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Connecticut Derails Title Insurance Kickback Scheme

Companies agree to pay $700,000, customers to be reimbursed

December 12, 2007

Paying the $700,000 are the law firm Reiner, Reiner & Bendett, P.C., of Farmington, Absolute Mortgage Solutions, LLC, of East Hartford and Access America, LCC, DBA Century 21 Access America of Wethersfield.

Of the money, $125,000 will pay restitution to about 500 Absolute consumers who overpaid for certain mortgage-related services as a result of one of the schemes.

In an October lawsuit filed on behalf of the Department of Consumer Protection and the Insurance Department, Attorney General Richard Blumenthal alleged that Reiner, which also sells title insurance, used sham service, rental and other agreements to conceal $142,200 in kickbacks and unlawful inducements between 2002 and 2005. In exchange, Absolute and Access allegedly steered title insurance business to the law firm. Connecticut law prohibits title insurance agents from paying for referrals.

"This law firm used service and other sham contracts to camouflage kickbacks and sidetrack state law," said Blumenthal.

According to the attorney general, Reiner and Absolute conspired to conceal illegal payments as fake fees, secretly forcing consumers to cover the cost of kickbacks. In addition, he said the law firm hid illicit payments to Access in phony 'marketing' and 'rental' agreements. These steering schemes increased consumers' costs and denied choice.

"Each of about 500 consumers will receive $200 early in the New Year. These firms will rightly give back their ill-gotten gains to compensate consumers and help the state fight similar schemes. I will fight to enforce state laws banning kickbacks and other anticompetitive practices that increase costs to consumers," Blumenthal added.

Reiner agreed to pay mortgage broker Absolute $200 per customer to perform certain closing services, including ordering a title search, assembling closing documents, assuring insurance was in place and coordinating the closing. Reiner paid Absolute $76,200 in 2004 under the agreement.

Consumers, however, had already paid Absolute for the same and other services. Blumenthal and Sullivan charged that the arrangement was a ruse to conceal illegal payments to Absolute for steering customers to Reiner for their title insurance.

Under the settlement, about 500 Absolute customers are eligible to receive $200, returning unnecessary fees charged them to underwrite the kickback scheme.

Reiner used two other bogus agreements to conceal $66,000 in kickbacks to Access between 2002 and 2005. One contract called for Reiner to pay Access for nonexistent "marketing" services. Under a second oral agreement, Reiner paid Access to "rent" space in Access offices for closings and other business.

Of the $700,000, $125,000 will compensate Absolute consumers, $425,000 will be deposited into the state's General Fund and the remainder used for consumer education by the Attorney General's Office, DCP and the Insurance Department.

The agreement caps a two-year joint investigation by the Insurance Department and the Attorney General's Office. The investigation was prompted by unusual market activity reported to the Insurance Department. DCP and the Banking Department also participated.

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