A Maple Grove real estate agent accepted free meals, drinks and lodging in exchange for steering more than two dozen clients to Liberty Title for insurance, a “quid pro quo” arrangement that violated a federal law against kickbacks, according to an enforcement action announced this week by the state Department of Commerce.
Liberty Title officials and the real estate agent, Brandon Doyle, said they dispute the allegations, but they agreed not to challenge the findings and to avoid any similar violations in the future. Liberty Title will pay a $45,000 fine and Doyle will pay a $5,000 fine.
“This is about protecting consumers and ensuring a fair marketplace,” Commerce Commissioner Mike Rothman said in a written statement. “Buying or selling a home is a complicated process and a big financial decision. These transactions shouldn’t be tainted by conflicts of interest that can increase costs for consumers.”
Jeff Zweifel, co-owner and vice president of Liberty Title, said he disagrees with the department’s characterization of the relationship, but he said he feels his Anoka-based company was treated fairly.
“It was a learning experience for us and the industry,” Zweifel said.
Doyle, who strongly denies the allegations, said he regrets signing the consent order.
“I’m getting hit for having a cheeseburger with a friend,” said Doyle, 31, noting that he and the Liberty employee who repeatedly bought him lunch co-authored a book published in 2016.
That book, “Mindset, Methods & Metrics: Winning as a Modern Real Estate Agent,” has sold more than 3,000 copies on Amazon, Doyle said.
This is the second time in recent years that the Commerce Department has taken action against a title company for engaging in alleged kickbacks. In 2015, TitleSmart agreed to a $45,000 fine for allegedly hosting boat cruises and giving away free meals to nearly 250 real estate professionals in exchange for insurance referrals. In that case, company officials also denied wrongdoing, saying they had engaged in routine networking opportunities.
According to the most recent consent order, Doyle accepted nine free meals from Liberty Title in 2014 from such restaurants as Houlihan’s, Granite City and Cheesecake Factory. Liberty also provided free hotel accommodations while Doyle attended a real estate conference in San Francisco, and the company covered $980 in beverage costs when Doyle and some of his clients attended a Minnesota Wild game in 2014.
After receiving the perks, Doyle’s real estate customers suddenly started doing a lot more business with Liberty, according to the Commerce Department. In 2013, before the arrangement began, Liberty provided title insurance on none of the 20 real estate transactions Doyle handled. But in 2015, 20 of Doyle’s 23 deals went through Liberty, according to the department.
“In this instance, there was a clear pattern with things of value being given and received, followed by a very dramatic change in business referrals as a result,” Commerce spokesman Ross Corson said.
Doyle, who has been selling real estate for five years, said there is a far less sinister explanation for the increase in referrals to Liberty. In 2015, Doyle and his father, Michael Doyle, left Edina Realty and began working for Re/Max in Maple Grove. As part of the switch, the Doyles said they stopped using Edina’s title company and started sending some of their clients to Liberty, which was about $50 cheaper per transaction.
“We actually saved our clients quite a bit of money,” Michael Doyle said. “We also gave our clients a choice of whichever title company they wanted to work with … So I really feel like we are being persecuted here.”
Michael Doyle said the Wild game was a joint marketing event in which his company covered the $3,000 to $4,000 cost of renting the suite and Liberty paid for the drinks.
“We invited about 20 clients that had worked with us that year, and Liberty Title invited some of their clients,” Michael Doyle said. “And they picked up some of the tab.”
Michael Doyle said he and his son agreed to go along with the consent order to make sure his son retained his real estate license, and to avoid an expensive legal fight. But he said he now regrets the decision and worries about the impact on his business.
“We are in sales,” Michael Doyle said. “If we lose our reputation, we might as well do something else.”
Zweifel said his company did not knowingly break the rules.
“We believed that Liberty Title was conducting its marketing practices in compliance with the rules as we understood them, but through this experience we now know we were wrong,” Zweifel said in a written statement. “We are working hard to make sure this never happens again. We have changed our marketing practices.”