Unscrupulous real estate professionals who defraud clients or otherwise break the rules can sleep soundly knowing three things:
• The investigation will likely take so long that they will have plenty of time to prey on more victims.
• Even if they eventually lose their license, they rarely face criminal prosecution.
• And a prison sentence is nearly out of the question, even in the more egregious real estate-related cases.
There's the Miami broker who failed to turn over rental money. The initial investigation took so long he bilked several more clients before his license was finally revoked.
And the Hillsborough broker who admitted in writing to misusing more than $120,000 and eventually had his license suspended for "theft of funds." Even he didn't face criminal charges.
The findings come from a recent St. Petersburg Times analysis of data from the Florida Division of Real Estate, the agency set up to protect consumers from dishonest real estate agents, appraisers and instructors. Cases involved a few hundred dollars to tens of thousands. Of the 1,595 cases the agency sent to state attorney's offices in the two years from Jan. 1, 2009, to Dec. 31, 2010, the Times found:
• The average Division of Real Estate investigation took more than 18 months. Forty took three years or longer. The longest: a contract violation that started in November 2004 and went to prosecutors in January 2009.
• 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.
State Sen. Mike Fasano, R-New Port Richey, a member of the senate's Governmental Oversight and Accountability Committee, said the investigations take "far too long."
"(They) need to get their act together," he said. "They have major flaws. They need to do something."
Division of Real Estate director Thomas O'Bryant Jr. defended the lengthy investigations and stressed that each complaint must be thoroughly investigated. Many involve complex allegations and also often include multiple law enforcement agencies, he said.
As for prosecutions, he said: "Once it leaves our hands, it's out of our jurisdiction. How they are treated by the state attorney's office is an issue they will have to deal with."
O'Bryant's agency regulates the licenses of more than 300,000 real estate professionals, in effect, endorsing the integrity and credentials of the those who handle billions of dollars of property transactions every year in Florida.
The number of cases has soared since the real estate bubble burst in 2006, further stressing the 33 investigators stationed around the state, O'Bryant said.
"We have been overwhelmed with the number of complaints," he said. "It's absolutely astonishing to me. It's a constant battle to keep up with."
Whatever the reason, the time it takes to investigate allows the bad apples to find more unsuspecting victims.
• • •
Take the case of Miami broker Donald Charnin.
He was supposed to collect rents and security deposits and turn them over to the landlord. Instead, he was accused in October 2007 of depositing them into his business account.
The Division of Real Estate requested his financial records, but he did not cooperate. The probe dragged on. Charnin kept collecting security deposits from more tenants without paying his clients, according to state records.
The state eventually finished the investigation into the original case in August 2009 and revoked his license two months later.
Two years had lapsed. The damage: six more complaints and $6,340 lost. And no criminal charges.
Carrie Taylor, a South Florida mother who needed a rental home, knows what it's like to be ripped off by a real estate agent.
In October 2008, she gave $975 to a Miami broker, who failed to pass it along to the landlord. Instead the agent kept it for herself. Taylor later found out the agent had done it before, pocketing $2,300 in rent intended for another landlord, who had also filed a complaint.
Taylor said her efforts to collect the money failed. She had to come up with the rent money again.
"I even tried finding her myself," she said. "I never heard another thing from anyone. She really hurt my family."
Consumers like Taylor have few good options when trying to recoup money in disputes with real estate professionals. They can file a lawsuit, but that means lawyers and court fees. They can go to the police, but officers rarely investigate contract disputes.
The last alternative is to file a complaint with the Division of Real Estate. The investigation is administrative, not criminal. The punishment can range from a fine to license revocation.
In most cases, investigators have six months to complete inquiries after receiving complaints. They then notify prosecutors after their probe and before sending the case to the department's legal unit. The attorneys can request additional evidence or forward the case to a probable cause panel.
The accused are given time to respond and appear for administrative hearings. If an individual is found to have violated state statutes, a final order might not come for another six months or longer.
The state can bypass that process and immediately suspend a license if the public is at risk, but that is rarely done. Just six emergency orders have been issued since 2008.
Two occurred after police arrested a broker and an appraiser in connection with murders, and two others for sexually assaulting teenage girls. Another came after an agent stole items from a home.
Those five were charged criminally.
But sometimes even an emergency order — one in which regulators described the broker as having "a total disregard for the laws and regulations . . . of this state" — doesn't assure criminal prosecution.
• • •
Tampa broker Horace Gerald Reynolds Jr. admitted in 2010 to misusing more than $120,000 to keep his business running. He decided to kill himself so his mother could use his life insurance to repay the accounts.
