The state agency responsible for regulating real estate licenses has sanctioned nearly 170 New York City residential and commercial real estate brokers and agents in recent years, including professionals at high-profile firms such as the Corcoran Group, Prudential Douglas Elliman, RFR Realty and Winick Realty Group.
More than 200 brokers and salespersons based in New York City were identified as having committed violations ranging from unintentionally retaining an unearned commission to operating without a broker’s license, according to nearly 100 consent orders, mostly filed by the state between 2009 and March 2011.
The Real Deal obtained the consent orders through a Freedom of Information Law request made earlier this year. The publication reviewed the 905 pages of documents detailing nearly 180 consent orders statewide and created a searchable spreadsheet for the 95 New York City cases (see document here or below), along with links to the original DOS documents (below).
The consent orders are settlement agreements the state hammers out with the firms and individuals (known as respondents) in which they admit guilt. The agreements are reached after the state files a complaint alleging violations of state licensing law. If the respondent does not agree to a settlement, the state can pursue the case before an administrative law judge in the Office of Administrative Hearings.
While the consent orders are public record, they are not published online by the state agency, unlike the decisions of the administrative law judges, which have been published online for about two years.
In the fall, the state plans to begin publishing online this year’s consent orders, and work backwards from there, Lisa MacSpadden, Deputy Secretary of State for Communications and Community Affairs, said.
The consent orders have not been online previously “because [consent orders] are prepared and stored in hard-copy format only…. Staff is in the process of resolving the technical issues involved in converting and uploading the consent orders to the Department of State’s website,” she said. The agency began holding discussion to resolve the technical difficulties as early at the fall 2010.
To give some idea of the low number of consent orders filed, there were just 103 brokers and agents sanctioned between 2009 and March 2011, while there are currently more than 25,000 brokers and agents licensed in Manhattan, DOS records show.
Steve Morrows, the respected leasing agent for Aby Rosen’s RFR who represents office buildings such as the Lever House at 350 Park Avenue in Midtown and 17 State Street in Lower Manhattan, was fined $1,000, in 2008. That year, he admitted that when he filed for a renewal of his license covering 2005 to 2007, he indicated he had taken a continuing education course when he had not. He noted in an email: “My broker’s license is current and in full force.”
More recently, in 2009, the state hit Jeff Winick’s firm, Winick Realty Group, with a $3,000 fine after DOS filed a complaint that year that the retail-focused firm sought an unearned commission tied to a lease for a spa at 544 Third Avenue. In addition, the company was forced to drop litigation seeking payment of that commission, state records show.
Elliman was fined a total of $2,500 for two separate cases both in 2009. The more recent one was in Manhattan, in which agent Jason Lanyard failed to complete continuing education classes. The other was in Queens, where agent Vicente Martinez violated a provision that bars soliciting certain property owners to sell their homes.
And in Brooklyn, the residential firm with the most real estate agents in the borough, Fillmore Real Estate, was fined $3,000 because licensed salesperson Janine Barbera presented herself as a licensed broker with another company while negotiating 14 home sales.
The largest series of violations was by Corcoran which The Real Deal reported in March, was fined $70,000 last year for 79 violations spread among 64 agents and brokers. Some of the real estate professionals were unlicensed, some unaffiliated with Corcoran or others were working under an unlicensed name, in the years 2006 and 2007. Top agent Carrie Chiang, for example, although licensed during that period, was not affiliated with Corcoran as required.
The agency slapped the brokerage with the fine, the highest by far of the consent orders obtained by The Real Deal.
The total amount of fines levied in New York City from 2009 to March 2011 was $196,375. Not including the Corcoran fine, the average monetary sanction was $1,330.
