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1      JAMES DEMUS, Counsel    (SBN 225005)

2   Department of Real Estate

320 west Fourth St., #350

3       Los Angeles, CA   90013

FIL ED

MAR2 4 201 1

D P- OF REAL.f$TATE     S IL   8 . N

4        (213) 576-6982

(213) 576-6910 (direct)

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9                                                   BEFORE THE DEPARTMENT OF REAL ESTATE

10                                 STATE OF CALIFORNIA

11                                                                                                    *  *  *

In the Matter of the Accusation of    )

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PACIFIC LOAN SOLUTIONS INC, PACIFIC )

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RESIDENTIAL INC, JEFFREY TORREZ and

14        ANDREW JONATHAN HUXHOLD,              )

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15                                                  Respondents.       )

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No. H- 37168-LA

A C C U S A T I 0 N

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The Complainant, Joseph Aiu, a Deputy Real Estate

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Commissioner of the State of California, for cause of

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Accusation against PACIFIC LOAN SOLUTIONS INC, PACIFIC

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RESIDENTIAL INC, JEFFREY TORREZ and ANDREW JONATHAN HUXHOLD is

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informed and alleges as follows:

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1.

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The Complainant, Joseph Aiu, a Deputy Real Estate

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Commissioner of the State of California, makes this Accusation

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in his official capacity.

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1                                                                                                       2 .

2                PACIFIC LOAN SOLUTIONS INC, (hereinafter "PLSI") is

3  presently licensed and/or has license rights under the Real

4   Estate Law (Part 1 of Division 4 of the Business and

5     Professions Code, hereinafter "Code"), as a corporate real

6     estate broker.   PLSI's corporate real estate broker license was

7   initially issued on December 13, 2008.

8                                                                                                       3 .

9             PACIFIC RESIDENTIAL· INC, (hereinafter "PRI") is

10  presently licensed and/or has license rights under the Real

11          Estate Law, as a corporate real estate broker.      PLSI's

12       corporate real estate broker license was initially issued on

13   October 18, 2004.

14                                            4.

15              JEFFREY TORREZ,  (hereinafter "TORREZ") is presently

16   licensed and/or has license rights under the Real Estate Law,

17  as a real estate broker.   TORREZ has been the designated

10   officer of PLSI since December 13, 2008.   TORREZ has been the

19   designated officer of PRI since October 18, 2008.

2 0                                                                                                       5 .

21                                      ANDREW JONATHAN HUXHOLD, (hereinafter "HUXHOLD") is

22  presently licensed and/or has license rights under the Real

23  Estate Law, as a real estate salesperson.   Huxhold was

24  initially licensed as a real estate salesperson on February 9 ,

25       2010.  From May 11, 2010 to July 2, 2010, HUXHOLD was employed

26       as a salesperson by PRI.

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1                                                                    FIRST CAUSE OF ACCUSATION

2                               (Advance Fee Violations)

3                                                                                                         6 .

4              On January 21, 2009, the Department of Real Estate

5        ("Department•) issued a letter to PRI claiming no objection to

6   PRI's use of an advance fee agreement, as submitted by PRI.

7   PLSI was not mentioned in the agreement submitted by PRI.  Nor s   has PLSI ever submitted an advance fee agreement to the

9   Department.

10                                                                                                        7 .

11                                       Neither Zachary Gonzalez, nor "Zachary Gonzalez, LLC"

12   have ever been licensed by the Department in any capacity.

13   Neither PLSI nor PRI ever submitted an advance fee agreement to

14   the Department for Zachary Gonzalez or Zachary Gonzalez, LLC.

15                                                                                                         8 .

16                       At all relevant times herein, PLSI and PRI engaged in

17    the business of real estate brokers in the State of California

16   within the meaning of Code Sections 10131(d) and 10131.2,

19   including brokering mortgage loans and performing loan

20    modification activities and claiming, demanding, charging,

21    receiving, collecting or contracting for the collection of an

22    advance fee, within the meaning of Code Section 10026,

23     including, but not limited to, the following loan modification

2 4       activities with respect to loans which were secured by liens on

2 5       real property.