"I never should have taken this route," he wrote in a typed suicide note to his mother. "And there is no excuse for what I did. I am so sorry. I feel like I have let everyone down."
His suicide attempt on Jan. 27, 2010, failed.
State auditors found that Reynolds misused at least $128,445. Charlie Liem, the acting secretary of the Department of Business and Professional Regulation, the parent agency of the Division of Real Estate, called it "theft of funds."
Liem believed Reynolds posed a danger to property owners.
"Mr. Reynolds' conduct constitutes such a threat to the public's safety and total disregard for the laws and regulations governing real estate professionals in this state that the safety and security of Florida residents cannot be assured as long as Mr. Reynolds continues the practice of real estate," Liem wrote in his emergency suspension order.
Reynolds then surrendered his license.
But he avoided prosecution.
There was no evidence to show that Reynolds personally benefited from his actions, said Hillsborough State Attorney's Office spokesman Mark Cox. The dots, he said, are easier to connect in certain criminal cases.
"It's not like he committed a murder or raped someone or went to Vegas and bought hookers," Cox said.
Sheri Maxim, the assistant state attorney who determined no charges should be filed, said Reynolds' actions were wrong, but she could not show he stole the money. The business is the victim, she added.
A civil court file, however, lists names of victims being repaid.
Reynolds' mother, Mary Reynolds, says she and her son are repaying the money. One-third of the $128,000 has been repaid, and the remaining cash should be repaid next year, she said.
She stressed that her son didn't harm anyone and only juggled the money between accounts to keep the business operating.
"It's probably going to take a year" to pay everyone, Mary Reynolds said. "We have made a huge dent."
A few cases eventually wind up in court. But very rarely, according to the Times analysis of the 1,595 cases.
Sean Keefe, a former assistant state attorney in Hillsborough County, wasn't surprised by the small number of prosecutions. White-collar cases are hard to prove in court, and prosecutors, he said, won't file charges unless they are confident of winning a conviction. If an individual establishes a pattern of misconduct, Keefe said, the cases are much easier to prosecute.
"There's such a massive gray area where the criminal intent began and ended," said Keefe, who now practices with the Tampa firm of James, Hoyer, Newcomer, Smiljanich & Yanchunis. "The government has to be convinced it can establish the case beyond a reasonable doubt."
Cases with small amounts of money are harder to prosecute, Keefe said. Trying to differentiate between people making a mistake at work or committing a crime is difficult in isolated cases, he added.
Defendants know that and will invoke the "mistake defense" to argue they should be sued or even fired from a job but not prosecuted, he said.
"That can be a very good defense," Keefe said. "It gets really, really tricky."
John Yanchunis, a senior partner at the same firm as Keefe, added that a lack of resources also plays a role. The same issue came up in the late 1980s when bar associations wanted real estate professionals prosecuted in order to protect the public from fraud. But money was an issue then and even more now, he added.
"They have bigger fish to fry," Yanchunis said. "The state attorneys and public defenders are getting squeezed. They have less and less (funding) to hire staff."
Cases even fall through the cracks.
A $25,000 dispute involving a Clearwater broker disappeared for 16 months until the Times started asking questions. The Division of Real Estate sent the case to the Brevard-Seminole State Attorney's Office in September 2009, records show. That office had no record of the case last month when the newspaper requested the status. The division admitted it erred by sending the case to the wrong state attorney's office. It recently forwarded the case to the Pinellas-Pasco State Attorney's Office.
"We made a mistake," said state spokeswoman Sandi Copes.
• • •
Patricia Fitzgerald, president of the Florida Realtors, wonders if the system is broken. She was surprised to hear about the backlog of cases and the lengthy investigations.
Dishonest Realtors tarnish the reputations of thousands of hard workers in Florida, she said.
"There seems to be a need for a little swifter justice," Fitzgerald said. "This is an area that needs to be shored up. It sounds like something is getting lost in the sauce."
Chip Boring, a Realtor and member of the Real Estate Commission, said the investigative process takes time to be done properly. He preferred a cautious approach before taking away someone's license or going forward with a criminal prosecution.
"We're not perfect in our practices," he said. "We all make mistakes, and it may not be intentional."
Fasano wants justice. While he lamented how long the investigations took, he was even more concerned about consumers being defrauded and deceitful real estate professionals avoiding prosecution.
"Anytime you defraud someone, you should be charged with a crime," Fasano said. "That's wrong."
Times researcher Carolyn Edds contributed to this report. Mark Puente can be reached at firstname.lastname@example.org or (727) 893-8459. Follow him at Twitter at twitter.com/markapuente.