An investigation from the District of Columbia Office of the Attorney General has uncovered the use of an illegal kickbacks scheme involving real estate agents across several title insurance companies. Allied Title & Escrow, LLC (Allied), KVS Title, LLC (KVS), Modern Settlements, LLC (Modern) and Union Settlements, LLC (Union) were found to be involved.
“District residents are entitled to make fully informed decisions about how to spend their hard-earned money, especially when it comes to making the high-stakes purchase of a home,” said Attorney General Brian Schwalb. “These four companies violated the most fundamental principles of a free and fair marketplace: they exploited consumers, limited their choices and hurt other businesses that play by the rules. Today, we’re exposing and putting an end to these elaborate and illegal kickback schemes.”
The investigation found that the companies were providing investment opportunities to real estate agents in either their company or in a shell company they created. Then, when agents would provide them business referrals, they would provide kickbacks in the form of split profits. Modern and Union were created for this purpose, and Allied and KVS created shell companies for the same purpose.
Allied was also found to be hosting yacht parties on Chesapeake Bay to reward participating agents.
“The financial incentives these companies provided to real estate agents led those agents to aggressively steer their home-buying clients to the companies in ways that reduced buyers’ ability to shop for the best price or service,” the Office stated. “This behavior inhibited competition in the District’s title insurance and escrow market, and it harmed other title companies that followed the law but lost business to the companies operating the unlawful schemes.”
The companies were ordered to pay a combined $3.29 million. Breaking down the payments: Allied will pay $1.9 million, KVS will pay $1 million, Union will pay $325,000 and Modern will pay $65,000. The District stated it will “devote up to $1.75 million from these settlements to restitution for affected consumers.”
