West Virginia Appraisal Board Scheme

The Doomed Quest to Reform a corrupt West Virginia Licensing Board

Readers of DC Comics will be familiar with Bizarro World, a cube-shaped planet that is home to a weirdly inverted version of reality. The planet is governed by the Bizarro Code, whose ungrammatical main tenet is, “Us do opposite of all Earthly things!”

But “Bizarro World” doesn’t nearly describe a scheme in which a West Virginia occupational licensing board has joined hands with a law firm that has managed to get its tentacles into the statehouse in Charleston. Incentivized financially to discipline licensees, board members have purportedly been able to earn money as a side hustle when licensees are then sued by the law firm.

In an attempt to shut down this glaring conflict of interest and dislodge the law firm from the musty halls of the statehouse, West Virginia House Bill 4285 was signed into law in April. It took effect this month.

The new law bans any member of the West Virginia Real Estate Appraiser Licensing and Certification Board from disciplining a licensee and then hiring on as an expert witness in a lawsuit involving the licensee. The statute attempts to remove the board members’ financial incentive to penalize appraisers by eliminating the possibility of future revenue attached to their disciplinary actions.

“Board members earn money working for a law firm that files lawsuits against appraisers,” said one West Virginia appraiser who spoke on the condition of anonymity. “I’m blown away that [board members] can do work for attorneys who sue appraisers. The moonlighting board members then work with the attorneys to discredit the appraiser being sued.”

The board members, according to the appraiser, also help engineer and approve below-market or inflated appraisals on behalf of the law firm. Attorneys who haunt the state capital are said to work as “scouts” for the law firm, always on the lookout for appraisers to sue.

It tilts the scales of justice. Just the threat of going up against the law firm that has hired a state board member as an expert witness can get an appraiser engaged by the opposing side to walk away, says the appraiser. In a deposition, the board member will use his state-appointed position to provide the vague impression he is working under color of law, or represents state authority. No appraiser would put his license at risk by challenging the board member’s own appraised value, knowing he could be disciplined down the line. The implied threat of the board member’s involvement is sometimes all it takes to subvert the legal system and the case settles, says the source. It’s the intimidation factor.

In a divorce case, a low appraised value can benefit the party who wants to retain the home. That party wants the value to be as low as possible. The law firm, working with a dishonest appraiser, will engineer a low value and then hire a member of the appraisal board to review and approve the low appraisal, says the source.

“It’s always the same law firm and the law firm always contracts with the same two appraiser board members,” said another appraiser who is familiar with the situation. “When complaints are made to the board, the board will find in favor of the complainant and the appraiser and his errors and omissions insurer will be sued by the law firm.”

“Once these guys paint a target on a licensee’s back, they adopt a ‘take no prisoners’ approach,” said the second appraiser, who would speak only on condition of anonymity.

Daniels, W. Va-based appraiser Lori Noble was the driving force behind the long-overdue statute. She worked with lead sponsor Delegate Brandon Steele (R). Delegates Geoff Foster (R) and Josh Booth (R) were co-sponsors of the bill. Every appraiser in the state owes her a debt. She has taken one for the team.

The statute also helps counter cronyism. It attempts to keep the board from maintaining a perpetual scarcity of appraisers in the state, which the board has done by slow-walking applications, sometimes for years. The law requires the board to provide applicants a written statement within 15 calendar days of its decision to deny an applicant’s license or renewal request.

“This bill will improve occupational licensing standards with greater supervision for our state agency. [It will] reduce antitrust in licensing, promote moral and ethical administration, and reduce subjective barriers to entry,” said Noble.

The board has a track record of scofflaw activities. From 2010 to 2019, board members accepted tens of thousands of dollars in free airfares, hotel rooms, meals, course materials and other things of value from a Washington, D.C., publisher known as the Appraisal Foundation. During that time, the same personnel, according to a state legislative auditor’s report, violated state law in a way that benefitted the publisher by streamlining use of the publisher’s standards but unlawfully muzzling citizens of the state in the process. In addition, four of the regulators – current and former appointees to the board – failed to disclose the gifts in required filings with the West Virginia Ethics Commission.

Members of West Virginia state boards, commissions, and agencies who are appointed by the governor must file a Financial Disclosure Statement reporting gifts, including meals and beverages, or anything with $100 or more in monetary value, from a person, business or organization that has a direct and immediate interest in governmental activity over which the board member has control. Any person who knowingly fails or refuses to file a required Financial Disclosure Statement is guilty of a misdemeanor pursuant to West Virginia Code §6B-2-10(c).

The board has been violating West Virginia law in other ways, as well. In 2017, it was discovered the board had hired unauthorized individuals as de facto board members. Board members were believed to have effectively delegated their duties to doppelgangers.

In the meantime, the lawsuits will continue until morale improves.

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Jeremy Bagott

Certified General Real Estate Appraiser at Bender Rosenthal Inc

Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

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