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RESPA wrongdoing? Consumer agency claims law firm paid kickbacks through joint-venture title firms

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RESPA wrongdoing? Consumer agency claims law firm paid kickbacks through joint-venture title firms

Oct 25, 2013, 07:45 am CDT

A Kentucky law firm is in the crosshairs of the Consumer Financial Protection Bureau for its operation of nine title insurance companies.

The bureau sued the six-lawyer Louisville firm, Borders & Borders, on Thursday, claiming the title companies were used to pay kickbacks for work referrals, report the Wall Street Journal Developments Blog, the Louisville Courier-Journal, and the National Law Journal.

The suit (PDF) alleges the law firm paid for referrals by operating nine joint-venture title insurance companies with local real-estate agents and mortgage brokers. The nine companies didn’t have separate office space and were operated by one law firm worker, the suit says. The CFPB claims the split profits for title work were illegal kickbacks that violated the Real Estate Settlement Procedures Act.

The law firm operated the joint-venture companies from at least 2006 until 2011, when the firm was notified of an investigation.

Morgan Ward represents Borders & Borders. “The CFPB is out on a limb with this lawsuit,” he told the Wall Street Journal. “It has made allegations that are simply not true from a factual standpoint, and its interpretation of the law is incorrect.”

Borders & Borders issued a statement disputing the charges. "The CFPB’s statement in its press release that we ‘paid kickbacks’ or did anything illegal could not be further from the truth,” the statement said. “We are a family-owned firm that has been in business for over 40 years, and we would not and did not violate RESPA. There were disclosures to every consumer, as required by the statute, and in every instance in which title insurance was issued through the agencies, the consumer approved.”

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