is valuable!
VOLUME 29, ISSUE 1 Page 6
COMMISSIONER’S FINAL ORDERS
Disciplinary Actions
Richard C. Anderson
No. 02A-152, Order dated 3/14/2003
The Department denied Anderson’s application for renewal of his
real estate broker’s license pursuant to A.R.S. § 32-2153 (B)(2)
and (7), (9) and cited his ineligibility for license renewal pursuant
to A.R.S. § 32-2130(E) based on two 12/10/2001 convictions for
unlawful possession of marijuana and unlawful possession of
drug paraphernalia, class 6 undesignated offenses. After hearing,
Anderson was granted a provisional license through September
30, 2004, subject to specified terms and conditions.
Carolyn Graybeal and Kenneth Plein
No. 01A-081 and 01A-020 (consolidated), Order dated
10/23/2001
Graybeal was found to have violated A.R.S. § 32-2153 (A)(22)
(B)(1), (3), (7), (10), A.A.C. R4-28-1101(A), (B), and (C). Gray-beal
filed a false or misleading renewal application by failing to
disclose an adverse judgment. The adverse judgment was based
on a transaction in which Graybeal, as listing agent, was found to
be negligent. Renewal of Graybeal's real estate salesperson's
license was denied and she was assessed a civil penalty of
$1,000. After an appeal by Graybeal and Plein, Maricopa County
Superior Court affirmed the Commissioner's Final Order as to
Graybeal but reversed the Commissioner's Final Order as to
Plein, resulting in no violations found or action taken against
Plein's license.
Karen Anderson Rose (formerly known as Karen Anderson
Nixon)
No. 02A-020, Order dated 12/20/2002
Rose's real estate salesperson's license was revoked after hear-ing
based on statutory violations that included A.R.S. § 32-2153
(A)(9), (10), (16), (24) and (B)(1), (2), (3), (5), (7), (9), and (10).
Rose was convicted in 2002 of Theft of More Than $3,000 But
Less Than $25,000, a class 3 felony, after it was discovered she
took cash from clients (usually tenants' monthly rental payments)
and "doctored the books" to hide the missing funds. Rose also
was proven to be conducting licensed activities while her license
was suspended under terms of a prior Consent Order.
Arthur Douglas Royer, Pearl Joanne Royer, Chez Blanche,
Inc., and Time Step, Inc.
No. 01A-071 Order dated 5/30/2002
Petitioners created and sold lots in a "wildcat" subdivision, in vio-lation
of subdivision statutes and rules, including A.R.S. §§ 32-
2181(A) and (D), 32-2183. Royer violated A.R.S. § 32-2164, 32-
2153(A)(1), (3), (B)(3), (4), and (7). The Department's Cease &
Desist Order remains in effect prohibiting lot sales until the peti-tioners
comply with all applicable subdivision laws and rules. Ar-thur
Royer's real estate broker's license was revoked, but he may
Administrative Actions
be issued a provisional license as a real estate salesperson for 2
years, subject to specified terms and conditions. Petitioners Ar-thur
Royer, Pearl Royer, and Chez Blanche, Inc., were assessed
a civil penalty of $5,000 and required to offer rescission to pur-chasers
and bring the subdivision into compliance with county
requirements. Maricopa County Superior Court affirmed the Com-missioner's
Final Order and dismissed Petitioners' appeal.
Scott Sean Walski
No. 02A-144, Order dated 2/24/2003
Walski's provisional real estate salesperson's license was re-voked
pursuant to A.R.S. § 32-2153 (A)(3), (24), and (B)(9) after
he tested positive for methamphetamines. Walski was previously
issued a provisional real estate salesperson's license pursuant to
a 12/26/2001 Consent Order with the Department. Body fluids
testing upon request by the Compliance Officer is one of the
specified terms and conditions of Walski's provisional license.
Appealable Agency Actions
Brian K. Altherr
No. 02A-122, Order dated 2/3/2003
The Department denied Altherr's application for real estate sales-person's
license pursuant to A.R.S. §§ 32-2153 (B)(2), (7), and
(10) based on a 1988 conviction for Attempted Child Molestation,
a Dangerous Crime Against Children, a class 3 felony.