The second-largest fine during the period, which spanned two years and three months, was levied against Pedro Tronilo, a Queens broker in 2007 with Century 21 Tronilo Properties, and now a broker with residential brokerage Tronilo Properties. He acted as a mortgage broker and real estate broker during the boom years, raising issues of fiduciary duties, state records show. In addition, he ran afoul of state banking laws with his
mortgage company Satron Mortgages, and failed to obtain an agency disclosure statement and did not create a dual agency disclosure, the state papers show.
The biggest violators in terms of number of consent orders were affiliates of the Denver-based franchising giant Re/Max. The state found agents or brokers at seven offices in Brooklyn, Queens and the Bronx, had violated state rules. For example, agent Hyun Sook Park and broker Tayseer Razik in the Bayside, Queens-based Re/Max Universal Real Estate were fined $3,500 for violations including a failure to obtain proper agency disclosures; and broker Zakir Khan at Re/Max Executive Realty in the Parkchester area of the Bronx, was ordered in 2009 to pay $3,000 for violations including failing to disclose an interest in a property.
Types of violations
Firms and individuals paid fines of between $250 for minor violations, up to the $70,000 paid by Corcoran in 2010 for dozens of licensing issues.
The most common violation was a brokerage or agent being unlicensed, which was a cause in 21 of the consent orders. The Corcoran agreement was the largest example, but the issue tripped up others, for example the Charles H. Greenthal Management firm, which claims to manage more than 185 of the city’s residential buildings, including 2 Sutton Place.
Midtown-based Greenthal Management was fined $3,000 in 2009 for violations in 2008 that included allowing an agent to manage an unlicensed branch office. (The firm’s attorney Barry Mandel, a partner at law firm Seyfarth Shaw, told The Real Deal that, “The failure to secure the license was inadvertent on the part of all parties.”)
Israel Horowitz, the owner and top broker at the residential firm Citi-Spaces, which closed earlier this year following a probe by the licensing agency, was accused in 2008 of not being licensed for nearly two months in 2007, among other violations. He and the firm were fined a total of $1,500.
The second most common violation was for agents or brokers who did not execute the proper agency disclosure forms, which lay out who the real estate professional is representing — buyer, seller or both, as a dual agent.
The state noted such disclosure violations in 17 consent orders, including Corcoran Brooklyn broker Stephen Caison, who as an agent in 2009 (or earlier) admitted in 2010 to failing to “timely and properly effectuate the requisite agency disclosure upon becoming buyer’s agent.”
In addition, there were four professionals who had to surrender their licenses because they had been convicted of a felony, including former Manhattan real estate attorney and agent at Manhattan-based Moss Real Estate, Jeffrey Kozlow. He was convicted in 2005 and 2007 of attempting to disseminate indecent material to a minor, having been caught in a sting operation run by the Westchester County district attorney’s office.
Kozlow declined to comment.
The state’s Department of State’s Division of Licensing Services issues real estate licenses and regulates brokers and agents. If an individual or firm is accused of wrongdoing through a complaint, the company or person (referred to as the “respondent”) can either fight the charges in an administrative court hearing or negotiate an agreement with the state, which results in a consent order.
In February, the state said it opened an investigation into several real estate firms such as commercial brokerage Massey Knakal Realty Services following articles mentioning alleged licensing violations by The Real Deal.
State and company records show the former the head of Massey Knakal’s Brooklyn office, Kenneth Krasnow, was not licensed as required even though he was a managing broker. Another agent close to the company’s chairman, Robert Knakal, Jonathan Hageman, was unlicensed for approximately 14 months.
The state has drafted a complaint against Massey Knakal and/or brokers or agents at the firm, but DOS spokesperson MacSpadden would not elaborate. As of last week the complaint had not yet been served on the firm. If the case goes to an administrative judge, instead of a settlement, the hearing would likely be in September or October, MacFadden said.
Paul Massey, Massey Knakal’s CEO, declined to comment. Everyone else named in the article either declined to comment or were not immediately available for comment.
Searchable spreadsheet for the 95 NYC cases and original DOS documents
Compiled by Adam Pincus