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1                                                                                                        9 .

2       James McNamara Transaction

3             On or about January 31, 2009, James McNamara signed a

4  Loan Modification Contact, in which he agreed to pay PLSI

5       $6,400 in advance fees for PLSI to negotiate a loan

6    modification on his behalf.   Also included in this contract was

7    an Authorization to Release Credit Information to PRI/PLSI.    On

e      September 3 , 2009, PLSI sent Mr. McNamara a Notice of

9   Cancellation, which claimed Mr. McNamara . had entered into a

10   contract with PLSI on January 31, 2009 for $4,600 and offered

11           to refund 50% of this amount  1 $2,300)

12                                                                                                      10.

13     Jerry Barton Transaction

14                             On or about February 10, 2009, Jerry Barton signed a

15     Loan Modification Contract, in which he agreed to pay PLSI

16   $11,600 in advance fees for PLSI to negotiate a loan

17  modification on his behalf.   Also included in this contract was

18    an Authorization to Release Credit Information to PRI.   Between

19    February 10, 2009 and April 15, 2009 , at the request of PLSI,

20    Mr. Barton sent three checks for a total of $11,600 in advance

21       fees to PLSI for loan modification services.

2 2                                                                                                       11.

23   Victor Salaiza Transaction

2 4                                      On or about February 12, 2009, Victor Salaiza signed

25   a Loan Modification Contract, in which he agreed to pay PLSI

26   $8,000 in advance fees for PLSI to negotiate a loan

27   modification on his behalf.   Some pages on this contract

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1      contained a heading for PRI.   On September 28, 2009, PLSI sent

2   Mr. Salaiza a Notice of Cancellation, which promised to refund·

3       half of the $8,000 in advance fees paid by Mr. Salaiza.

4                                            12.

5       Shahla O'Sullivan Transaction

6                       On or about April 8, 2009, Shahla O'Sullivan

7    submitted a Loan Modification Application to PLSI.  In

s     response, PLSI supplied Ms. O'Sullivan with a Residential Loan

9    Modification Retainer Agreement for "Zachary Gonalez, LLC" .

10    This agreement arranged for Ms. O'Sullivan to pay $10, 925 in

11       advance fees.  Between April 8, 2009 and June 2, 2009, Ms.

12   Sullivan paid $10,926 in advance fees to "Pacific Loan

13  Solutions. " Ms. O'Sullivan was subsequently issued a Loan

14   Modification Update from PLSI.

15                                                                                                                                                         13.

16   Robert Moreno Transaction

17                                        In Response to a solicitation from PLSI, Robert

18        Moreno arranged a meeting with HUXHOLD to discuss loan

19        modification services.   PLSI supplied Mr. Moreno with a

20        Residential Loan Modification Retainer Agreement for "Zachary

21        Gonalez, LLC '', which Moreno signed on May 4, 2009.  This

22        agreement arranged for Mr. Moreno to pay $5,317 in advance

23       fees.  On or about May 15, 2009, Mr. Moreno received a Loan

2 4      Modification Update from PLSI.  After paying $5,317 in advance

25       fees to Zachary Gonzalez, Mr. Moreno issued $1,000 checks to

26   "Pacific Loan Solution" as advance fees for a loan modification

21   on September 5, 2009 and September 19, 2009.

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1                                                                                                       14.

2   Klara Melman Transaction

3                                      On or about September 10, 2009, Klara Melman was

4  solicited by PLSI regarding loan modification services.   PLSI

5       supplied Ms. Melman with a Residential Loan Modification

6    Retainer Agreement for "Zachary Gonzalez, LLC", which Moreno

7    signed on September 16, 2009.   This agreement arranged for Ms.

a     Melman to pay $7;859 in advance fees.   Ms. Melman subsequently

9    received a letter from PLSI which stated "we will be processing

10    your file along with Zachary Gonzalez Jr. LLC".

