FILED
LAURENCE D. HAVESON, Counsel (SBN 152631)
Department of Real Estate
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320 West 4th Street, Suite 350
JAN 1 4 2021
Los Angeles, California 90013-1105
3 DEPT. OF REAL ESTATE
Telephone:
(213) 576-6982
Direct:
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(213) 576-6854
Fax:
(213) 576-6917
Attorney for Complainant
BEFORE THE DEPARTMENT OF REAL ESTATE
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STATE OF CALIFORNIA
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In the Matter of the Accusation of
No. H-41862 LA
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SHARON SUZANNE BUTLER,
ACCUSATION
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Respondent.
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The Complainant, Maria Suarez, a Supervising Special Investigator for the
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Department of Real Estate ("Department" or "DRE") of the State of California, for cause of
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Accusation against SHARON SUZANNE BUTLER ("BUTLER") ("Respondent"), alleges as
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follows:
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1.
The Complainant, Maria Suarez, acting in her official capacity as a Supervising
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Special Investigator, makes this Accusation against Respondent.
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2.
All references to the "Code" are to the California Business and Professions Code
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and all references to "Regulations" are to Title 10, Chapter 6, California Code of Regulations.
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LICENSE HISTORY
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3.
Respondent BUTLER has been licensed by the Department as a real estate broker
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("REB"), License ID 01018706, from on or about October 12, 2006, through the present, with
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BUTLER's license scheduled to expire on October 14, 2022, unless renewed. BUTLER was
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previously licensed as a real estate salesperson ("RES"), from on or about March 8, 1989 to
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October 11, 2006. As of November 20, 2019, BUTLER maintained four fictitious business names:
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ACCUSATION
"Butler Real Estate and Investment Group," "Open House Experts," The Real Geek," and "Short
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Sale Resolution Network." Also, as of November 20, 2019, BUTLER did not maintain any branch
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offices and employed 10 salespersons.
4.
BUTLER is the Designated Officer ("D.O.") for real estate corporation ("REC")
The Real Geek Incorporated ("TRGI," License ID 012102302), and was the D.O. for REC First
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Avenue Real Estate Group, Inc. ("FAREGI," License ID 01978145) from August 31, 2017 to
October 16, 2018. FAREGI's real estate license was revoked by the Real Estate Commissioner on
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October 17, 2018 in connection with disciplinary action in DRE Case No. H-40993 LA.
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BROKERAGE: BUTLER
5.
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At all times mentioned, in Los Angeles County, BUTLER acted as a real estate
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broker, conducting licensed activities within the meaning of Code Section 10131(b): leasing or
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renting, offering to lease or rent, or collecting rents from real property for others.
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AUDIT OF BUTLER: AUDIT NO. LA190019
6.
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On April 24, 2020, the Department completed an audit examination of the books and
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records of BUTLER's real estate activities that require a real estate broker license under Code
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Section 10131. The audit examination, LA190019, covered the time period from January 1, 2018 to
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July 31, 2019 ("audit period") and was limited to BUTLER's property management activities.
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7.
The purpose of the audit examinations was to determine whether BUTLER
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conducted his real estate activities and handled and accounted for trust funds in accordance with the
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Real Estate Law and the Regulations.
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Bank Accounts
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According to BUTLER, she maintained one trust account to hold and collect trust
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funds for multiple beneficiaries for her property management activity during the audit period, as
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ACCUSATION
Trust Account 1 ("TAI")
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Bank:
Account Name:
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Account #:
Signatories:
a
Signatures required:
Description:
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Sunwest Bank
First Avenue Real Estate Group, Inc.
Trust Account
XXXXXXXX3299
Paul Richard Kotas (former REB)
Adeeb Ahmad Azizi (RES)
One (1) signature
TAl was maintained for the receipts and disbursements of
trust funds received for multiple beneficiaries in connection
with BUTLER's property management activity.
According to TAI's bank signature card, the Account Name
for TAI was shown as "First Avenue Real Estate Group Inc
Trust Account.' However, based on TAl's bank statements,
the Account Name for TAl was shown as "First Avenue
Real Estate Group Inc. Diversified Real Property Memt And
Business Services."
The date that TAI was opened is unknown.
BUTLER was not an authorized signer on TAI.
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Audit Violations in Audit No. LA190019
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9.
The Complainant realleges and incorporates by reference all of the allegations
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contained in paragraphs 1 through 8 above, with the same force and effect as though fully set forth
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10. The audit examination revealed violations of the Code and the Regulations, as set
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forth in the following paragraphs, and as more fully discussed in Audit No. LA190019 and the
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exhibits and work papers attached to the audit reports:
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Issue One (1). Code Section 10145(a) and Regulation 2832.1: Handling of Trust Funds; Trust
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Fund Handling for Multiple Beneficiaries
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11. A bank reconciliation for TAI was prepared for the audit cutoff date as of July 31,
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2019. The Department's auditor calculated the minimum accountability for TAl based on records
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of bank statements, control record, separate record, check register, and deposit register provided by
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BUTLER for examination.
