A Twin Cities title company agreed to pay $45,000 to the Minnesota Department of Commerce to settle an investigation into whether it violated state insurance laws and federal kickback rules by hosting boat cruises in exchange for business referrals.

TitleSmart of Maplewood agreed to stop running cruises on the St. Croix River, events it considered to be routine networking opportunities, as a result of the investigation, said Cynthia Koebele, its president and owner.

“We didn’t want the distraction of a protracted dispute, although we vigorously disagreed with their interpretation of the code, and therefore reached an amicable resolution with the commerce investigators,” said Koebele. “We just wanted to concentrate on what we do best — closing and title services.”

In a consent cease-and-desist order, the state agency said that licensees who attended “were in a position to refer settlement services business to TitleSmart,” and alleged that the “cruises, food, drinks and gifts constituted payments of commissions or valuable consideration for negotiating or soliciting insurance.”

The settlement agreement includes a $45,000 payment, $20,000 of which may be stayed if the company steers clear violations of the federal Real Estate Settlement Procedures Act, or RESPA, for two years. RESPA is aimed at making mortgage transactions more transparent and it prohibits settlement kickbacks. The company was also ordered to pay $5,000 in investigation costs.

Prentiss Cox, associate professor of law at the University of Minnesota Law School, said that such events are “rampant” and that the settlement is “groundbreaking” because it suggests that anti-solicitation laws for insurance agents were violated.

“There are a variety of schemes by which real estate and mortgage agents receive value from title and closing companies,” he said. “It is an area in which law violations are varied and need much better enforcement.”

Cox said that in addition to prohibiting companies from offering kickbacks, it holds the recipients responsible as well, so the commerce department could have taken action against licensees who participated in the cruises.

While the agency knows the identity of the real estate and mortgage licensees who took part in the cruises, it decided to focus its investigation on TitleSmart “because of the limited value of the benefit received by each individual on a pro rata basis,” said Ross Corson, a department spokesman.

In 2012, Title Smart paid $14,297.87 for a cruise that included food, alcohol and door prizes. The following year, it hosted another cruise with an almost $20,000 tab. Attendees included 243 mortgage brokers, loan officers, real estate salespeople and real estate brokers who were in a position to refer settlement services business to TitleSmart.

The department found that after the 2012 cruise, 68 percent of the transactions closed by TitleSmart were referred by someone who attended the cruise. After the 2013 cruise, 75 percent of TitleSmart’s transactions were referred by someone on the cruise.

Since starting TitleSmart in 2007, Koebele has grown the company to six offices and won the Ernst & Young’s Entrepreneur of the Year award. She said that many businesses in real estate host similar events. “Whether it be a boat ride on the river or Lake Minnetonka, golf outing, baseball game … there are an endless number of networking events where the venue and food are paid for by a hosting company,” she said.

The company’s attorney, Greg Miller of the Minneapolis law firm Siegel Brill, agrees that such events are prevalent in the industry. In the wake of the settlement, he expects many companies will put their plans for such events on hold.

“This will have a quieting effect throughout the mortgage, real estate and title industry,” he said.