Jalma Hunsinger and American Homebuyers Inc.
No. 01A-159 and 01A-164 (consolidated), Order dated 7/1/2002
Renewal of brokers' licenses denied after hearing based on
statutory violations that included A.R.S. § 32-2153 (A)(3), (B)(2),
(3), (7), and (10). The denial was based on Hunsinger's guilty
plea to 3 counts of Facilitation of Illegally Conducting an Enter-prise,
felonies, involving his role in the Baptist Foundation of Ari-zona,
Arizona Land Opportunity, Inc. After an appeal by
Hunsinger and American Homebuyers, Maricopa County Supe-rior
Court affirmed the Commissioner's Final Order and dis-missed
the appeal.
VOLUME 29, ISSUE 1 Page 7
and selling without being registered as a (securities) dealer, and
failure to disclose the Assurance of Discontinuance. Rodden was
convicted in 1996 on 4 counts of Criminal Simulation, Class 6
undesignated offenses; and in 2001 for Extreme DUI. Rodden
has not repaid investors who lost money through his actions, nor
has he paid a civil penalty assessed him.
Ridgley B. Secrist
No. 02A-091, Order dated 11/26/2002
The Department denied Secrist's application for real estate sales-person's
license pursuant A.R.S. § 32-2153 (B)(2) and (7) based
on a 1994 conviction for Failure to File Currency Transaction Re-ports
as Part of a Pattern of Illegal Activity Involving More Than
$1,000,000 in a Twelve Month Period, a class C felony. Secrist
appealed and was granted a 2-year provisional license subject to
specified terms and conditions.
Jacob B. Stahlecker
No. 02A-069, Order dated 12/23/2002
The Department denied Stahlecker's application for renewal of
his real estate broker's license for underlying conduct in a real
estate transaction. Stahlecker appealed. The renewal was
granted however the Commissioner took judicial notice of a pay-ment
from the Real Estate Recovery Fund on Stahlecker's behalf
for which his broker's license had been terminated.
Frederick F. Taylor
No. 02A-110, Order dated 12/20/2002
The Department denied Taylor's application for real estate sales-person's
license based on violations of A.R.S. § 32-2153 (B)(3),
(5), (7), and (10) due to the 2001 Judgment and Order by the
Arizona Supreme Court suspending Taylor's license to practice
law in Arizona for three years.
Luis A. Morales, Jr.
No. 02A-129, Order dated 2/13/2003
The Department denied Morales' application for real estate sales-person's
license pursuant to A.R.S. §§ 32-2153 (B)(2) and (7),
based on four convictions: in 1981 for possessing marijuana, a
misdemeanor; in 1982 for possession of marijuana, a class 6 fel-ony;
in May 1984 for possession of marijuana for sale, a class 4
felony; and in February 1992 for attempted transportation of over
one pound of marijuana with the intent to sell, a class 3 felony.
Morales appealed and was granted a 2-year provisional license
subject to specified terms and conditions.
Robert B. Nixon
No. 02A-084, Order entered 12/30/2002
The Department's denied Nixon's application for real estate
salesperson's license pursuant to A.R.S. § 32-2153 (B)(2), (7),
and (10) based on a 1987 conviction for Attempted Child Moles-tation,
a class 3 felony. Nixon appealed and was granted a 2-year
provisional license subject to specified terms and conditions.
Dean Phelan, Connie Phelan, and Timeshare Resale Bar-gains
No. 02A-092, 11/19/2002
Following a Cease & Desist Order issued by the Department, an
appeal was filed and an administrative hearing was held. Peti-tioner
Dean Phelan was found to have acted as a real estate
salesperson or broker in the listing, marketing, and sale of time-share
intervals while not licensed as a salesperson or broker and
the Cease and Desist Order was affirmed as to him. Mrs. Phelan
was dismissed from the terms of the Order; and Timeshare Re-sale
Bargains was determined to be a trade name, not a separate
entity, and was also dismissed.
