State probes realty group over access to database

The state's top real estate cop subpoenaed the Pikes Peak Association of Realtors for access to its Multiple Listing Service database on Wednesday, accusing the group of hindering her agency's investigations into local cases involving millions in fraudulent loans that left buyers with ruined credit and sent homes into foreclosure.

Erin Toll, director of the Colorado Division of Real Estate, said her investigators were forced to use surreptitious means to get access to the MLS, and she is "furious" about it.

"It's crazy," Toll said. "I can't do my job. They won't help the Division of Real Estate find the bad guys. I'm trying to regulate the industry with both hands behind my back."

The real estate group denounced Toll for her attack, saying it was unfair to suggest they are resisting her efforts to protect consumers from real estate agents engaged in criminal activity.

"We're not hiding anything," said Terry Storm, PPAR's chief executive. "We're following the law."

The association's attorney, Tyler Kraemer, said his client caught Toll's investigators trying to conduct a "fishing expedition" in the MLS system about 18 months ago. The agency wanted to search the database without a legitimate complaint, Kraemer said, leading him to advise the board to prohibit access.

"The MLS system contains confidential information, and we have to be sure any subpoena request is a legitimate request," Kraemer said. "The association is willing to cooperate as long as they have a clear understanding of what she's going to be doing in the database. We have not been provided with a sufficient comfort level as to what she'll be doing in it."

Kraemer said he has not seen the subpoena, but hopes both sides can work out a compromise. If not, Toll said she'll go to court.

Toll wants her staff of 50 to be able to search the Pikes Peak MLS to search for signs of overappraised properties, pockets of houses going into foreclosure and other indicators of mortgage fraud. She said her investigators should not have to reveal the details of each investigation to the real estate association staff and possibly compromise their probes, and added that they have unfettered access to virtually every other MLS database in the state.

"It is improper for us to let (anyone) know who we're investigating," Toll said. "They want us to subpoena every single piece of information we need. The property address; the victim; the suspected Realtor; whatever.

"It is none of the PPAR's business who we're investigating. They could disrupt our investigation if they alerted their member. We need from PPAR the same access we have to every other Realtor group in Colorado: unfettered access to their database via a friendly subpoena."

She cited recent Gazette investigations that revealed mortgage fraud in the purchase of five houses on Balsam Street and two on Fossil Butte Drive. The series of stories led the Colorado Real Estate Commission to ask three local real estate professionals to give up their licenses and pay $20,000 to $25,000 each in fines.

"There is an inordinate number of complaints coming from Colorado Springs, compared with the rest of the state," Toll said. "I don't know what is going on there. But our hands are tied. This issue is critical to the safety of Colorado Springs consumers."

Storm, of the Realtors association, rejected Toll's assertion that his group has been uncooperative. And he scoffed at Toll's suggestion that his group might tip off a fellow Realtor to an investigation.

"We're not protecting anybody or hiding anything," Storm said. "We want the bad guys as much as she does."

He also challenged her claim that state real estate investigators deserve the same respect as police investigating crimes.

"She's not a cop," Storm said. "She's a political appointee."

Wynne Palermo, chairwoman of the association board, was less strident in her opposition to Toll's request for access, but said the group's hands are tied.

"Our attorney told us it's not within the law for us to give her carte blanche access," Palermo said. "It's ludicrous to suggest we don't want to catch the bad guys. We don't want these people working with consumers."

Palermo said the association is willing to try for a compromise with Toll.

"We would never want to impede any of her investigations. But we can't go against what our attorney tells us is proper for our association."

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