|By Richard Burnett, The Orlando Sentinel, Fla.|
|McClatchy-Tribune Information Services|
According to state documents released earlier this month,
Loss of the title-insurance agency license, though temporary, would be a "death penalty" for most agencies because they would have no income from selling policies during that period, said
But Kaufman, Englett and Lynd deflected the blow by phasing out the agency from late 2009 to
KEL's partners say they did not shift their title-agency business to new companies to avoid the state's enforcement action; they say the shift took place long before regulators told them in early 2011 that
The changes, they say, were part of a business strategy to bring in new agency principals and to establish their own insurance company --
Although KEL's partners say they were not informed of the state's regulatory complaint until early 2011, the conflict that led to the complaint actually dates from 2005, according to a lawsuit filed by
The Chicago Title lawsuit alleges that the K.E.L. agency committed major mistakes in its work on two closings seven years ago, and that K.E.L.'s negligence cost Chicago Title nearly
According to the March settlement with the state, regulators also blamed K.E.L. for the troubled 2005 closings. But Kaufman, Englett and Lynd contend that the settlement, and the surrendering of the former agency's license, do not constitute a sanction against them, because the state's enforcement case was settled without an administrative hearing.
"In the end, we elected not to go that route because, by that time, we hadn't been operating that company for nearly two years," KEL spokesman
So, in a quirk of the regulatory system, the state took away the license of a company that no longer exists, even as the defunct company's principals continue selling title-insurance policies, uninterrupted, through other corporate entities.
That raises serious questions about the state's regulatory authority, said
"Even if everything the KEL partners did was legal and above-board, this basically exposes a flaw in the disciplinary system," he said. "In the best-case scenario, the state received no punishment value from the action it took. In the worst case, what the partners did skirts the intent of the action, and I think the state would want to look at that very seriously."
State regulators say their reach is limited by
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