Gayle Platt
No. 02A-107, Order dated 11/19/2002
Platt 's application for renewal of real estate salesperson's li-cense
was denied pursuant to A.R.S. § 32-2153 (B)(1), (7), and
(10) based on an adverse civil judgment and payout from the
Wyoming Real Estate Commission's recovery fund for Platt's
conversion of funds while she was managing property under her
Wyoming real estate broker's license.
James M. Rodden
No. 02A-112, Order dated 2/26/2003
The Department denied Rodden's application for real estate
salesperson's license pursuant to A.R.S. §§ 32-2153 (B)(2), (4),
(5), (7), (9) and (10) based on a lack of good character, demon-strated
by his failure to disclose a conviction and a prior consent
order. Rodden has been the subject of an Assurance of Discon-tinuance
entered with the Attorney General's Office for mislead-ing
and deceptive statements; a Consent Order for material mis-representations,
sale of unregistered and non-exempt securities
VOLUME 29, ISSUE 1 Page 8
Administrative Actions
SETTLEMENTS BY CONSENT ORDERS
Disciplinary Actions
Reza Steve Alavi
No. 01A-151, dated 4/7/2003
Alavi was one of several people involved in a “wildcat” subdivi-sion
near Tucson. These people, including Alavi, purchased por-tions
of the subdivision, surveyed their respective parcels into
one-acre lots, and then sold their lots to individual purchasers.
None of the sellers obtained the required county approvals or a
subdivision public report. Eighteen lots were created from the
original 20-acre parcel. Alavi violated statutory provisions includ-ing
A.R.S. § 32-2181, et seq. The Consent Order imposed a
Cease & Desist Order that prohibits Alavi from selling his remain-ing
lot without first demonstrating compliance with county and
state subdivision laws, and assessed a $1,000 civil penalty
against him. Other respondents named in the caption of the Con-sent
Order were not parties to this settlement.
Lucille Chesser
No. 02A-094, Consent Order 12/11/2002
Chesser was found to have violated statutory provisions including
A.R.S. § 32-2153 (A)(22) and A.A.C. R4-28-502(C), based on her
preparing and disseminating advertising containing inaccurate
claims and which misrepresented the facts or created misleading
impressions. Chesser was assessed a civil penalty of $1,000 and
required to complete 9 additional hours of continuing education
classes.
Lonnie Garner, Virginia Garner and Chaparral Ranch, Ltd.
No. 00A-121, Consent Order 12/16/2002
Respondents acted in concert with family and others, through a
series of owners and conveyances to create an illegal “wildcat”
subdivision near Rimrock in Yavapai County, in violation of A.R.
S. § 32-2181(A) and (D), and § 32-2183(F). Lonnie Garner, a
licensed real estate salesperson, also violated A.R.S. § 32-2153
(A)(3) and (A)(22). The Consent Order imposes a Cease & Desist
Order that prohibits Respondents from selling subject lots until
they comply with county and state subdivision laws. Respondents
were jointly assessed a $3,000 civil penalty and required to offer
rescission to all purchasers. Lonnie Garner’s license was sus-pended
for 30 days, and he was required to complete 9 additional
hours of continuing education.
Gregory S. Hancock and Hancock Communities, L.L.C.
No. 00A-121, Consent Order 12/16/2002
Respondents filed an application for subdivision public report for
Greenfield Lakes Parcel 5 Unit 2, which contained false and mis-leading
information regarding the subdivision’s proximity to the
proposed San Tan Freeway in Gilbert, in violation of A.R.S. §§
32-2153(A)(3) and (A)(22), and § 32-2181(A). The Department
considered as a mitigating factor Respondents' settlement with
buyers of lots in the subject subdivision in a pending civil lawsuit.
Respondents, both real estate licensees, were jointly assessed a
$10,000 civil penalty and were required to offer rescission to all
purchasers who did not receive compensation resulting from the
lawsuit. Broker Gregory Hancock was assessed an additional
$5,000 civil penalty and ordered to complete 6 additional hours of
continuing education.
Julio Hidalgo, Sr.
