Hearing on appraiser's license focuses on who performed work
| Tuesday, Jan 12 2010 05:49 PM
Last Updated Tuesday, Jan 12 2010 06:45 PM
Related Stories:
A former trainee who worked under appraiser Kirksey J. "Mark" Newton Jr. was grilled Tuesday about how much of the work in certain appraisal reports he had done, himself, and how much had been done or supplemented by his former supervisor.
It's an important distinction in a trial before an administrative law judge that will determine whether Newton can keep his appraiser's license.
The California Office of Real Estate Appraisers, or OREA, disciplined appraiser Michael Wood last year for appraisal work that was riddled with errors and omissions. Wood was a trainee at Newton's company, San Joaquin Appraisals, from 2006 to 2007, but now runs his own firm.
Now the state is going after Newton. In opening arguments Monday, one of Newton's attorneys, Ernest Price, indicated that Newton was not to blame for problems with properties that have drawn the state's scrutiny. Much of that appraisal work, Price said, was performed by a subordinate.
On Tuesday, Wood, who is Newton's brother-in-law, said as a trainee he mostly did field work such as inspecting properties and taking measurements and photographs. It was Newton who pulled multiple listing service data and established an estimate of value, Wood testified.
California Deputy Attorney General Gillian Friedman asked Wood if clients ever asked for properties to be appraised at a predetermined value.
Wood replied that he didn't know, because he "never received the appraisal request."
That would be part of a "hard file" of documentation prepared by someone else and given to him when he was assigned the appraisal, Wood said.
"Would the hard file have a value request?" Friedman asked.
"I wasn't involved in any of that," Wood said.
On cross examination, one of Newton's attorneys, Eugene Suh, asked Wood if he learned how to obtain comparable sales data when he was studying real estate prior to joining San Joaquin.
"No," Wood said.
"Where did you learn how to do that?" Suh asked.
On the job, Wood answered, but not until he'd been there a while. "As I gained a little more experience and confidence," he said, adding that he had not pulled comps for any of the seven properties that are at issue in the case.
Later, Friedman asked OREA investigator William Drabick to detail his findings when he examined appraisals of seven properties Newton had performed or signed off on.
In just about every report, Drabick testified, there were problems with "(data) collection, verification and analysis," he said. "You'll hear that from me again and again."
Many of the property valuations were unsupported, Drabick said, and often that valuation was derived by relying on information about sales that were not comparable to the property being examined, he said.
Drabick also testified that he found a fax in the documentation for one of the appraisals in which someone from McMillin Homes requested a value ahead of time, and the ultimate opinion of value wound up pretty close to what the client had requested even though there was insufficient justification for that figure.
Newton had not taken the stand as of 3 p.m. Tuesday and was unavailable for comment.
Suh objected when Friedman tried to ask Drabick about Newton's work for Ty Stewart of defunct real estate firm Crisp, Cole & Associates.
"It's more prejudicial than probatory," he said.
Administrative Law Judge Samuel Reyes allowed limited references to Crisp & Cole, saying the facts of who Newton performed work for were are not in dispute.
It remains to be seen how much more detail will come into the hearing about a 2007 FBI and IRS raid of 13 local sites associated with Crisp & Cole, including Newton's office. At the time, authorities carted away boxes of documents.
Neither Carl Cole nor his former business partner, David Crisp, have been charged criminally, but they are under federal investigation for mortgage fraud and three of their associates have accepted plea deals in exchange for cooperating with authorities.
