Former Real Estate Broker Again in Trouble

Fed up with her repeated misdeeds, the state Department of Real Estate refused to give Arla Waxman another chance.

Waxman, 33, who had arranged mortgages and loans in Los Angeles and Ventura counties as a real estate broker, prepared bogus bank statements, forged numerous documents and engaged in other “dishonest dealing,” said an administrative law judge in a December 1998 ruling.

Although Waxman had been disciplined for other wrongdoing, the pattern of questionable practices continued, and the judge stripped her of her real estate broker’s license.

But the Santa Clarita woman with an IQ high enough to be a member of Mensa bounced back. She found work arranging real estate loans and maintained her status as a state-certified notary public.

Now, Waxman is in trouble again. A civil suit alleges she defrauded a Westlake Village man out of two homes and, in federal court, she pleaded guilty to bankruptcy fraud. She is scheduled to be sentenced today in the bankruptcy case.

What disturbs consumer advocates and former clients the most is that she could remain in positions with access to private financial information despite her state discipline record.

Although barred by the state from hanging out a real estate broker’s shingle of her own, Waxman nonetheless was lawfully hired as a loan officer with World Savings, a federally chartered institution.

“Here’s a person that the Department of Real Estate said can’t be trusted, yet this person was allowed to continue acting as a notary and doing real estate loans. Something’s wrong with that system,” said Gail Hillebrand, senior attorney for Consumers Union.None of the civil or criminal allegations against Waxman result from her employment at World Savings. In fact, she became a “top producer” for the company last year and the pride of her Santa Clarita office, a co-worker said, by pulling in $68 million in business.

World Savings officials declined to comment on Waxman, whose employment there was recently terminated.

But a former colleague defended her.

“I don’t care if her license was revoked,” said Donna Hawk, a senior loan processor who once shared an office with Waxman. “She made me a lot of money.”

Waxman said World Savings did a background check before hiring her and knew about her revoked license and legal troubles. She had not been convicted of a crime when she was hired by World Savings, though the administrative law judge had deplored her “dishonest dealing.”

According to the U.S. Office of Thrift Supervision, which oversees federally chartered savings associations such as World Savings, federal regulations prohibit institutions from hiring or continuing to employ anyone convicted of a felony or a criminal offense that involved a “breach of trust.”

But there is no law barring such institutions from hiring someone who has been disciplined by a state licensing agency through the administrative court system.

The thrift supervision office has policies and procedures that require prudent hiring practices among its institutions, especially for employees in fiduciary relationships. Its officials would not comment on Waxman’s case.

By the time Waxman was hired by World Savings in early 2002, she had been disciplined by the Real Estate Department, been sued for fraud and filed for bankruptcy in 1996, 1999 and 2000, public records show.

The department restricted Waxman’s broker’s license in 1996 after the agency found that she had mishandled client trust accounts. Two years later, the agency revoked her license after the administrative court finding that she had forged documents.

In 2001, Waxman appealed to the department to get her license back, saying she needed a way to support her two children. A commissioner denied her petition, citing her failure to pay a $40,000 judgment in a lawsuit filed against her and a lack of rehabilitation.

In another civil suit against her, Bradley J. Herman of Westlake Village alleges she defrauded him in 1999 out of two houses worth more than $2 million.

Herman contends that Waxman took advantage of him when he was ill by tricking him into signing papers that gave her control of the houses. Despite her revoked license, she was able to obtain loans against the houses because major lenders continued dealing with her, according to the lawsuit. After she cashed out the equity in the houses, she let them fall into foreclosure, Herman alleges.

Herman charges that Waxman forged a property ownership document and validated it with her own notary stamp. Her possession of that stamp, he says, raises issues about how government agencies communicate with each other.

Although the Real Estate Department posts discipline information on its Web site and sends out quarterly newsletters to real estate professionals, except for the Department of Corporations, it does not actively notify other state agencies about its discipline actions, said agency spokesman Tom Pool.

Waxman remained a notary public until her license expired in May 2000.

“Her real estate license and her notary commission aren’t linked together,” said Debbie O’Donoghue, a spokeswoman for Secretary of State Kevin Shelley, whose office oversees notaries. A notary license could be revoked if someone files a complaint with the secretary of state, but no one had done so against Waxman.

“Since it happened while she was already a notary, she just stayed commissioned,” O’Donoghue said.

Such reasoning makes no sense to Herman.

“One hand should know what the other is doing,” he said. “The moment her real estate license was revoked ... they should have immediately notified the secretary of state’s office and any associated agencies that might be in her field.”

Two other former clients, David and Kelly Brown, won a $150,000 default judgment in 2001 against Waxman, who had set up an improper loan when the couple bought an Agoura Hills house. The house had severe defects that Waxman fraudulently concealed, a Los Angeles County Superior Court judge found.

The Browns are now fighting Waxman in Bankruptcy Court to collect their judgment, said their attorney, Frank E. Miller.

In an interview, Waxman denied doing anything wrong to Herman or the Browns. She said she lost her case against the Browns because she was homeless at the time and couldn’t appear in court. As for the bankruptcy fraud case, Waxman said she “mixed up some numbers.”

In August, while she was a rising star at World Savings, Waxman pleaded guilty to two counts of filing for bankruptcy using false Social Security numbers with intent to deceive. In December, her plea became public record and in February she was fired. She faces a maximum sentence of 10 years in prison but is hoping for probation.

“I’ve done some good things. But everyone focuses on some of the bad things that come up,” Waxman said.

In the meantime, Waxman said she is writing a children’s book and hopes to land another job soon -- possibly as a lawyer.

According to the State Bar of California, Waxman passed the July 2001 exam but has not yet received a license to practice law. Bar spokesman E.J. Bernacki would not comment on Waxman’s application.