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Number of Florida real estate brokers embezzling money rises

The number of real estate professionals stealing money from customers is on the rise in Florida, state officials say.

Florida Division of Real Estate officials are hearing more and more anecdotes from investigators related to brokers dipping into clients' escrow accounts. It is currently investigating 139 complaints.

The uptick has sparked the Division of Real Estate to perform random audits, a practice it stopped nearly a decade ago.

And in just four months from May to August, the state used its emergency powers to suspend the licenses of five brokers who stole nearly $1.1 million from clients, a move used only when the public is at great risk of being harmed by a real estate worker. In the previous three years, it had used the emergency suspension order only six times.

A 42-year real estate veteran and member of the Florida Real Estate Commission fears the problem will grow as the economy languishes.

"These people are going to keep doing this until they get caught or until someone turns them in," said Roger Enzor of Pensacola. "They're taking other people's money."

Tampa broker Bruce Edward Manny was one of the five recently suspended brokers.

He owned Land Ho of Tampa Bay and was supposed to collect rents and security deposits and turn them over to landlords. Now the state has accused him of stealing $225,000 from 200 clients.

On Feb. 25, Vintage Real Estate in Brandon hired Manny. Days later, Manny told Vintage officials that he had a priority list of owners he paid each month, not a standard real estate practice, which raised the suspicions of managing broker Christopher O'Brien.

O'Brien then overheard Manny tell clients "that I don't have your security deposit."

O'Brien asked Manny about the money.

"I don't have it," Manny told O'Brien, according to investigative records. He immediately fired Manny and filed a complaint with the state.

Auditors examined Manny's records and discovered he was "essentially stealing from over 200 Florida consumers." During an interview with state auditors, Manny "lacked remorse and reacted with indignation and anger. He stated he did not want to go to jail."

In suspending Manny's license, Ken Lawson, secretary of the Department of Business and Professional Regulation, which oversees the Division of Real Estate, wrote that Manny knew he was committing possible crimes.

"Loss of money or income at any point in time is harmful," Lawson wrote in the suspension order. "But in these current economic times, the loss of money for citizens of this state can have dire consequences."

The Hillsborough State Attorney's Office is now reviewing the case. The state disciplined Manny in 1990 and 1998 for failing to maintain escrow accounts.

Scott Bohnsack said Manny owes him more than $10,000 for rent on a Tampa home. He wants Manny prosecuted.

"I want my money back," he said. "The state needs to send a message (to real estate professionals). There needs to be an example set."

• • •

The St. Petersburg Times reported in February that unscrupulous real estate professionals who defraud clients or otherwise break the laws rarely get prosecuted or charged with crimes. Of the 1,595 cases the agency sent to state attorney's offices in 2009 and 2010, the Times found that:

• Cases involved a few hundred dollars to tens of thousands, and the average investigation took more than 18 months. The time lapse allowed more than 100 real estate professionals to commit additional misdeeds while the initial complaint was still being investigated.

• Of the 33 most egregious cases — ones in which the real estate board eventually revoked or suspended the license — only three were charged with a crime.

Michael Guju, an attorney and vice chairman of the Real Estate Commission, said he wants the state to use more emergency suspensions to deal with rogue real estate agents.

On top of the Manny case, the recent emergency suspensions were of a Fort Myers broker accused of taking $624,000; a Sarasota broker and $167,000; a Cape Coral broker and $35,000; and a Boca Raton broker and $23,000.

"We have to get better at it and knock the rust off the wheels," Guju said. "We have to send a direct message to those who are tempted to take money. These wrongful acts will not be tolerated. It's a black eye for Realtors."

Division of Real Estate officials cannot provide specific numbers before July of this year for escrow complaints because of a previous, antiquated computer system.

Last year, the division spent less on investigations than it did in 2005. Enzor, of the Florida Real Estate Commission, said audits should be a priority instead of pursuing lesser offenses like unlicensed activity. Years ago, he said, real estate professionals feared state investigators. Not any longer.

"The investigators were the kings," Enzor told the Times. "They were respected and enforced the laws. Nowadays, people aren't afraid to take money."

More audits could occur if the Legislature stopped raiding a Division of Real Estate trust fund that pays for the investigations, officials say. Real estate license fees and fines go into the trust fund. The Legislature has diverted $7.6 million since 2008 to help balance the state's budget.

The practice is neither new nor improper. But the recent escrow shortages should be a wakeup call for legislators, Enzor said.

"We need the investigators," he said. "We have to have a respectable real estate industry in Florida."

Mark Puente can be reached at mpuente@sptimes.com or (727) 893-8459. Follow him on Twitter at twitter.com/markpuente.

Number of Florida real estate brokers embezzling money rises 10/08/11 [Last modified: Saturday, October 8, 2011 12:59pm]
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