Investors Title Co. has agreed to end what the California Department of Insurance called illegal rebating activities and pay a $1 million fine, the department announced today.
The settlement follows a California Department of Insurance investigation into accusations that the company was steering title business by using illegal rebate activities.
The investigation, based on employee interviews and an examination of the company’s books and records, found that Investors Title Co. had used illegal rebate activities which included fabricating fraudulent receipts totaling over $108,000, according to a statement from the Insurance Commissioner’s office.
The company also paid more than $145,000 for printing, postage, promotional materials, and other business support services for the benefit of Realtors, builders and lenders, totaling more than $253,000 in illegal distributions, the Insurance Department said.
“Illegal rebates add unwarranted costs to title business operations and artificially inflate the cost of premiums for policyholders,” said Insurance Commissioner John Garamendi. “Our department will continue to investigate these illegal rebate scams which foster unfair competition and cheat consumers. What title companies need to realize is these illegal rebates aren’t worth it and we will uncover it.”
The $1 million fine is four times the amount of claimed illegal rebates, Garamendi said.
Investors Title, which transacted title business in the counties of Los Angeles, Ventura, Orange, Riverside, San Bernardino, and San Diego was ordered to pay a $1 million fine, pay a $5,000 penalty for failure to comply with a previous Order of the Commissioner to cease and desist, and to reimburse $52,974 to the Department of Insurance for costs of the investigation.
Additionally, Investors Title Co. agreed to cease and desist from engaging in illegal rebate activities and suspended all current sales and marketing employees, for 10 days, who were engaged in illegal rebate activities. The employee suspension included company sales managers that directed business development and marketing activities and the sales representatives who spent the kickbacks obtained as reimbursement on gifts, merchandise, and entertainment for Realtors, lenders and builders.
CDI filed an accusation in June 2004 against Investors Title Co. alleging illegal rebate activities following an investigation, which began in June 2001 and covered activities from May 2000 to November 2001.
Title insurance industry practices have been in the spotlight nationwide this year, with investigations of major title insurance companies taking place in Colorado, California and other states. The probes have centered on title insurance practices of paying kickbacks to real estate brokerages, lenders and others for referring large volumes of business to them.
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