This article is part of an ongoing series covering violations of real estate law. Here, a broker caught up in an insurance wire fraud scheme had his licensed revoked as a result of his criminal conviction.
In March 2021, the California Department of Real Estate (DRE) revoked the broker license of Behnam Halali, former broker officer at Amazing Realty, a brokerage based out of San Jose.
In 2011 and 2012, before working for Amazing Realty, Halali was employed by American Income Life Insurance Company as an independent contractor. There, he and a number of coworkers conspired to defraud the company, submitting hundreds of applications for fraudulent life insurance policies. Halali and his co-conspirators split the resulting fees among themselves.
Halali and others involved in the scheme left or were fired from American Income Life Insurance in 2012, and Halali obtained his broker license in 2013.
However, when the conspirators were indicted for their insurance fraud scheme in February 2014, Halali failed to notify the DRE within 30 days of the indictment, as required by real estate law.
In January 2018, Halali and his co-conspirators were convicted. Halali was sentenced to five years in prison and the conspirators were ordered to pay money losses of nearly $3 million to the life insurance company they defrauded.
Only a full year after Halali’s conviction, in January 2019, did the DRE learn he was incarcerated and take action to suspend his broker license — an underwhelming response rendered even more absurd by the fact that Halali’s broker license actually expired in 2017.
Eventually, in March 2021, the DRE decided Halali’s crimes bore a “substantial relationship” to his activities as a real estate broker and decided to revoke his license outright, despite it having long been expired at this point.
The power of example
The amount of time it took for the DRE to take notice of and respond to Halali’s past criminal activities and current incarceration isn’t a good sign for its effectiveness as an agent of oversight. However, oversight is the goal, and the case of Behnam Halali brings to light an important function of the DRE — one that is as symbolic as it is practical.
Because Halali was imprisoned as the result of a felony conviction and his license had already expired, the DRE’s revocation of his license clearly had little tangible effect on Halali himself. However, Halali’s conduct serves as an example to other licensees.
The lesson here is a useful one that all real estate agents — even those not engaged in criminal insurance fraud schemes — will do well to keep in mind. Activities undertaken outside the scope of a licensee’s real estate practice often have a significant bearing on that practice. And in the case of misconduct, when the DRE deems those activities “substantially related” to an agent’s licensed acts — a designation entirely at the DRE’s discretion — it will hold the licensee accountable.
Since the DRE no longer has a state-specific Code of Ethics, tactics like revoking an already-expired license constitute a method of keeping ethics at the forefront of its agents’ minds. And while most licensees won’t find themselves in a position as dramatic as Halali’s, it is always in an agent’s best interest to be aware of how conduct in other areas of their professional life may impact their real estate practice.