The state Department of State upheld a December decision to pull the licenses of the co-founders of Mitchell, Maxwell & Jackson, a Midtown-based appraisal firm that was one of the biggest in New York City during the real estate boom.
The state ruled Friday to revoke the certified residential real estate appraisers licenses of co-founders Steven Knobel and Jeffrey Jackson, effective May 24, according to a copy of the decision reviewed by The Real Deal.
The determination, signed Daniel Shapiro, first deputy secretary of state, affirmed portions of an earlier decision, from an administrative law judge. However, Shapiro struck down another section of the December ruling, in which the judge found that the company itself violated the law.
The state reviewed the judge’s decision after Knobel and Jackson filed an appeal with the Department of State.
While some in the appraisal community were surprised that the state would rule to revoke and not just suspend the licenses, the agency said the punishment was warranted. The men were accused of affixing the signature of top appraiser Marianne Mueller to 14 appraisals or reports in April and May 2009 on which she did no work, in violation of state appraisal regulations.
“Considering the extent of the fraud in this case and appellants’ direct involvement in the commission of fraudulent acts, the penalty of revocation cannot be said to shock one’s sense of fairness,” Shapiro wrote in his decision.
Knobel, speaking on behalf of himself and Jackson, applauded the decision to remove charges against the firm itself, but said the decision was ultimately a rubber stamp.
“We are pleased that the recent ruling on our appeal has vacated all liability against Mitchell, Maxwell & Jackson, Inc. and admits the administrative law judge had erred on this issue,” Knobel said in a statement to The Real Deal. “Although, we were hopeful [Shapiro] would not try to simply cover up the [judge’s] flawed decision in regards to Mr. Jackson and myself, it appears that [Shapiro] has simply rubber stamped his department’s result.”
Knobel said he and Jackson would file a so-called Article 78 action in New York State Supreme Court, in which a plaintiff asks the court to review and reverse a state agency’s decision.
A spokesperson for the Department of State said the agency declined to comment on ongoing litigation.
The ruling is a setback for the two men who have fought vigorously to hold on to their licenses. In their appeal, filed in January, they said if they lost their licenses as many as 35 people would lose their jobs.
Appraiser Jonathan Miller, CEO of Miller Samuel, was surprised by the revocation.
“I did not think it would go this far. I thought it would be a suspension or a fine,” he said. “In one way it’s reassuring that there is oversight. That is a good thing for the industry. But I wish them well.”
Adam Russ, partner at law firm Wasser & Russ, who is representing Mueller in a civil lawsuit against Knobel and Jackson, said, “We believe the Department of State arrived at an appropriate result and we are pleased that Ms. Mueller’s claims have again been vindicated.”