Lawsuits, arrests during an open house and a real estate crime ring that passed from Argentina to New York and Miami — it’s been a grim year for the real estate industry. As any Realtor is well aware, the industry has no want of crazy, thrilling or downright unbelievable stories – and as we head into the new year, we invite you to look back with us on some of the biggest moments in real estate crime that shaped 2018.
The year started off with a bang when, in January, a former employee of Move.com, a subsidiary of parent company Realtor.com, slapped the company with a lawsuit claiming it defrauded Realtor.com’s agent clients by charging them for services they never ordered or received.
Three months later, two real estate agents filed a class-action lawsuit on behalf of ‘thousands’ of others – this time alleging that the same company has defrauded thousands of agents by failing to deliver the number of viable leads it promises from realtor.com. Realtor.com “frequently fails to deliver what it claims to be selling,” according to the three-count complaint filed by California agent John Herkenrath and Ohio agent Tina Wilson.
Over the past year, a number of online scams, schemes and frauds have been circulating in the real estate industry — an oldie in which scammers create leads made to look like real ones from Zillow or Realtor.com has once again landed in the email mailboxes of people from all over the country.
In Massachusetts, scammers have been specifically targeting female real estate agents with calls pretending to be from the police. And, earlier this month, someone sent emails asking for charitable donations while pretending to be from the National Association of Realtors (NAR).
As the scams become more intricate, read up on how to avoid some of the most common ones here.
Over the summer, an Engel & Völkers branch in South Carolina parted with an agent who was recorded saying she’s a “clean, thoroughbred, white girl” after police officers tried to arrest her for driving under the influence.
When the officers asked Cutshaw what her race had to do with her driving under the influence, she allegedly responded “You’re a cop, you should know what that means,” sparking national outrage, social media shaming and coverage in the Washington Post and the New York Times.
“Making statements such as these as a means to justify not being arrested are unusual in my experience as a law enforcement officer and I believe further demonstrate the suspect’s level of intoxication,” the arresting officer wrote in the police report.
Engel & Völkers scrubbed Cutshaw’s online profile once her arrest was made public, prompting a spokesperson to tell Inman the company “no longer [has] a relationship with” the agent.
In August, South Beach Realtor Kevin Tomlinson avoided prison time after being found guilty on extortion charges in June for allegedly demanding $800,000 from rivals Jill Hertzberg and Jill Eber, a high-profile luxury real estate duo known as “The Jills.”
After filing a complaint that accused Hertzberg and Eber of hiding properties that had been on the multiple listing service (MLS) for more than six months, Tomlinson reportedly demanded $250,000, and later $400,000, to not make the complaint public and settle without a lawsuit.
As it turned out, conversations were secretly recorded by Miami police. and a jury found Tomlinson guilty of extortion on June 22.
While Tomlison faced as much as 30 years in prison, Judge Milton Hirsch ultimately sentenced him to two years of house arrest, 15 years probation and a bar from working in real estate or tweeting about The Jills.
Most have had a sale fall through at the last minute, but one agent responded forcefully, hitting the seller with a lawsuit for a commission on a home that never sold.
Hans Ohrstrom, a broker of record at the Toronto-based HomeLife Eagle Realty, claimed the homeowner bore responsibility for preventing the sale of her own property after a buyer failed to make the agreed-upon payment for more than 120 days and she went to another real estate company for help selling the house. She had already moved into a new property and was paying for two mortgages.
The move was so brazen and unprecedented that it sent waves of outrage through Toronto’s real estate community — and caused Ohrstrom to drop the case.
“Nice try,” Bob Aaron, a Toronto lawyer who worked in real estate law for 46 years, told Global News at the time of the cases. “The court cases have shown that you can’t get your commission if the deal doesn’t close.”
When someone falsely accused Alabama Realtor Monika Glennon of having sex with her husband in a home she was supposed to show on the Re/Max Facebook page, it wasn’t just a matter of professional embarrassment. The accusation, which was later revealed to be a fabrication, cost Glennon more than $100,000 in attorney’s fees to find out who wrote the post.
The situation had begun over an argument over a viral news story about a teenager taking a selfie at Auschwitz. Glennon defended the teen’s actions on Facebook as a simple mistake and spent time arguing about it back and forth with Mollie Rosenblum, the woman who confessed to making the accusation.
“While Mrs. Glennon is not an adulterous woman to my knowledge, she is guilty in my opinion, of Facebook trolling the wrong person,” Rosenblum said at the time.
In early fall, Century 21 Regency Realty Realtor Cheryl Piccinini entered a recently foreclosed property for an open house — and almost got slapped with a breaking and entering charge when a neighbor blocked her in the driveway and called the police.
“Right or wrong, a lot of these foreclosures do have doors that don’t lock all the way,” Piccinini told Inman at the time, adding that she had tried to open the door with a key before realizing it was left open and going inside. “Not knowing that I was walking into this situation was upsetting,” she added.
