Brokers Getting Secret Payments Through Real Estate Software

California prosecutors have stumbled across a neat little real estate scam.

Title insurance companies are using software used by real estate brokers to facilitates unlawful secret payments to the brokers for the referral of business to title insurers and other providers.

Last week, Jacksonville, Florida-based title insurance company Fidelity National Financial settled a case brought by the district attorneys of San Diego, Ventura and Los Angeles counties.

Fidelity National Financial will pay $873,588 to settle the charges.

In the civil complaint filed under California’s Unfair Competition Law, the district attorneys alleged that Fidelity National operated a software platform — called Transaction Point — for real estate brokers and other settlement service providers in California.

The state alleged that the system facilitated unlawful secret payments to the brokers for the referral of business to title insurers and other service providers.

“Consumers deserve the benefits of competition when they buy homes and choose service providers and these secret payments in exchange for referrals violated expectation,” San Diego District Attorney Bonnie Dumanis said.  “We bring enforcement actions like this to ensure that free and fair competition – and not an undisclosed referral payment – determines who provides each real estate settlement service.”

Fidelity National developed the Transaction Point software and its Web-based referral system in 2002 to assist brokers in preparing transaction documents and ordering related real estate settlement services, such as escrow, title insurance, and natural-hazard disclosure services.

But the district attorneys allege that Transaction Point also was used by the brokers to charge and collect unlawful fees of $25 or more from providers of those services, including from service-providers affiliated with Fidelity National, which made these payments on their behalf.

Fidelity National ceased operating the Transaction Point system in late 2009 when the system was questioned by authorities.

Under the terms of the stipulated final judgment, which was entered without admission of liability, Fidelity National Financial, Inc. is prohibited from paying any real estate broker that places an order with Fidelity National for title insurance or other goods or services using Transaction Point or any substantially similar computerized order placement platform, or paying a fee to any real estate broker for the use of any substantially similar computerized system.

Fidelity National also agreed to pay a total of $873,588, consisting of $123,588 in investigative and prosecution costs and $750,000 in civil penalties pursuant to the Unfair Competition Law to be divided among the three counties that prosecuted the matter.

Copyright © Corporate Crime Reporter
In Print 48 Weeks A Year

Built on Notes Blog Core
Powered by WordPress