No. 02A-167, Consent Order 12/19/2002
Hidalgo's real estate broker's license was revoked. Hidalgo vio-lated
statutory provisions including A.R.S. § 32-2153 (B)(5) and
(10), based on a 2002 plea agreement in which he admits Filing
False Documents with HUD, a class E felony, by assisting another
person to obtain a federally insured loan while Hidalgo was acting
as real estate broker and knew that the person used a false social
security number on the loan application.
Russell Jacoby, RJ and DJ Land Trusts, and M&M 2000, L.L.
C.
No. 02A-097, Consent Order 12/4/2002
Respondents purchased six or more lots in Lake Mohave Ran-chos
Unit 6 and Sunset Vista, both existing subdivisions near Do-lan
Springs in Mohave County, and made sales without first ob-taining
a public report or exemption, in violation of A.R.S. §§ 32-
2181, 32-2181.01 and 32-2181.02 (B)(2). The Cease & Desist
Order prohibits Respondents from selling lots until they comply
with applicable subdivision laws. All Respondents were jointly as-sessed
a $2,000 civil penalty and were required to offer rescission
to purchasers. Respondents were also ordered to submit an appli-cation
for public report to the Department within one year.
Beth L. Jones
No. 01A-151, Consent Order 1/13/2003
This case involved lot sales in a “wildcat” subdivision near Tuc-son.
Several people, including Jones, purchased portions of the
subdivision, surveyed their respective parcels into one-acre lots,
and then sold their lots to individual purchasers. None of the sell-ers
obtained the required county approvals or a subdivision public
report. Eighteen lots were created from the original 20-acre par-cel.
Jones violated statutory provisions including A.R.S. §§ 32-
2153 (A)(1), (3) and (22) and 32-2181, et seq., and A.A.C. R4-28-
1101(B)(3). She was assessed a $2,500 civil penalty and required
to complete 9 additional hours of continuing education. Other re-spondents
named in the caption of the Consent Order were not
parties to this settlement.
Chuck Lesser
No. 02A-044, Consent Order 1/13/2003
Lesser was found to have violated statutory provisions including
A.R.S. § 32-2153 (A)(3) and (22) and A.A.C. R4-28-1101(A)
based on his failure to determine and verify the credit worthiness
of a tenant while acting on behalf of the property owners under a
property management agreement. He also failed to include all
VOLUME 29, ISSUE 1 Page 9
Administrative Actions
civil penalty. Both are required to complete 18 additional hours of
continuing education classes.
Nicholas Edward Villani and Linda L. Villani
No. 02A-168, dated 4/22/2003
Nicholas and Linda Villani were found to have violated provisions
including A.R.S. § 32-2153 (A)(3) and A.A.C. R4-28-502 (C)
based on their advertising and marketing a residential property as
having a 24 year warranty on roof and structure when no such
warranty was available. The Villanis were assessed civil penalties
of $1,500 each and each will attend 9 additional hours of continu-ing
education classes.
Kathleen Yamauchi
No. 02A-080, dated 4/7/2003
Yamauchi was found to have violated statutory provisions includ-ing
A.R.S. § 32-2153 (A)(3), A.A.C. R4-28-502 (C) and (G) based
on her failure to confirm and correctly advertise the size of prop-erty
she listed for sale. The lot was advertised as "over an acre"
despite Yamauchi having previously ordered a survey, and hav-ing
a copy of the survey in her records, which showed the prop-erty
was less than an acre. Yamauchi was assessed a civil pen-alty
of $2,500 and will attend 9 additional hours of continuing
education classes.
Appealable Agency Actions
Rudolph H. Alvarez
No. 02A-150, Consent Order 1/6/2003
The Department denied Alvarez's application for real estate
salesperson's license pursuant to A.R.S. § 32-2153 (A)(1), (3),
(22), and A.A.C. R4-28-1101 (A) and (B) based on Alvarez's con-duct
when licensed previously in which he misrepresented his
receipt of buyer's earnest money and failed to timely disclose the
information he received as to the buyer's inability to purchase the
property. Alvarez appealed. Alvarez was granted a provisional
license subject to specified terms and conditions, required to at-tend
12 additional hours of continuing education courses, and
assessed a $1,000 civil penalty.