11                                                                                                       15 .

12    Enrique Saavedra Transaction

13                       On or about September 5, 2009 Enrique Saavedra made

14    an appointment to discuss loan modification with HUXHOLD, in

15    response to a solicitation mailed by PLSI.   PLSI supplied Mr.

16    Saavedra with a  Residential Loan Modification Retainer

17    Agreement for "Zachary Gonzalez, LLC", which Mr. Saavedra

18    signed on September 5, 2009.  This agreement arranged for Mr.

19    Saavedra to pay $7,724 in advance fees.     Mr. Saavedra

20    subsequently received a letter from PLSI which stated "we will

21    be processing your file

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along. with Zachary Gonzalez Jr. LLC".

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2   Javier Garcia Transaction

3                                      In or about April 2009, Javier Garcia received a

4   solicitation regarding loan modification from PLSI.  PLSI

5       supplied Mr. Garcia with a Residential Loan Modification

6    Retainer Agreement for "Zachary Gonzalez, LLC" , which Mr.

7    Garcia signed on April 18, 2009.  This agreement arranged for

s     Mr. Garcia to pay $4,020 in advance fees.

9                                            17.

10                The conduct of PLSI and PRI, as described in

11           Paragraph 9 above, constitutes a substantial misrepresentation,

12   providing cause for the suspension or revocation of the

13   licenses and license rights of PLSI and PRI pursuant to Code

14   Section 10176(a).

15                                                                                                       18.

16                The agreements described in Paragraphs 9 through 16

17  above, constitute advance fee agreements within the meaning of

1s  Code Section 10026. PLSI failed to submit the advance fee

19  agreements referred to in Paragraphs 9 through 16 above, to the

20    Commissioner ten days before using them, in violation of Code

21    Section 10085 and Section 2970 of Title 10, California Code of

22    Regulations ("Regulations").   The conduct, acts and/or

23       omissions of PLSI, are cause for the suspension or revocation 2 4           of the licenses and license rights of PLSI, pursuant to Code 25    Sections 10085, 10177(d) and/or 10177(g).

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1                                                                                                       19.

2                                       PRI failed to submit the advance fee agreements,

3       described in paragraphs 9 through 11 above, to the Commissioner

4   ten days before using them, in violation of Code Section 10085

5       and Regulation 2970. The conduct, acts and/or omissions of PRI,

6    as set forth in paragraphs 9 through 11 above, is cause for the

7    suspension or revocation of the licenses and license rights of

8       PRI, pursuant to Code Sections 10085, 10177(d) and/or 10177(g).

9                                            20.

10                HUXHOLD negotiated the advance fee agreements,

11           described in paragraphs 13 and 15 above, prior to being

12    licensed as a real estate salesperson, in violation of Code

13    Sections 10130 and 1013l(d). HUXHOLD also failed to submit the

14    advance fee agreements to the Commissioner ten days before

15  using them, in violation of Code Section 10085 and Regulation

16   2970. The conduct, acts and/or omissions of HUXHOLD, as set

11   forth in paragraphs 13 and 15 above, is cause for the

18   suspension or revocation of the licenses and license rights of

19   PRI, pursuant to Code Sections 10085, 10177(d) and/or 10177(g).

20                                         SECOND CAUSE OF ACCUSATION

21                                                  (AUDIT VIOLATIONS)

2 2                                                                                                        21.

23                 On February 26, 2010, the Department completed audit

2 4       examinations of the books and records of PLSI pertaining to the

25           mortgage and loan activities described in Paragraph 8 that

26           require a real estate license.  The audit examination covered a

21       period of time beginning from September l, 2008 to October 31,

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1      2009.  The audit examinations revealed violations of the Code

2      and the Regulations as set forth in the following paragraphs,

3      and more fully discussed in Audit Report SD090016 and the

4 exhibits and workpapers attached to said audit report.