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ACCUSATION
12. As of July 31, 2019, there was a minimum trust fund shortage of $14,654.50 in TAl
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that was caused by a minimum negative property balance totaling $14,654.50. The negative
w balances were caused by disbursements related to properties when there were no sufficient funds to
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make such disbursements. Also, as of July 31, 2019, there were minimum
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unidentified/unaccounted for funds of $36,552.45 in TAI.
13.
BUTLER provided no evidence that the owners of the trust funds had given their
written consent to allow BUTLER to reduce the balance of funds in TAI to an amount less than the
existing aggregate trust fund liabilities.
14.
The reduction of the balance of funds in TAI to an amount less than the existing
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aggregate trust fund liabilities was in violation of Code Section 10145(a) and Regulation 2832.1.
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Issue Three (3)." Code Section 10145 and Regulation 2832: Handling of Trust Funds: Trust
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Fund Handling
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15.
Based on records examined, including the Sunwest Bank signature card for TAI,
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bank statements, and canceled checks, TAI was not set up in BUTLER's name as trustee or in any
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of BUTLER's licensed fictitious business names-"Butler Real Estate and Investment Group,"
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"Open House Experts," The Real Geek," or "Short Sale Resolution Network"-as trustee. Instead,
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TAI was set up in the name of First Avenue Real Estate Group Inc. Trust Account.
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16.
BUTLER's failure to set up TAl as a trust account in BUTLER's name as trustee or
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in any of BUTLER's licensed fictitious business names as trustee was in violation of Code Section
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10145 and Regulation 2832.
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Issue Four (4). Code Section 10145 and Regulation 2831.2: Handling of Trust Funds: Trust
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Account Reconciliation
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17.
During the audit period, based on records examined, BUTLER did not maintain
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accurate monthly reconciliation records for TAI. The balance of all separate records compared to
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the balance of the record of all trust funds received and disbursed (control record) for TAl were not
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Issue Two (2) of the audit report is being skipped intentionally. Complainant reserves the right to conduct further
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investigation and to amend the Accusation should further evidence be acquired in support of Issue Two, as well as
potential causes of accusation not alleged in this Accusation at the time of filing.
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ACCUSATION
accurate. In addition, there were unidentified/unaccounted funds of $36,552.45 in TAI as of July
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31, 2019.
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BUTLER's failure to maintain accurate monthly reconciliation records for TAl was
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in violation of Code Section 10145 and Regulations 2831.2.
un Issue Five (5). Code Sections 10145 and Regulation 2831.1: Handling of Trust Funds:
Separate Record for Each Beneficiary or Transaction
19. Based on an examination of records, BUTLER did not maintain accurate separate
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records for each beneficiary or property for TAI and no separate record was maintained for the
unidentified/unaccounted funds of $36,552.45 in TAI as of July 31, 2019. The minimum
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accountability for TAI was calculated by the auditor based on limited bank statements, control
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records, and separate records for one month ending July 31, 2019.
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20.
BUTLER's failure to maintain accurate separate records for each beneficiary or
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property for TAI and failure to maintain a separate record for the unidentified/unaccounted funds
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of $36,552.45 for TAI was in violation of Code Section 10145 and Regulation 2831.1.
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Issue Six (6). Code Sections 10145 and Regulation 2831: Trust Fund Records to be
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Maintained
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21.
Based on an examination of records, BUTLER failed to maintain accurate records of
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all trust funds received and disbursed (control record) for TAl related to her property management
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activities in violation of Code Section 10145 and Regulation 2831.
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Issue Seven (7). Code Section 10145 and Regulation 2834; Handling of Trust Funds: Trust
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Account Withdrawals
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22.
Based on an examination of the Sunwest Bank signature card for TAl, former REB
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Paul Richard Kotas ("Kotas," former license ID 00460262) and RES Adeeb Ahmad Azizi ("Azizi,"
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license ID 01963152) were listed as signatories for TAl.
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a.
Kotas surrendered his REB license effective July 16, 2018 in connection
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with disciplinary action in DRE Case No. H-40993 LA. Kotas was not authorized in
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writing by BUTLER to be a signer on TAI. Kotas, who was a non-licensee effective July
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16, 2018, and who was not covered by a fidelity bond or insurance, was allowed to make
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ACCUSATION
withdrawals from TAI. Kotas was the D.O. for FAREGI from on or about April 8, 2015 to
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August 30, 2017. Kotas was cancelled as the D.O. of FAREGI on July 31, 2017. As noted
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above in paragraph 4, FAREGI's license was revoked by the Real Estate Commissioner on
October 17, 2018.
