Three years ago, Beatriz Merino found the home of her dreams — a blue house with a broad front porch and enough rooms for each of her children on Hampshire Lane in Elgin, a western Chicago suburb.
She gave her real estate agent, Chicago broker Diego Torres of Expo Realty, a check for $16,470, at his request, to serve as a down payment on the home in February 2021.
Torres only allowed her to see the property from the outside because, he said, it was occupied while going through foreclosure and would be sold at auction, Merino recalled.
In the months that followed, Merino followed up with Torres about the deal. He explained away the delay of the sale each time. Eventually, she asked for her money back.
“I called him and called him, from six in the morning until the afternoon. I told him: ‘Sir, give me my money back, please. I trusted you. I never thought you were a swindler,’” Merino said in Spanish.
Merino had no way of knowing that this was an allegedly familiar playbook for Torres. He didn’t pay her back for three years.
At least five lawsuits have been filed since last year against Torres, accusing him of fraud, breach of contract and deceptive practices. He allegedly defrauded his victims, all Latino residents of Illinois, out of $189,790.
He told clients, all lower income prospective homebuyers, that he found them a great home for a remarkable price and asked for a deposit to secure it, court records show. He then allegedly made up excuses about why the home wasn’t ready yet, often saying the home would be purchased at auction and citing pandemic-era court delays.
When buyers asked for their money back, he failed to return it to them for months or years, sending them bad checks to buy time, the lawsuits allege.
Despite the lawsuits and 2022 news coverage by Telemundo, he flew under the radar, drawing in new unsuspecting buyers including Arnold Maldonado Reyes, who claims he was defrauded out of $97,500 last summer.
Merino filed a complaint with the Illinois Department of Financial and Professional Regulation in the fall of last year, but it took the agency until February of this year to suspend the broker’s license. Earlier that month, Torres showed up on Merino’s doorstep unannounced, check in hand. This time, the check didn’t bounce, she said.
The state revoked Torres’ and Expo Realty’s real estate licenses last month and fined each entity $25,000. An additional, unlicensed company owned by Torres, Empire Enterprises, was ordered to “cease and desist” practicing real estate. Empire Enterprises was also fined $25,000.
Misconduct by Illinois residential brokers often goes undetected by the state’s regulatory agency. Not everyone knows they can file a complaint with the state, but the agency said it has upped its outreach.
“He’s been at it for years, and I don’t know what’s going on with the government — why haven’t they done anything?” said another alleged victim of Torres who requested anonymity. “Why let there be more victims and more victims?”
Many brokers also don’t file a complaint with the state, if at all. They are much more likely to file a complaint with the local Realtors association, which guarantees confidentiality.
Like other states across the U.S., Illinois’ limited, complaint-driven regulation of brokers and agents allows bad actors to fly under the radar for too long, hurting consumers.
Slow to act
As the department in charge of licensure and professional regulation, IDFPR can be heavy-handed in disciplining brokers when it needs to be. In the most serious of cases, it will revoke a license.
IDFPR receives an average of 450 complaints against real estate professionals each year, according to state data from 2020 through June of this year. The number of annual complaints has grown in recent years, with a 20 percent increase from 2022 to 2023.
Of those complaints, about 30 percent are closed at the intake interview. This may be because the complainant did not file enough evidence, or because their complaint does not constitute “unlawful or unprofessional conduct,” according to the agency.
This was not the case for Merino. When she filed her complaint last year, she said she was told that Torres was being investigated and had 21 complaints against him.
About half of complaints filed are assigned to investigators who determine whether the agent violated the state’s licensing statute or administrative rules. If so, they forward the complaint to a prosecuting attorney with the Division of Real Estate, who determines whether formal charges will be filed. If the state can’t reach a negotiated agreement with the licensee, a conference or formal disciplinary hearing will be set. For Torres, it was the latter.
“You work your whole life to have this — a home, a house of your own. It has impacted us tremendously psychologically, mentally.”
Hearings are held before an administrative law judge along with a member of the Real Estate Administration and Disciplinary Board, a diverse group of attorneys, brokers, executives, trade association leaders and human resources consultants. The outcome of the case is made public through IDFPR’s monthly discipline reports, which are available online.
Agents can ask the state to make their disciplinary records confidential after three years. The department has only received five such requests since 2023. Four were granted and one was denied.
While one major weakness of the state’s regulatory body is that not all consumers know they can file complaints, even brokers sometimes forget it is an option, said Matt Laricy, a top Chicago broker.
The complaint-driven regulation means the state cannot work proactively to prevent bad behavior among real estate professionals. It can only raise awareness of the process. Two of the alleged victims The Real Deal spoke with said they found out about the complaint process via social media.
The state is also limited in its ability to enact justice. For example, it cannot “order the refund of fees, award damages, or enforce or cancel contracts,” according to the state. It also can’t mediate commission disputes.
However, the funds it collects from fines go into a “Real Estate Recovery Fund” used to provide financial restitution to those harmed by misconduct, the spokesperson said.
Filing a complaint with the state can also put pressure on the person it was filed against, which may have been what prompted Torres to return Merino’s money. But the onus remains on the complainant.
