California DRE: Real Estate Agent Pleads Guilty to Conspiracy to Commit Real Estate Fraud in Connection with Short Sale Transaction

After an extensive investigation by the California Department of Real

Estate (DRE) and the Office of the California Attorney General (AG),

real estate salesperson Matthew Wayne Stewart pled guilty to conspiracy

to commit real estate fraud stemming from his actions in two short sale


“This case should be a warning to all licensees involved in short sale

fraud”, stated Bill Moran, DRE’s enforcement chief. “Such fraud by real

estate licensees will not be tolerated and the DRE will continue to work

with its law enforcement partners to ensure unscrupulous operators are

punished to the full extent of the law.”

In October 2010, the DRE filed an action against Stewart accusing him

of, among other things, receiving illegal secret profits in two separate

short sale transactions. Specifically, Stewart was accused of entering

into two separate short sale listing agreements wherein the allowable

compensation to be paid to the licensees could not exceed 7% of the

sales price. However, Stewart was accused of exceeding the compensation

limitation by requiring the buyers to pay an additional 3% short sale

negotiation fee, a fee that was concealed and not disclosed to the

lenders or sellers.

The case was referred to the AG’s Mortgage Fraud Strike Force,

established by Attorney General Kamala Harris in May 2011 to investigate

and prosecute mortgage fraud. On December 28, 2011 the AG filed felony

charges against Stewart for defrauding buyers and sellers in short sale

transactions in Placer and Nevada counties. On April 18, 2012, Stewart

pled guilty to conspiracy to commit real estate fraud stemming from the

above transactions wherein Stewart “fraudulently collected two short

sale fees to which he was not lawfully entitled…” As part of the plea,

Stewart was required to surrender his real estate license, serve 90 days

in jail, pay restitution of approximately $25,000, and be on formal

probation for three years. On June 12, 2012, Stewart’s voluntary license

surrender became effective.

Given current market conditions and the large number of financially

distressed homeowners, the potential for short sale fraud is huge. Short

sale fraud takes many forms and all forms have a deleterious effect on

the market. To help combat short sale fraud, the DRE has issued several

Consumer Alerts to help educate consumers and real estate licensees

alike to avoid short sale scams. The Alerts are posted on the DRE’s

website and may be found at:

The DRE is a state department whose mission is to protect the public

interests in real estate matters. For more information about DRE and its

programs visit