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.