The process is so slow that it allows perpetrators to continue harming consumers while their cases are being investigated. The department has to balance “due process for the respondent and consumer protection for the public,” the spokesperson said.
Illinois’ regulatory agency revoked Cheryl Ruzich’s license last year, four years after the state opened a case against the Pisoni Real Estate agent, who worked in the town of Marion.
A second case against her was opened two years later, and her license was suspended for a minimum of one year in the fall of 2022.
A lender who worked with Ruzich in a partnership to obtain an investment property contested Ruzich’s Chapter 13 bankruptcy filing in 2019, claiming she lied to him about the conditions surrounding his investment.
Ruzich approached the lender, a retiree named Mark Sands, to invest in a property together, according to court filings. She was “so confident in this venture” that she agreed to take out a second mortgage on her home and her real estate office. Sands agreed, ultimately loaning her more than $111,000, including interest.
But Ruzich lied, according to Sands’ petition. Her debt to Sands was actually the fourth mortgage taken out on her home and the fifth mortgage taken out on her business. If he knew this, he said he would never have loaned her the money, which was a substantial portion of his retirement savings.
Ruzich declined to comment.
The state’s investigation into Ruzich found that she changed a sales contract without permission, failed to deposit money into an escrow account, made false promises and pursued “a continued and flagrant course of misrepresentation,” discipline reports said. She also failed to provide escrow records on time or report the loss of escrow records to the department when asked.
A changing landscape
When brokers have a problem with other brokers, they are most likely to duke it out among themselves or choose to never work with that person again, Chicago agents said. If they file a complaint, it’s likely with the local Realtors association.
“I would say 90 percent of the time you’re going to go to the association. I’ve never gone to the state, and I’ve never heard of anybody getting a complaint with the state,” Laricy said.
The Illinois Realtors association has a hotline they use to field complaints, vetted by a “grievance committee” made up of experienced agents who volunteer their time, the association’s general counsel, Betsy Urbance, said.
“There are those out there that don’t know the difference — they think we are the state agency, and the agency is Realtors,” Urbance said. “It’s been an ongoing joke for as long as I’ve been in the industry that there are those out there, whether they’re real estate licensees or just regular old people, that confuse the two.”
If the complaint is deemed credible and enforcement is recommended, the association’s default is to fine the broker, which “avoids an uncomfortable and often time-consuming hearing process,” according to the association. If the agent refuses, it goes to a hearing process. This is common practice among local associations in other states.
Any disciplinary actions taken are recorded as part of that member’s internal file, but are not disclosed to the public or made public in any way, Urbance said.
Unlike the state, the Realtors association does not have the power to suspend or revoke an agent’s license. They can only suspend the agent’s membership and, with it, their access to the Multiple Listing Service, Urbance said. But this is almost never done.
“It has to be something really bad, right? Like, really bad,” Urbance said about revoking an agent’s membership.
The association refers cases to IDFPR whenever they involve a “breach of the public trust” like fraud or housing discrimination, she said.
The Illinois Realtors association has seen an uptick in complaints filed since the National Association of Realtors’ announced its $418 million deal to settle multiple class action antitrust lawsuits earlier this year, Urbance said.
Last resort
Because of the holes of other regulatory bodies, the last resort — legal action — can become the first choice, particularly for consumers or brokers seeking financial compensation.
This also has its limitations. Civil lawsuits can be expensive and slow-moving.
Of the five lawsuits filed against Torres, Merino has gotten her money back. Only one other case, filed by Leticia Santos and José Mendoza, has reached settlement proceedings. A settlement offer has not been made public, but the couple, who charged Torres with breach of contract, conversion, fraud and unjust enrichment, asked for damages to cover the $19,600 down payment they gave to Torres in 2021.
A sixth prospective homebuyer went to the press, telling Telemundo in 2022 that Torres presented her with fake paperwork documenting a home sale that never occurred and told her she couldn’t tour the home because it was in foreclosure.
A day after Telemundo reached out to Torres, he returned the $12,250 down payment to the woman and told the news outlet it was a “misunderstanding.”
The case of Diego Torres shows the challenges that consumers, particularly low-income or non-English speaking people who are more vulnerable, face in finding an agent they can trust.
Torres’ license was only revoked last month, two years after Telemundo reported on the allegations.
He has maintained a five-star rating on Zillow, though he only has one review.
Today, there is no website or LLC listed in the state of Illinois under the name Expo Realty. Torres has not advertised listings in years. In the lawsuits filed against him, he lists a different address for his company each time. In one case, plaintiffs struggled to serve him with the lawsuits.
Torres’ most recent alleged victim handed him $38,850 as a down payment last year on what would have been the family’s first home. The Chicago resident, a father of two who requested anonymity, has not been able to sleep or eat well since then, as he wonders if he will ever recover his family’s savings.
“You work your whole life to have this — a home, a house of your own. It has impacted us tremendously psychologically, mentally,” he said. “Sometimes, you don’t sleep thinking about the sacrifice you made, all for a person to come and do this to you.”
— Editor’s note: This is the second story in TRD’s Bad Brokers investigative series covering the under-regulation
of real estate agents and brokers.