RESPA Violations Can Mean Big Fines and Jail Time
More tips on RESPA law, guidelines and violations for real estate agents and loan originators from former HUD investigator and RESPA expert, Dr. Gary Lacefield.
This week’s video discusses sham operations and fees for no service and the resulting big fines and possible jail time for a former VP of FLEET (now Bank of American) and others in New York. Violating RESPA guidelines can have major consequencies. Watch the video or read this RESPA update below.
View the RESPANewsUpdate.com video here. This educational video and the RESPANewsUpdate.com website were created by WebCasting.com, based in Dallas, Texas. This video is provided for free, compliments of Premier Mortgage Funding, Inc.
For more about Dr. Lacefield, visit RiskMitigation.net or GoGetRealEstate.com/Get/GLacefield.
Fines in New York RESPA Case for former Fleet VP
New York authorities uncovered a scheme involving a ’slush fund’ established by a local law firm to give kickbacks to lenders in exchange for referrals. The conspiracy also involved two title companies and three shell settlement services firms. The lending institutions involved were Fleet Bank, now known as Bank of America, and CTX Mortgage Co. Both routinely employed the services of the Hankin Firm to represent their interest in the closing of their respective residential real estate loans.
Janet Skinner, a former vice president of mortgage lending for Fleet Mortgage and later CTX Mortgage was hit with criminal charges for her role. According to the court, Skinner conspired with Hankin and others to accept nearly $400,000 in concealed payments and other things of value from the law firm and the shell corporations while she steered title and legal work to the Hankin Firm and title companies and gave repeated concealed payments to the loan officers and support staff of the lenders.
Skinner plead guilty to a felony count of conspiracy to commit mail fraud. She faces a maximum of 30 years in prison and a potential fine of $1 million.
One of the attorneys was charged with violating RESPA for receiving unlawful settlement fees from Crystal Clear Abstract, one of the sham companies owned by his former partner, Jerard Hankin.
Daniel Curtin, former partner of the now-defunct Poughkeepsie law firm Hankin, Hanig, Stall, Caplicki, Redl and Curtin, faced a possible six-month sentence and a fine of up to $5,000. He had plead guilty last fall to one misdemeanor count of “unlawfully receiving a portion of real estate settlement charges.”
Two of the other partners in the Hankin Firm, Todd S. Stall and Daniel Curtin, both were charged with RESPA violations for their roles. During his time with the firm, Stall was local chairman of the New York State Bar Association’s Real Estate continuing legal education program and was a frequent lecturer on real estate-related topics.
It was revealed in Court documents that “during the time period February 2001 through February 2004, Curtin received regular monthly payments from Crystal Clear Abstract or a related entity totaling approximately $18,000 that reflected a portion of charges and payments received by Crystal Clear or a related entity for selling title insurance and providing settlement services. Curtin provided no services to Crystal Clear in exchange for these payments.”
Additional Court papers indicate that Curtin established a shell company with no employees or offices called Doc Prep Plus, Inc., that he used exclusively to receive a portion of the fees received by the Hankin Firm in exchange for the real estate closing services provided by the firm.
Further, he established the Highland Energy Corporation and Lakeland Realty Corporation, two companies that were also shell corporations without employees or offices. Court documents report that the sole purpose of those companies was also to “funnel illegal kickbacks to an employee of one or more of the lending institutions with the Hankin Firm did business.”
In addition to the RESPA violations, Curtin could face further disciplinary action from an attorney grievance committee. Hankin, who arguably played a much larger role in conspiracy, is scheduled to be sentenced on April 20. Hankin has pleaded guilty to conspiracy to commit mail fraud and tax evasion regarding the shell corporations he set up to funnel the illegal real estate settlement fees. He faces a maximum of 35 years in prison.
So what did they do wrong? The compensation that one party offered and the other party accepted was compensation for services that were not performed or needed. Very simply, they offered and received money for the referral of business. The results: Individuals who had spent their life earning law degrees and establishing a very well respected law practice may lose the ability to practice their lively hood. (Stall, one of the law partners, was ordered to surrender his law license) In addition to monetary fines, several of the participants are facing “real” jail timeup to 35 years. Was it worth it?