2005-12-09 / Front Page

Local Realtor Under State Gun For Cheating Client

By Howard Schwach


HeffernanHeffernan A local real estate agent is under fire from the New York State Department of State for allegedly cheating a customer out of thousands of dollars in a scheme involving an under-the-table payment for negotiating a lower sale price.

David B. Heffernan, who is known in Rockaway as D. Brian Heffernan and who does business under the name of Heffernan Realty, is charged by the state with several violations of the Real Property Law and Regulations, the canon that regulates the industry.

Heffernan says that he is innocent of all the charges and that he will not admit to his guilt and take a consent agreement that was recently offered to him, because he maintains he is innocent of the charges.

If found guilty at an upcoming hearing, however, he could have his license to practice either revoked or suspended and be forced to make further restitution or pay a fine of up to $12,000 for what the state is calling "untrustworthiness and incompetence to act as a real estate broker." The hearing has not yet been scheduled and Heffernan has been offered a consent agreement in which he would pay a fine of $1,500 if he admits guilt.

"I deny all of the charges," Heffernan told The Wave this week. "I will never sign an agreement that I am guilty, because I am not."

While there are six violations of the law alleged in state papers, the first two - which date back to 2002 - carry the highest penalties.

According to the state, Heffernan failed to tell a client, Andrew Schwab, a lawyer who was selling his property at 222 Beach 100 Street, that a customer, a development partnership, was willing to make a full price offer of $215,000.

Instead, the state charges, Heffernan went to the buyers and told them that he could get the property for $195,000 in return for two concessions: That if the buyers flipped (resold at a profit) the property, Heffernan would then be paid $5,000 in cash and that, in addition, the buyer would make a unspecified cash payment to Heffernan after the closing.

"Mr. Heffernan did not advise Mr. Schwab that the prospective purchasers were willing to offer the full price and did not inform Mr. Schwab about his proposal to Mr. [Wayne] Rose (the co-broker for the buyers)," the state papers say.

The state also says that after the contract of sale was executed, Rose contacted Schwab and told him what had happened. In June of 2002, Schwab met with Heffernan and his sponsoring broker, Barbara J. Morris of West End Realty.

At that meeting, the state says in its papers, Schwab told the two that he knew of Heffernan's alleged unethical activity. In full settlement of Schwab's claims, Heffernan paid Schwab $15,000 in exchange for the lawyer's promise not to file charges with the Department of State.

Shortly after that meeting, Heffernan left West End Realty to begin his own real estate brokerage company.

The state charges that Heffernan breached his duty to his client, Schwab, when he proposed the deal with the buyers.

"By failing to convey to Mr. Schwab that the customers were willing to make a full price offer on Mr. Schwab's property and by proposing an arrangement whereby [Heffernan} would convince Mr. Schwab to accept a purchase price of $195,000 in exchange for, in part, a secret cash payment after the closing and by failing to advise Mr. Schwab of this proposal, [Heffernan] breached the fiduciary duty owed to Mr. Schwab of reasonable care, full and undivided loyalty and therefore demonstrated untrustworthiness or incompetence pursuant to article 441-c of the real property law," the papers charge.

In addition, the state says, "making a payment in an intentional effort to conceal alleged misconduct from the Department is an act of untrustworthiness."

Heffernan, however, says, "All of the people involved in the charges and allegations against me have proven to be lacking in credibility and integrity."

He points to the fact that Wayne Rose lost his real estate license in New Jersey and that he also was found guilty of charges of sexual abuse.

In addition, Heffernan says, both Schwab and Rose were partners in a Manhattan real estate venture called "Harbor Advisory" that reportedly has been forced into bankruptcy.

Heffernan also charges that Morris recently settled a case against West End Realty brought by the Commission on Humans Rights that her company had taken part in racial steering in Belle Harbor.

Heffernan said the charges were brought against him months after the meeting where he paid the $15,000 and only because he was being forced to sell his portion of the realty business to Morris.

He says that he paid the $15,000 to Schwab not as an admission of guilt, but because Schwab had political clout and could get his license pulled. He made the agreement on the advice of his attorney, he said.

There are several other charges that Heffernan violated real estate law in the papers, allegedly by advertising properties for sale without the permission of the owners and advertising properties for sale without providing the owners with a written agency disclosure form.

Morris declined to comment for this story. Neither Wayne Rose nor Andrew Schwab was available for comment.

Correction: This article contains certain factual errors about Wayne Rose and a real estate venture called Harbor Advisory in which Rose had been involved. First, Mr. Rose's real estate license was revoked in New York, not in New Jersey. Second, Mr. Rose was not found guilty of charges of sexual abuse, but rather was convicted of fourth-degree child abuse. Finally, while Harbor Advisory has ceased operations, it has not filed for bankruptcy protection.

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