First American Title Co. has agreed to pay a $1 million penalty after state regulators alleged that a marketing representative in Southern California provided illegal perks to real estate agents, including video marketing and drone footage of listings with placement on social media sites, bus caravans to promote listings, and sales coaching.
Like many other states, California prohibits title agents from providing “things of value” to real estate agents or lenders as business inducements. The California Department of Insurance alleges that Eugene “Gene” Bleecker, a former First American marketing representative in northern Los Angeles County, provided such inducements to members of a real estate networking group he managed, the Advisory Group Real Estate Network.
In an April 5 accusation, the department said the vast majority of the group’s 600 members were real estate agents who belonged to chapters in the Santa Clarita, Antelope, and San Fernando Valleys. Investigators alleged Bleecker had “unilateral power” 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 spent significant effort to encourage, or even guilt them, into doing so,” the accusation claimed, citing emails from Bleecker to members.
According to the accusation, Bleecker was a First American marketing representative from 2012 to January 2020. He was so successful at bringing in business that First American conducted little oversight of his activities, the department alleged.
In two interviews, a former manager told a Department of Insurance investigator that, “Bleecker had a good deal of independence at First American because he met his sales goals and was a top producer,” the complaint said. His former manager “claimed that higher management at First American told her to leave Bleecker alone because of Bleecker’s status.”
In announcing that First American had agreed to pay a $1 million penalty, California Insurance Commissioner Ricardo Lara said the case should “serve as a warning to companies that they are accountable for their employees’ actions that harm consumers.”
“By looking the other way while one of its employees marketed its products in violation of state laws, First American Title Company failed to protect real estate consumers from conflicts of interest that can inflate the cost of title insurance,” Lara said.
First American also agreed to pay $185,000 to cover the department’s legal and investigative costs, for a total $1.185 million. The company, which paid a $50,000 fine in a similar but separate case in January, did not admit any liability or wrongdoing.
“First American Title Company fully cooperated with the California Department of Insurance investigation of a former employee of the company,” a spokesperson said in a written statement provided to Inman. “We’re pleased to resolve this matter with the California Department of Insurance and remain committed to compliance with Department of Insurance requirements.”
Lucas Rowe, an attorney with the law firm representing Bleecker, Donahoe Young & Williams LLP, said in an email to Inman that, “At this time, the only comment I can make is that we deny the allegations by the Department of Insurance.”
Under California Insurance Code Section 12404, “an unlawful inducement occurs when a Realtor or lender receives, or is put in a position to receive, direct or indirect things of value in exchange for steering business to a title company,” the department said in a news release. “Such acts inflate title insurance premium rates for all consumers.”
A federal law, the Real Estate Settlement Procedures Act, or RESPA, also prohibits kickbacks for business, and requires that consumers receive disclosures that make clear any business relationships between mortgage lenders and settlement service providers such as title insurers.