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b.
Azizi was also not authorized in writing by BUTLER to be a signer on TAI.
Azizi was also not employed under BUTLER's REB license during a time period that he
was allowed to make with withdrawals from TAl, January 1, 2018 to November 5, 2018.
Based on information obtained by the Department as of June 4, 2019, Azizi was the owner
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of Diversified Real Property Management ("DRPM"), an unlicensed fictitious business
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name, which was conducting property management services under BUTLER's REB license.
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Azizi was later licensed under BUTLER's REB license from November 6, 2018 to February
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5, 2020.
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23.
According to BUTLER, BUTLER did not have fidelity bond or insurance coverage
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for TAI.
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BUTLER was also not an authorized signer on TAI.
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25.
The listing of Kotas and Azizi on TAl's bank signature card without written
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authorization from BUTLER to be signers on TAl, Kotas's ability to make withdrawals from TAI
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as an unlicensed person without fidelity bond or insurance coverage for TAl, and BUTLER's
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failure to be an authorized signer on TAI during the audit period was in violation of Code Section
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10145 and Regulation 2834.
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Issue Eight (8). Code Section 10130: License Required
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26.
Based on an examination of records provided, during the audit period FAREGI was
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conducting activities requiring a license under BUTLER's REB license after its REC license was
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revoked on October 17, 2018. The Department's auditor has provided the following examples:
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a.
On or about March 25, 2019, RES Juli Flibbert ("Flibbert," License ID
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01604552), executed two property management agreements on behalf of FAREGI with J.S.
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ACCUSATION
and C.S." for the period from May 1, 2019 to May 31, 2020 to manage properties located at
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19751 Crestknoll Dr., Yorba Linda, CA ("19751 Crestknoll"), and 12426 Maybrook,
w Whittier, CA ("12426 Maybrook"). The executed property management agreements for the
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properties located at 19751 Crestknoll and 12426 Maybrook authorized Flibbert, on behalf
of FAREGI, to, among other things, do the following: advertise the availability of the
properties, or any parts thereof, for rent or lease; initiate, sign, renew, modify, or cancel
rental agreements and leases for the properties, or any parts thereof; collect and give
receipts for rents, other fees, charges, and security deposits; receive security deposits from
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tenants; and disburse the owners funds in compensation due the property manager at the
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rate of 7% of the monthly rent, and $195 for a placement fee for renting or leasing a
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property.
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b.
Also on or about March 25, 2019, Flibbert executed two Disclosure
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Regarding Real Estate Agency Relationship forms on behalf of FAREGI with J.S. and C.S.
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27. Based on an examination of records provided by BUTLER, during the audit period,
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a former REC named Diversified Real Property Management & Business Services Inc.
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("DRPMBSI," License ID 01154767), whose license expired on January 17, 2016, was providing
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property management services and collecting property management fees under BUTLER's REB
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license while DRPMBSI did not have a valid license. DRPMBSI provided property owner
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statements, cancelled checks, and bank statements showing, for example:
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DRPMBST's monthly collection of rent from tenants residing at 510 and 512
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S. Birch, Santa Ana, CA, between January 1, 2018 and July 31, 2019; and,
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b .
Monthly collection of property management fees by DRPMBSI for 510 and
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512 S. Birch, Santa Ana, CA, between January 1, 2018 and July 31, 2019;
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28.
FAREGI's and DRPMBSI's conducting of property management activities requiring
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a license, under BUTLER's REB license, during a time during the audit period when neither
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FAREGI nor DRPMBSI had a valid license was in violation of Code Section 10130.
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" Initials are used in place of individuals' full names to protect their privacy. Documents containing individuals' full
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names will be provided during the discovery phase of this case to Respondent and/or her attorney(s), after service of a
timely and proper request for discovery on Complainant's counsel
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ACCUSATION
Issue Nine (9). Code Section 10159.5 and Regulation 2731: Use of False or Fictitious Business
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Name
29.
During the audit period, BUTLER used the following unlicensed fictitious business
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names as follows:
a.
"Diversified Real Property Memt and Business Services" appeared as the
account name on Sunwest Bank account statements for TAl from May 31; 2018 to July 31,
2019.
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b.
"First Avenue Real Estate Group Inc" appeared as the account name on
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Sunwest Bank account statements for TAI from May 31, 2018 to July 31, 2019.
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C.
