The Real Deal New York

Sotheby’s CEO, manager could face penalties in dual agent probe

State regulators have wrapped up review of Roger Erickson’s 812 Fifth deal

March 25, 2013 02:00PM
By Katherine Clarke

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Sotheby’s President Kathryn Korte and Roger Erickson

Kathryn Korte, the president and CEO of Sotheby’s International Realty, and Ellie Johnson, the manager of the firm’s Upper East Side office, may also face disciplinary action as the result of a state probe into allegations that top-producing broker Roger Erickson acted as an undisclosed dual agent, The Real Deal has learned.

The New York State Department of State opened the investigation last year, after the seller of an apartment at 812 Fifth Avenue lodged a complaint. He alleged that Erickson had breached their exclusive sale contract by clandestinely working with a prospective purchaser, effectively lowering the sale value of the home.

While brokers are permitted to represent both parties in a condominium or co-op sale, they must disclose their work as a “dual agent” and sign disclosure forms to that effect.

Last week, state officials wrapped up the investigation into Erickson and referred the materials to the DOS’ litigation unit, which will determine if the broker will face a penalty or not. (It is not clear when the DOS will issue a decision.)

At the same time, the DOS revealed that it had widened the inquiry, naming Johnson — Erickson’s manager at the time of the sale — as well as Korte, who oversees the New York City franchise, as subjects of the probe. Both brokers could face disciplinary action, though it was not clear what specific allegations they are facing.

Indeed, naming Korte, the firm’s broker of record, and Johnson, Erickson’s manager, may not be an indication of their direct culpability so much as an assumption that the duo was responsible for supervising Erickson, an industry source noted.

“A broker of record is responsible for the behavior of agents whose license they hold,” said the source, who does not work at Sotheby’s and requested anonymity in commenting on the case. “There’s the presumption of supervision and that they’ve given the broker sufficient training that they’re not going to do anything that [constitutes misconduct].”

Erickson, Korte, Johnson and Sotheby’s declined to comment on the case via a spokesperson for the firm. In a statement released after the DOS opened the investigation, Erickson and Sotheby’s asserted that the allegations had no merit. A spokesperson for the DOS did not immediately respond to a request for comment.

In this case, a man named Harvey Schuyler retained Erickson in December 2008 to sell his Fifth Avenue co-op, originally listed for $3.65 million. Several months later, Erickson allegedly recommended Schuyler accept a $3 million offer from another one of his clients, Turkish businesswoman Demet Sabanci Cetindogan, whom he represented in contract negotiations. However, he allegedly did not reveal that she was his client, nor obtain Schuyler’s consent to act as a dual agent.

The two-bedroom apartment ultimately sold to another buyer for $3 million in 2010.

Separately, Schuyler sued Erickson early last year, claiming that he used “aggressive tactics, deception and sheer dishonesty” to convince him to accept Cetindogan’s offer, which allegedly caused him to take a hit on the eventual sale of the apartment.

“Having set the apartment’s purchase price below the fair market value, created a false market,” the complaint said. “[Schuyler] thereafter was unable to realize a higher market value for the apartment as the false market price was widely known.”

A New York State Supreme Court judge has not yet ruled on the allegations.

In a statement to The Real Deal, Schuyler’s attorney Evan Schieber, a partner at the law firm of Rivkin Radler, called the DOS investigation “a positive step towards curbing abuses by real estate brokers.”

Erickson, who reportedly drives a platinum Ferrari F430, is noted for his flashy lifestyle and has worked with celebrity clients such as Steve Jobs, Bono and Madonna. He was named the No. 1 broker at Sotheby’s in 2010 and has closed sales in excess of $1 billion during his 20-year real estate career, according to his agent’s page.

Erickson spent the early part of his career working as a music executive at CBS records and reportedly left his music publicist ex-wife Susan Blond after 13 years of marriage for Russian tango instructor, Irina Shpeckt.

Erickson recently listed a full-floor apartment at the Rosario Candela-designed 778 Park Avenue for $22.5 million. The apartment belongs to the estate of noted philanthropist Celeste Bartos, who passed away in January, The Real Deal previously reported.

  • Raging Realtor

    Two faced

  • Raging Realtor

    This happens all the time. It should be against DOS policy for a broker firm to take the whole commission in the event of a buyer not being represented. This is what it causes.

  • http://twitter.com/stevecheese louis V III

    SMEAR CAMPAIGN!! get ur own listings bitch ass buyer brokers! Dude drives an F50 for a reason ! Seller had a better chance of closing with a pro than some scrub right outta real estate school ! Go rent a studio in the heights & STFU!!!

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