Kevin A. Beasley
No. 02A-132, Consent Order 12/17/2002
The Department denied Beasley's application for real estate
salesperson's license pursuant to A.R.S. § 32-2153 (B)(2) and (7)
based on convictions in 1989, 1993 and 1994 respectively for
Solicitation to Possess a Dangerous Drug, a misdemeanor; Pos-session
of Dangerous Drugs, a class 4 felony; and Attempted
Possession of Dangerous Drugs for Sale, a class 4 felony.
Beasley appealed. Beasley was granted a license on a provi-sional
basis for 2 years subject to specified terms and conditions.
Troy Jay Elston
No. 03A-010, dated 4/9/2003
material terms within the property management agreement.
Lesser was assessed a civil penalty of $2,000 and required to
complete 6 additional hours of continuing education classes.
Damion Lupo
No. 01A-155, Consent Order 2/12/2003
Lupo was found to have violated statutory violations including A.
R.S. § 32-2153 (A)(1) and (3) and A.A.C. R4-28-502(C) and R4-
28-1101(E) when he failed to disclose in writing his licensed
status to a seller, and gave the seller a business card that con-veyed
the false impression that he was not licensed while acting
as principal in a transaction. Lupo was assessed a civil penalty of
$1,000 and required to attend 15 additional hours of continuing
education classes.
Leonard A. Moon
No. 02A-106, Consent Order 12/19/2002
Moon disseminated false information regarding sewer vs. septic
system in an MLS ad for one of his listings, in violation of A.R.S.
§§ 32-2101(2) and 2153 (A)(22), and A.A.C. R4-28-502(C). Moon
was assessed a $1,500 civil penalty, and was ordered to com-plete
9 additional hours of continuing education.
David E. Sewell
No. 02A-090, Consent Order 1/30/2003
Sewell was found to have violated statutory provisions including
A.R.S. § 32-2153 (A)(3) and (22) and A.A.C. R4-28-1101(A) by
failing to convey accurate and complete information concerning
numerous significant problems with the property's septic system
while acting on behalf of the seller. The Department considered
as a mitigating factor Sewell's completion of all septic system
renovations and repairs satisfactory to the buyer. Sewell was as-sessed
a civil penalty of $1,000 and required to attend 9 addi-tional
hours of continuing education classes.
William J. Smith
No. 01A-046, dated 3/27/2003
Smith's provisional real estate salesperson's license was revoked
pursuant to A.R.S. §§ 32-2153 (A)(24) and (B)(9) after he tested
positive for cannabinoids and cocaine metabolite. Smith was pre-viously
issued a provisional real estate salesperson's license pur-suant
to a 11/9/2001 Consent Order with the Department. Body
fluids testing upon request by the Compliance Officer was one of
the specified terms and conditions of Smith's provisional license.
Arturo S. Soto and Marilyn Soto
No. 01A-116, Consent Order 12/16/2002
The Sotos violated statutory provisions including A.R.S. § 32-
2153 (A)(22), based on their presenting a buyer's purchase con-tract
to the seller, where a substantial amount of the purchase
price was financed with a seller carry-back, without verifying the
buyer's financial ability and qualifications. Arturo Soto's license
was suspended for 60 days; Marilyn Soto was assessed a $1,500
VOLUME 29, ISSUE 1 Page 10
Administrative Actions
Juan Palacio
No. 02A-138, Consent Order 12/12/2002
The Department denied Palacio's application for real estate
salesperson's license pursuant to A.R.S. § 32-2153 (B)(2) and
(7) based on two misdemeanor convictions in 2000 for Driving
Under the Influence of Alcohol or Drugs, and Driving with a
Blood Alcohol Level of .08 or more. Palacio appealed. Palacio
was granted a license on a provisional basis for 2 years sub-ject
to specified terms and conditions.
Kevin S. Petruska
No. 02A-133, Consent Order 12/16/2002
The Department denied Petruska's application for real estate
salesperson's license pursuant to A.R.S. § 32-2153 (B)(2) and
(7) based on misdemeanor convictions in 2001 and 1991 re-spectively
for Public Sexual Indecency and Operating a Vehi-cle
While Under the Influence of Alcohol. Petruska appealed.
