Hawaii state regulators are investigating Prudential Locations LLC for a 2003 "Wells Fargo Friends" party the company threw whose attendees included agents that referred at least $1 million in business to Wells Fargo.
The Department of Housing and Urban Development announced Sept. 20 a $48,000 settlement with Prudential, one of Hawaii's largest real estate brokerages, for violations of the Real Estate Settlement Procedures Act (RESPA) stemming from the gathering.
HUD's investigation found that "Prudential organized, promoted, executed and paid for the "First Annual Wells Fargo Friends Party" in January 2003. Only real estate agents who referred over $1 million worth of business to Wells Fargo were invited."
However, according to Prudential's attorney Paul Alston, HUD's findings were incorrect. "This is not true," he said. "Attendance was not limited to these agents. Many other people were invited to the party."
At that party, HUD further found that "Prudential paid for and gave real estate agents the opportunity to win a three year lease of a Mercedes-Benz, trips, and other prizes at the 'First Annual Wells Fargo Friends Party' in January 2003 in return for their referrals of business to Wells Fargo."
Alston stated that these findings by HUD were not accurate, either. "This is not true," he said. "The party and the drawings were not inducements to refer business since agents' eligibility to participate in the drawings was determined based upon events that preceded the announcement of the party."
Prudential Chief Executive Officer William S. Chee signed the $48,000 settlement payment to the U.S. Treasury and agreed to cease the business practices that triggered HUD's concern. In addition, Prudential agreed to notify all its real estate agents that any compensation to them based on referring business to affiliated partners is a violation of RESPA.
Jo Ann Uchida, complaints and enforcement officer with Hawaii Regulated Industries Complaints Office, confirmed the investigation but would not offer details.
Alston further confirmed that the state was investigating, but said that it is "a routine response to any federal action, and, of course, the federal settlement involved no admission or finding of wrongdoing."