HARRISBURG, PA — Pennsylvania Attorney General Michelle Henry has announced a civil lawsuit against Barry Newhart and a group of mortgage brokerage companies based in the Lehigh Valley, alleging their involvement in an unlawful kickback scheme with local real estate agents.
The complaint, filed in the United States District Court for the Eastern District of Pennsylvania, accuses Newhart and the brokers of orchestrating a scheme where real estate agents were incentivized to steer potential homebuyers to their mortgage brokerage. According to the lawsuit, real estate agents were offered discounted ownership stakes in a joint venture mortgage company, along with perks such as sporting event tickets and lavish dinners. The alleged arrangement was hidden from homebuyers, violating federal and state consumer protection laws.
“Buying a home can be a stressful and challenging time, and this group of mortgage brokers and real estate agents conspired to serve themselves while betraying buyers,” stated Attorney General Henry. She emphasized that homebuyers should be informed of conflicts of interest, particularly when making significant financial decisions like purchasing a home.
The lawsuit specifies that Newhart attempted to disguise the kickbacks as stock sales and cash payments, a move intended to evade federal prohibitions under the Real Estate Settlement Procedures Act. The complaint further alleges that these actions violate Pennsylvania’s Unfair Trade Practices and Consumer Protection Law and the federal Consumer Financial Protection Act, among others.
The defendants in the case include six mortgage companies, notably Bright Financial Group, LLC; Conquest Mortgage, LLC; and Flagship Home Loans, LLC, among others.
The Attorney General’s Office is pursuing wide-ranging legal remedies, including injunctive relief, civil penalties, restitution, and attorney fees. Consumers who believe they may have been impacted by the defendants’ practices are encouraged to file a complaint online, contact the Consumer Protection Hotline at 1-800-441-2555, or email scams@attorneygeneral.gov.
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