Petruska was granted a provisional license for 2 years subject
to specified terms and conditions.
Norris L. Randle, Jr.
No. 02A-160, dated 3/21/2003, amended 4/17/2003
The Department denied Randle's application for real estate
salesperson's license pursuant to A.R.S. §§ 32-2153 (B)(2)
and (7) based on a 1999 felony conviction for Possession of a
Controlled Substance. Randle appealed and was granted a
provisional license for 2 years subject to specified terms and
conditions.
Bill J. Sezate
No. 02A-147, Consent Order 1/30/2003
The Department denied Sezate's application for real estate
salesperson's license pursuant to A.R.S. § 32-2153 (B)(2) and
(7) based on 1992 convictions for Attempted Possession of
Marijuana (Over Eight Pounds) for Sale, and Misconduct In-volving
Weapons, both class 4 felonies. Sezate appealed.
Sezate was granted a provisional license for 2 years subject to
specified terms and conditions.
􀂌􈰠
The Department denied Elston's application for real estate sales-person's
license pursuant to A.R.S. §§ 32-2153 (B)(2), (7), and
(10) based on his 1997 conviction for Theft, a class 6 undesig-nated
offense. Elston appealed and was granted a provisional
license for 2 years subject to specified terms and conditions.
Marcel Higginbothan
No. 02A-123, Consent Order 12/11/02
The Department denied Higginbothan's application for real estate
salesperson's license pursuant to A.R.S. § 32-2153 (B)(2) based
on a 1996 conviction for Aggravated Assault, a class 3 felony.
Higginbothan appealed. Higginbothan was granted a license on a
provisional basis for 2 years subject to specified terms and condi-tions.
Craig O. Jolly
No. 02A-134, Consent Order 1/31/2003
The Department denied Jolly's application for real estate sales-person's
license pursuant to A.R.S. § 32-2153 (B)(10) based on
prior sanctions against him and Heritage West Securities Inc., of
which he was the owner and president, by the National Associa-tion
of Securities Dealers, Inc., for violations of the securities
regulations and laws. Jolly appealed. Jolly was granted a 2-year
provisional license, subject to specified terms and conditions.
Kayle B. Kartchner
No. 02A-157, Consent Order 1/30/2003, amended 2/4/2003
The Department denied Kartchner's application for real estate
salesperson's license pursuant to A.R.S. § 32-2153 (B)(2) based
on a 1994 conviction for Possession of Burglary Tools, a misde-meanor.
Kartchner appealed. Kartchner was granted a provi-sional
license for 2 years subject to specified terms and condi-tions.
Terra R. Kowalski
No. 02A-131, Consent Order entered 12/19/2002
The Department denied Kowalski's application for real estate
salesperson's license pursuant to A.R.S. § 32-2153 (B)(2) based
on a 2001 conviction for Theft, a misdemeanor. Kowalski ap-pealed.
Kowalski was granted a license on a provisional basis for
2 years subject to specified terms and conditions.
Marcus V. Marnell
No. 03A-009, dated 4/15/2003
The Department denied Marnell’s application for real estate
salesperson’s license pursuant to A.R.S. §§ 32-2153 (B)(7) and
(10) based on a criminal Information filed October 14, 1997 in
Maricopa County Superior Court charging Marnell with Child
Abuse, a class 4 felony. Marnell was discharged from probation
on September 4, 1998, and the court ordered the matter dis-missed
with prejudice without entering a conviction. Marnell ap-pealed
and was granted a provisional license for 2 years subject
to specified terms and conditions.
VOLUME 29, ISSUE 1 Page 11
Administrative Actions
Main Office:
2910 North 44th Street, Suite 100
Phoenix, Arizona 85018
Phone: 602.468.1414
Fax: 602.468.0562
Southern Arizona Office:
400 W. Congress, Suite 523
Tucson, Arizona 85701
Phone 520.628.6940
Fax 520.628.6941
ARIZONA DEPARTMENT OF
REAL ESTATE
We are on the web:
http: //www.re.state.az.us
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