"Diversified Real Property" was used in a property management agreement
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entered into with A.G. for property located at 510 and 512 S. Birch, Santa Ana, CA, and
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which agreement was executed by Flibbert on behalf of Diversified Real Property on or
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about May 1, 2019.
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d.
"Diversified Real Property Management" was used in:
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(1) A property management agreement entered into with C.D. for
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property located at 1722 Mitchell Avenue, Unit 154, Tustin, CA, and which
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agreement was executed by Azizi on behalf of Diversified Real Property
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Management on or about January 27, 2018. This agreement contained the
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statement, "Please note that "Diversified Property Management' is the entity that
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does business, is a 'dba' for Butler Real Estate & Investments with Brokerage DRE
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License #01018706."
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(2) A letter dated April 30, 2019 to a tenant of property owned by A.G.
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informing the tenant to make rent checks payable to Diversified Property
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Management, and which letter ended with the name Juli Flibbert.
e.
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"First Avenue Real Estate Group" was used in a broker-associate licensee
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independent contractor agreement between BUTLER and RES Richard De Vuong (License
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ID 01977440), which agreement was executed by BUTLER on or about October 15, 2018
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ACCUSATION
on behalf of "Butler Real Estate and Investment Group Dba First Avenue Real Estate
Group."
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f.
"First Avenue Real Estate" was used in a property management agreement
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entered into with B.F. for property located at 18011 Wellington Circle, Villa Park, CA, and
which agreement was executed by Azizi on or about August 14, 2018 on behalf of "First
Avenue Real Estate dba of Butler Real Estate and Investments."
30.
At no time during the audit period were any of the names listed above in paragraph
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31.
BUTLER used these unlicensed fictitious business names, listed above in paragraph
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29, without first obtaining a license from the Department in violation of Code Section 10159.5 and
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Regulation 2731.
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Issue Ten (10). Code Section 10177(h) and Regulation 2725: Broker Supervision
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32.
The Complainant realleges and incorporates by reference all of the allegations
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contained in paragraphs 1 through 31 above, with the same force and effect as though fully set forth
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33.
Based on the above audit findings in Issue 1 and Issues 3 through 9 above, as
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alleged in paragraphs 10 through 31 above, BUTLER did not exercise adequate supervision and
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control over the property management activities conducted on her behalf by employees and/or
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licensees as necessary to ensure compliance with the Real Estate Laws and Regulations.
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34.
BUTLER failed to establish policies, rules, procedures, and systems to review,
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oversee, inspect, and manage the handling of trust funds and allowed licensed activities to be
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conducted by FAREGI and DRPMBSI during a time period when neither FAREGI nor DRPMBSI
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had a valid license.
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35.
BUTLER's acts and/or omissions, as alleged above, were in violation of Code
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Section 10177(h) and Regulation 2725.
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ACCUSATION
ADDITIONAL VIOLATIONS OF THE REAL ESTATE LAW
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NEGLIGENCE AND/OR WILLFUL DISREGARD OF THE REAL ESTATE LAW
36.
The Complainant realleges and incorporates by reference all of the allegations
contained in paragraphs 1 through 35 above, with the same force and effect as though fully set forth
herein.
37.
The overall conduct of BUTLER is violative of the Real Estate Law and constitutes
cause for the suspension or revocation of the real estate license and license rights of BUTLER
under the provisions of Code Sections 10177(g) for negligence and/or 10177(d) for willful
disregard of the Real Estate Law.
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INVESTIGATION AND ENFORCEMENT COSTS
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38.
Code Section 10106 provides that in any order issued in resolution of a disciplinary
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proceeding before the Department of Real Estate, the Commissioner may request the administrative
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law judge to direct a licensee found to have committed a violation of this part to pay a sum not to
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exceed the reasonable costs of the investigation and enforcement of the case.
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AUDIT COSTS
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39.
Code section 10148(b) provides, in pertinent part, the Commissioner shall charge a
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real estate broker for the cost of any audit, if the Commissioner has found in a final decision
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following a disciplinary hearing that the broker has violated Code section 10145 or a regulation or
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rule of the Commissioner interpreting said section.
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ACCUSATION
WHEREFORE, Complainant prays that a hearing be conducted on the allegations of
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this Accusation and that upon proof thereof, a decision be rendered imposing disciplinary action
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against all the licenses and license rights of SHARON SUZANNE BUTLER under the Real Estate
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Law, for the costs of investigation and enforcement, and audit as permitted by law, and for such
other and further relief as may be proper under other applicable provisions of law, and for costs of
audit.
Dated at Los Angeles, California this /3 - day of January
2021.
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By RED
Maria Suarez
12 Supervising Special Investigator
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cc:
SHARON SUZANNE BUTLER
Maria Suarez
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Sacto.
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