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Florida's real estate theft investigation backlog continues to grow

Back in February, the number of unresolved investigations of rogue real estate agents in Florida reached 600, with cases lingering for months and years.

Eight months later, the backlog has more than tripled.

State regulators vow to clean things up. But in the meantime, unscrupulous real estate agents still have access to homes, still handle thousands of dollars, still have little reason to fear officialdom will make them pay for their misdeeds — and can still harm unsuspecting victims.

"It is really a horrendous situation," said Florida Real Estate Commissioner Darla Furst of Sarasota. "I don't think I've seen it this bad in the 35 years I've been a broker."

As the St. Petersburg Times reported in February, the backlog of cases meant that each took an average of 18 months from start to finish.

Investigators send the cases, now totaling 2,100, to lawyers with the Florida Department of Business and Professional Regulation, or DBPR. They, in turn, decide which ones go before the Florida Real Estate Commission for discipline, get forwarded to state attorneys for criminal charges, or get dismissed.

The backlog extends beyond investigations of licensed agents. Complaints against people who conduct real estate transactions without licenses have jumped from 531 cases to 1,452 in the past two years.

The DBPR oversees the Division of Real Estate, which regulates the licenses of more than 300,000 real estate professionals, in effect, endorsing the integrity and credentials of those who handle billions of dollars of property transactions every year in Florida.

"This needs to be fixed," said Realtor Connie Langhorst of Wave Realty of Tampa Bay. "The bad (agents) are making a bad name of all of us. It's depressing to those of us who work hard and do a good job."

Juana Watkins, who took over the Division of Real Estate in March after serving as assistant director since April 2008, won't discuss the case backlog.

"I have to follow the directive of the communications department," she said. "If they give me the okay, I'll talk. … I do a lot of public speaking engagements."

Layne Smith, DBPR general counsel, attributes the backlog to:

• Personnel shortage. Earlier this year, his department had just four of its usual nine lawyers handling real estate cases.

• Paperwork. Until recently, files had to be shipped across Florida for officials and commissioners to review the files.

• Location. The DBPR is headquartered in Tallahassee, but its real estate lawyers work from the Orlando office.

Smith said the agency has begun filling the vacant attorney positions and hired three contract lawyers to help. Most of the lawyers have relocated from Orlando to Tallahassee, which should help improve communication, and the office is converting paper files to digital files to eliminate the lost time in mailing material across Florida.

"We are going to kick the bottom out of this thing," Smith said.

Smith hopes to have the backlog gone within a year and understands critics who want more investigators hired. The agency cannot hire because the Legislature has emptied $7.6 million from a Division of Real Estate trust fund since 2008 to help with state budget shortfalls. Real estate license fees and fines go into the trust fund, not tax dollars. Smith said he will monitor the situation and will ask the Legislature for permission to hire if the problems persist.

The Times reported in February that shoddy real estate professionals who defraud clients or otherwise break the laws rarely get prosecuted or criminally charged. Of the 1,595 cases 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.

The Times reported this month that the state used its emergency powers to suspend the licenses of five brokers who recently stole nearly $1.1 million from clients. In the previous three years, it had used the emergency suspension order only six times. Regulators are also finding more brokers pilfering escrow accounts. The thefts have forced investigators to perform random audits, a practice it stopped a decade ago.

Thomas DeBella of Southland Real Estate in St. Petersburg attended a recent Real Estate Commission meeting in Orlando with other Pinellas County agents. The 32-year real estate practitioner wishes regulators had more power to police the industry besides revoking licenses and imposing fines.

"It's like the Wild West out here," DeBella said. "There's a lot of money changing hands. There are unscrupulous people out there."

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

Florida's real estate theft investigation backlog continues to grow 10/29/11 [Last modified: Friday, October 28, 2011 6:46pm]
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