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Thank you for your question. I'm very sorry to hear about this situation.
Your question pertains to Administrative Law. Under general principles of administrative law, an administrative penalty assessed against a licensee must be reasonably related to the violation. In this case, because you were the Broker of Record, the law will generally hold you liable for any misdeeds done by any agents under your perview. Further, administrative penalties which often include enforcement costs (such as the audit) are common.
Nevertheless, you could seek to challenge this ruling in the district court by challenging the sufficiency of the factual evidence used by the DRE. Given the fact that you did not do anything personally but that your CEO admitted to the mismanagement, and given your responsibilities as the broker of record, this appeal would be difficult and likely unsuccesful.
Your primary recourse would have been to sue the CEO for the related damages and the breach of fiduciary duty to you and the company. Of course, you have already thought about this when you pointed out that the CEO is outside of US jurisdiction and has no money.
Thus we must turn to the question of what the consequences would be if you did not pay the administrative penalty or whether the penalty. Generally, when a party fails to pay an administrative penalty assessed by a licensing agency, the agency will simply revoke the party's license and that will be that. However, the law permits personal liability to be assessed against you by the DRE for the payment of the administrative penalty. Thus, if you simply don't pay the penalty and allow your license to expire, the DRE can still come after you personally.
Please let me know if you have any further questions regarding this matter.
ZDN: I have appealed to the DRE over the course of this fiasco. I suppose since I am unemployed at present that I could offer to make payments for audit reimbursement. Unemployment benefits are not very much so perhaps I could offer to pay $100 per month. Would they charge interest on the unpaid balance? If so it would cost much more than the $6,845 that they are asking me to pay. Only paying $100 per month would take me 5.7 years to pay off the debt. I am currently 69 years old and cannot afford to retire so that is why I'm still looking for work. This $6,845 really creates a hardship for me. Frank
Thanks for your response.
The DRE has the statutory right to charge you interest on the unpaid fine, but it can waive that right.
In your situation, I would attempt to negotiate with the DRE and ask them for leniency. You can only pay what you can pay, and unemployment benefits are rarely enough to make ends meet.
ZDN: Thanks for your understanding and honest answers. I will spend some time to write back to the DRE and indeed ask to negotiate and for leniency and understanding for my situation. I am a man of prayer and trust in God and I am asking Him to come to our aid. Thanks so much for your help! Frank
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Good Luck and God Bless
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