A mortgage title company and a handful of individuals are being sued by the Consumer Financial Protection Bureau and Maryland Attorney General related to an alleged mortgage kickback scheme with banks such as Wells Fargo and JPMorgan Chase.
The CFPB said Wednesday that it filed complaints jointly with the Maryland AG against six individuals who were tied to Genuine Title, a now-defunct title company in Maryland, as well as several other limited liability companies that allegedly transferred mortgage kickback payments. The defendants are being accused of trading cash and marketing services in exchange for mortgage referrals.
Wells Fargo and JPMorgan Chase have already been cited for the activities since loan officers were involved in the alleged scheme with Genuine Title. Authorities are requesting the court to ban five of the six named persons from the mortgage industry and pay a total of $662,500 in redress and penalties. Actions are still proceeding with the remaining defendant, the CFPB said.
“Paying kickbacks for mortgage referrals is illegal, and it has been illegal for decades,” said CFPB Director Richard Cordray in a press release. “Secret and unlawful payments keep consumers in the dark and put honest businesses at a disadvantage, and the consumer bureau will continue to take action against them.”
The complaint is against Genuine Title and six people tied to the company either as executives or a part of the referrals trade-off: Jay Zukerberg, Brandon Glickstein, Gary Klopp, Adam Mandelberg, William Peterson and Angela Pobletts.
Zukerberg was named as the founder and owner of Genuine Title while Glickstein was the marketing director. Klopp, Mandelberg, and Pobletts were loan officers in the greater Baltimore area while Peterson was a loan officer and president of a mortgage broker in Maryland. The parties are being accused of collaborating to get mortgage referrals which in turn gave them mortgage kick-backs.
Specifically, the CFPB said that Genuine Title funneled cash payments to the loan officers through limited liability companies that the four named loan officers created so that it wouldn’t look “fishy” had Genuine Title paid them directly, the CFPB said.
Zukerberg and Glickstein are accused of arranging for cash payments in amounts ranging from $130,000 to $500,000to the loan officers from 2009 to 2013. Genuine Title offered closing real estate services from 2005 until it shuttered in April 2014.
The company is accused of offering marketing services, including mailings to consumers with the loan officers’ contact information, in exchange for a referral.
“This scheme was especially profitable for the loan officers, who generally are paid by commission, because the marketing services increased the amount of business they generated,” the CFPB said.
In January, the CFPB cited Wells and JPMorgan for having loans officers who were involved in the alleged scheme with Genuine Title and because the banks did not have adequate systems in place to catch the fraud. The banks agreed to pay more than $35 million in penalties and restitution, without admitting or denying the charges.
Authorities have also requested a federal court judge to ban Zukerberg and Glickstein from the mortgage industry for five years and pay $130,000 and $400,000 in fines, respectively.
Mandelberg, Peterson and Pobletts could be banned from the mortgage industry for two years and face $132,500 in fines altogether. The action against Klopp is still pending since no settlement has yet been reached.