First American Title Co. agreed to pay a $ 1 million fine after state regulators alleged a marketing agent in Southern California provided illegal perks to real estate agents, including video marketing and drone recording of offers placed on social media sites , Bus caravans to advertise advertisements and sales coaching.
As in many other states, California prohibits brokers, real estate agents, or lenders from providing “valuables” as business incentives. The California Department of Insurance claims that Eugene “Gene” Bleecker, a former First American marketing representative in northern Los Angeles County, incentivized members of a real estate networking group he leads, the Advisory Group Real Estate Network.
In an April 5 indictment, the department said the vast majority of the group’s 600 members were real estate agents belonging to chapters in the Santa Clarita, Antelope and San Fernando Valles. Investigators alleged Bleecker had “unilateral powers” to add or remove members and that about half of the group’s members sent their title insurance business to him.
“While Bleecker stated that group members did not have to use his services, he went to considerable lengths to encourage or even find them guilty,” the prosecution alleged, citing e-mails from Bleecker to the members.
According to the indictment, Bleecker was First American’s marketing agent from 2012 to January 2020. He was so successful at doing business that First American barely oversaw its activities, the department claimed.
In two interviews, a former manager told an insurance department investigator: “Bleecker had a good level of independence with First American because he met his sales targets and was a top producer,” the complaint reads. His former manager “claimed that First American senior management told her to leave Bleecker alone about Bleecker’s status.”
California Insurance Commissioner Ricardo Lara announced that First American had agreed to pay a fine of $ 1 million as a “warning to companies that they are responsible for the actions of their employees that harm consumers” .
“By looking the other way while one of their employees marketed their products in violation of state law, the First American Title Company failed to protect property consumers from a conflict of interest that can drive up property insurance costs,” Lara said.
First American also agreed to pay $ 185,000 to cover the department’s legal and investigative costs, a total of $ 1.185 million. The company, which paid a $ 50,000 fine in a similar but separate case in January, admitted no liability or wrongdoing.
“The First American Title Company has fully cooperated with the California Department of Insurance’s investigation into a former company employee,” a spokesman said in a written statement to Inman. “We are pleased to clarify this matter with the California Department of Insurance and remain committed to complying with the requirements of the Department of Insurance.”
Lucas Rowe, an attorney at the Donahoe Young & Williams LLP law firm that represents Bleecker, said in an email to Inman, “For now, all I can say is that we are denying the Insurance Department’s allegations.”
Pursuant to Section 12404 of the California Insurance Code, there is “an unlawful incentive to obtain or enable a broker or lender, direct or indirect, of value in exchange for directing business to a title company,” press release. “Such acts increase title insurance premium rates for all consumers.”
Federal law, the Real Estate Settlement Procedures Act, or RESPA, also prohibits kickbacks for businesses and requires consumers to receive disclosures that make clear all business relationships between mortgage lenders and settlement service providers such as title insurers.
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