5                                                                                       TRUST ACCOUNT

6                                            22.

7                During the audit period, PLSI did not maintain a s trust account.

9                       VIOLATIONS OF THE REAL ESTATE LAW

10                                                                                                                                                            23.

11                                                           In the course of activities described in Paragraph 8

12    above and during the examination period described in Paragraph

13    21, PLSI acted in violation of the Code and the Regulations in

14     that it:

15               (a) deposited advance fees collected from borrowers

16 for loan modifications into PLSI's general operating account,

17 in violation of Code Sections 10145 and 10146 and Regulation

18    2832.

19                                        (b) did not provide itemized accounting of advance

20    fees collected, in .violation of Code Section 10146 and

21    Regulation 2972.

22                                        (c) did not maintain a columnar record for the

23 advance fees PLSI collected and handled through its general 2 4 accounts, in violation of Code Section 10145 and Regulation 25      2831.

26                              (d) did not maintain a separate record for the

27      advance fees PLSI collected and handled through its general

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1      accounts, in violation of Code Section 10145 and Regulation

2   2831.1.

3                                       (e) allowed an unlicensed individual to perform acts

4   requiring a real estate license, in violation of Code Section

5       10130.

6                                        (f)  claimed to have a •general trust account• in its

7   loan modification agreement, when it only had a general

a    operating account, in violation of Code Section 10176(a)

9                 (g)  failed to retain records of loan modification

10   transactions, trust fund records, bank statements, deposit and

11           disbursement records, transaction flow sheets and fax

12    confirmation sheets for loan modification activity, in

13    violation of Code Section 10148

14                                                                                                       24.

15                                        The conduct of PLSI, as described in Paragraph

16     23 , above, violated the Code and the Regulations as set forth

17           below:

18          PARAGRAPH               PROVISIONS VIOLATED

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23 (a)                  Code Sections 10145/10146 and

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Regulation 2832

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23 ( b)                                              Code Section 10146 and Regulation

23                                      2972

2 4                         2 3 ( c )                                                             Code Section 10145 and Regulation

25                                                                                                      2831

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1                       23 (d)                  Code Section 10145 and Regulation

2                                                                                                      2831.1

3                      23(e)

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23 (f )

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23 ( g)

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Code Section 10130 Code Section 10176(a) Code Section 10148

7                                   The foregoing violations constitute cause for the

8       suspension or revocation of the real estate license and license

9       rights of PLSI, under the provisions of Code Sections 10176(a),

10  10177(d) . and/or 10177(g).

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NEGLIGENCE

12                                      25.

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The overall conduct of PLSI and TORREZ constitutes

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negligence or incompetence.   This conduct and violation are

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cause for the suspension or revocation of the real estate

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license and license rights of PLSI and TORREZ pursuant to Code

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Section 10177(g).

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SUPERVISION AND COMPLIANCE

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The overall conduct of TORREZ constitutes a failure

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on his part, as officer designated by a corporate broker

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licensee, to exercise the reasonable supervision and control

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over the licensed activities of PLSI as required by Code

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Section 10159.2, and to keep PLSI in compliance with the Real

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Estate Law, and is cause for the suspension or revocation of

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the real estate license and license rights of TORREZ pursuant

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1      to the provisions of Code Sections 10177(d), 10177(g) and

2  10177(h).

3             WHEREFORE, Complainant prays that a hearing be

4   conducted on the allegations of this Accusation and that upon

5       proof thereof, a decision be rendered imposing disciplinary

6  action against all the licenses and license rights of

7   Respondents PACIFIC LOAN SOLUTIONS INC, PACIFIC RESIDENTIAL INC

8   JEFFREY TORREZ and ANDREW JONATHAN HUXHOLD under the Real

9  Estate Law, and for such other and further relief as may be

10   proper under other applicable provisions of law.

11       Dated at San Diego,

California

12   this

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/?/'   day of

p hA.iu  --..

Deputy Real Estate Commissioner