While the police eventually looked at her business cards and went away, the scare and embarrassment was more than enough for Piccinini to think twice about working with foreclosed properties. The story also hit a nerve with our readers, many of whom have been in situations in which they had a scheduled showing but struggled to get into a locked open house.
Throughout both 2017 and early 2018, a suspicious serial caller with a deep voice had been targeting female real estate agents across the country. The caller, who would introduce himself as “Dwayne Bergeman,” called female agents in brokerages in Massachusetts, Arkansas, Pennsylvania, Hawaii and Arizona.
Each time, the caller would use a similar technique – pretending to be a buyer and asking to see a property “as quickly as possible.” While authorities have not been able to track down Dwayne Bergeman’s true identity, the suspicious calls prompted Realtor associations across several states to issue safety alerts to members.
“The concern would be some sort of physical attack and the risk posed to the agents’ safety by interacting with an individual they have no prior familiarity or contact with,” John Dulczewski, executive vice president of the Greater Boston Association of Realtors, said at the time.
Not all of the news has been negative, though. In October, a real estate agent went to great lengths to track down family jewelry stolen from an open house.
An elderly woman, who had been selling a house in Yakima, Washington, after losing her husband to cancer, called broker Haley Larson in tears after noticing that someone took her wedding bands and other family jewelry from an open house. After going through her belongings, she discovered that her husband’s wedding band, her grandmother’s engagement ring and even some opioid medications prescribed for her husband’s cancer were all missing.
While the police insisted that not much could be done to find the thief, Larson would not accept that answer — and after digging through open house sign-in sheets, scouring Facebook and driving to pawn shops across the state, was able to locate the jewelry and return it to her client
“I took it as a personal assault on our industry in general because people like this are going to make it really difficult for Realtors to market houses efficiently and effectively,” Larson told Inman at the time.
International crime rings and luxury real estate are not just the stuff of movie thrillers. In November, four Argentine nationals were arrested and accused of investing millions into expensive real estate across the United States on behalf of an aide to former president Cristina Fernández de Kirchner. The properties included expensive condos, banks, pharmacies and even a CVS convenience store across Miami and New York – one of the condos alone was worth $10.7 million.
The scandal first broke when the leaked Panama Papers tied many heads of state to illegal money operations — over the last year, both Argentine and American investigators have been trying to figure out how four South American citizens ended up with millions of dollars of top-notch Florida real estate.
Hidden pressures associated with the real estate industry snagged the spotlight after a Dallas agent died from a nose job gone wrong.
Laura Avila, 36, traveled to Juárez, Mexico from Texas in order to get rhinoplasty at a cheaper rate but went into cardiac arrest when the anesthesia doctors injected into Avila’s spine went up to her brain instead of through her body.
Avila’s tragic fate caused some agents to speak out about the sometimes superficial nature of the industry and many reported feeling pressure to look forever young in order to draw top clients and sell luxury properties.
“The stress to look your best is likely more in the real estate industry as it is a sales-based business with face-to-face interactions,” plastic surgeon Melissa Doft said.
Now that she’s left prison and been banned from practicing real estate, former agent Holly Pasut has been making a career out of telling other agents how to avoid the same mistakes.
Her story, in which a real estate business acquaintance dragged Pasut into mortgage fraud by asking her to pay a consulting fee for help finding a buyer, has received its fair share of both sympathy, distrust and anger. But that hasn’t stopped Pasut, 62, from retelling it — she published a book and will be going on a cross-country tour with the Fidelity National Title Group at the beginning of 2019.
“By the time I started to connect some dots, it was too late because I had been involved in some of the transactions,” Pasut told Inman. “What I learned was that even though you were not intending or trying to commit fraud, ignorance is not an excuse.”
Around Christmastime, a once-celebrated Illinois judge was sentenced to a year in prison for illegally obtaining more than than $1.4 million in mortgages on two Chicago investment properties and pocketing over $300,000 for her own use between 2004 and 2007.
Jessica Arong O’Brien, who was the first Asian elected president of the Women’s Bar Association of Illinois and Cook County’s first Filipina judge, cried openly in court as Judge Thomas Durkin read her sentence. She had resigned from her post as a judge earlier this year.
“I still think you have difficulty admitting you did anything wrong,” Durkin said in court. He also denied O’Brien’s request for probation by saying that her scheme lasted almost three years and was therefore not done impulsively.
One of the most heartbreaking and important crime stories of the year happened near the very end of 2018.
Real estate sales rep Steven Bernard Wilson was shot and killed while working out of a Ryan Homes model home. After an investigation, police arrested 18-year-old Dillon Augustyniak of Jessup, Maryland on charges of first-degree murder, armed robbery, theft and use of a firearm in a violent crime.
Both Wilson’s family and the real estate community rallied around Wilson’s family and more than $100,000 has been raised to support his young daughters in the wake of the tragedy.
The random nature of killing – police say the suspect killed Wilson while trying to rob the open house – also reminded agents across the country of the myriad dangers they face when entering empty or even abandoned properties alone.