This article is part of an ongoing series covering violations of real estate law. Here, the Department of Real Estate (DRE) revoked the real estate license of a broker who failed to report felony charges brought against them, advertised real estate services on their website while not in good legal standing with the Secretary of State, and failed to disclose required information in their website advertisements.
In April 2023, the California Department of Real Estate (DRE) decided by default decision to revoke the license of Franco Tse-Hua Fang, a broker since 1995 operating out of San Gabriel, California. The decision became effective July 2023.
In January 2023, an indictment was filed against Fang under the United States District Court for the Northern District of California. The case alleged three felony counts of bank fraud against Fang.
Fang did not report the indictment charging a felony against her to the DRE within 30 days, a violation of real estate law. [Calif. Business and Professions Code §10186.2]
In February 2023, Fang filed a Certificate of Dissolution for the real estate corporation for which she managed as designated officer (DO), Golden Investments of America Inc. (GIAI) with the California Secretary of State (SOS). Thus, GIAI’s corporate status was terminated as of the date of the dissolution filing.
However, the DRE discovered GIAI maintained websites which solicited borrowers for mortgages and advertised itself as a licensed real estate corporation and a mortgage loan originator (MLO) with an MLO license endorsement. The website did this all while GIAI was not in good legal standing with the SOS, a violation of DRE regulations. [DRE Regulations §2742(c)]
Further, GIAI’s real estate websites lacked required disclosures. The websites failed to contain:
- GIAI’s real estate corporation ID number;
- GIAI’s Nationwide Multistate Licensing System (NMLS) ID number; or
- the required statement, “Real Estate Broker, California Department of Real Estate.”
Meanwhile, the site contained the names “DBestLoan.com DBA Golden Investments of America, Inc.” and “Mortgage Loan Solutions” which were not licensed as fictitious business names with the DRE.
Finally, Fang managed GIAI’s website as DO with broker supervision responsibilities imposed on her. She violated real estate laws and regulations with her oversight of the website by advertising without a valid business license and without providing the necessary disclosures. Thus, there was cause for the revocation of her real estate license and MLO license endorsement. [Bus & P C §§10166.051, 10177(h), 10177(g); DRE Regs. §2945.4]
Reporting felony charges, advertising and fictitious names
A felony charge involving fraud bares a substantial relationship to a broker’s real estate activities. Fraud has no place in a fiduciary’s dealings with the public.
The law requires a real estate licensee to timely report to the DRE:
- any criminal complaint, information, or indictment charging a felony against the licensee;
- the conviction of the licensee of any felony or misdemeanor; and
- any disciplinary action taken against the licensee by another licensing entity or authority of state or federal government. [Bus & P C §10186.2]
The licensee’s reporting is to be in writing and made within 30 days of the indictment, charge, conviction or disciplinary action. [Bus & P C §10186.2]
Failure to report is a cause for discipline against the licensee.
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Advertisement is a fundamental part of a licensee’s practice. [See RPI e-book Office Management and Supervision, Chapter 5]
Although real estate licensees may use different strategies in their advertisements, above everything else, the licensee’s advertising needs to be lawful.
When a licensee advertises on a website, in print or otherwise, they are required to provide their:
- name;
- DRE license number;
- NMLS ID number, when applicable; and
- responsible broker’s identity. [Bus & P C §10140.6]
Also, advertisements of mortgage products intended to solicit borrowers need to identify the licensing authority issuing the license, using the phrase, “Real estate broker, California Department of Real Estate.” [DRE Regs. §2847.3]
Finally, before using a fictitious business name when rendering real estate services requiring a license, a broker needs to first obtain an individual or corporate license from the DRE bearing the fictitious name.
A licensee may not use a fictitious name in the conduct of any activity for which a license is required unless the licensee is the holder of a license bearing the fictitious name. [DRE Regs. §2731]
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