First American Title Co. agreed to pay a $ 1 million fine after state regulators alleged a Southern California marketing representative provided illegal benefits to realtors, including marketing video and images of ad drones with placement on social media sites, bus trailers to promote ads and sales coaching.
Like many other states, California prohibits title agents from providing “valuables” to realtors or lenders as a business incentive. The California Department of Insurance alleges that Eugene “Gene” Bleecker, a former First American marketing representative in North Los Angeles County, provided such incentives to members of a real estate networking group he managed, the Advisory Group Real Estate Network.
In an April 5 charge, the department said the vast majority of the group’s 600 members were real estate agents from sections of the Santa Clarita, Antelope and San Fernando valleys. Investigators alleged that Bleecker had “one-sided power” to add or remove members, and that about half of the group’s members had sent him their title insurance contracts.
“Although Bleecker said members of the group did not have to use his services, he went to great lengths to encourage or even make them feel guilty to do so,” the prosecution claimed, citing emails from Bleecker. to members.
According to the prosecution, Bleecker was a marketing representative for First American from 2012 to January 2020. He was so successful in building business that First American had little control over his business, the department said.
In two interviews, a former manager told a Department of Insurance investigator that “Bleecker had a great deal of independence at First American because he met his sales targets and was a top producer,” the complaint. His former manager “claimed that First American senior management told him to leave Bleecker alone because of Bleecker’s status.”
Announcing that First American had agreed to pay a $ 1 million fine, California Insurance Commissioner Ricardo Lara said the case should “serve as a warning to companies that they are responsible for the actions of their employees who harm consumers “.
“By looking away as one of its employees markets its products in violation of state laws, First American Title Company has failed to protect real estate consumers from conflicts of interest that can inflate the cost of ownership. ‘title insurance,’ Lara said.
First American also agreed to pay $ 185,000 to cover the department’s legal and investigative costs, for a total of $ 1.185 million. The company, which paid a $ 50,000 fine in a similar but separate case in January, has not admitted any liability or wrongdoing.
“First American Title Company has fully cooperated with the California Department of Insurance’s investigation of a former company employee,” a spokesperson said in a written statement provided to Inman. “We are delighted to resolve this issue with the California Department of Insurance and remain committed to meeting Department of Insurance requirements. “
Lucas Rowe, an attorney at the law firm representing Bleecker, Donahoe Young & Williams LLP, said in an email to Inman: “At the moment, the only comment I can make is that we deny the allegations of the Department of insurance. “
Under Section 12404 of the California Insurance Code, “an unlawful inducement occurs when a real estate agent or lender receives, or is able to receive, direct or indirect things of value in return for directing ‘a business to a securities company,’ the department said in a statement. Press release. “Such acts inflate title insurance premium rates for all consumers.”
A federal law, the Real Estate Settlement Procedures Act, or RESPA, also prohibits bribes for businesses and requires consumers to be provided with information that clearly indicates any business relationship between mortgage lenders and providers of such settlement services. than title insurers.
Email Matt Carter