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When Douglas Elliman accused three escrow subsidiary staff of conspiring in an “illegal kickback” scheme alongside a celeb dealer final month, the trade indulged in a parlor sport to uncover the identification of the famed Realtor.
Amid a flurry of lawsuits filed within the fall, Elliman executives accused staff of Portfolio Escrow, an organization it acquired in 2020, of partaking in a commission-sharing scheme that started in January 2015 and concerned “at least one high-profile Los Angeles real estate broker that is now a star of a reality television show.”
The well-known dealer, in accordance with a supply near the investigation, is Jason Oppenheim, founding father of The Oppenheim Group and star of the Netflix actuality sequence Promoting Sundown, Inman has realized completely. Oppenheim acknowledged receiving funds from Portfolio Escrow previously however denied wrongdoing and disputed the characterization of the association as an “illegal kickback.”
“Whatever this particular structure [was], for that period of time, did occur,” Oppenheim instructed Inman. “But it’s something that once I was advised I shouldn’t be engaged in it, I didn’t — and I haven’t received anything before or since.”
In change for enterprise from purchasers working with the dealer, Douglas Elliman alleged in authorized filings that officers on the escrow firm paid the agent as much as 20 p.c of its income from escrow charges for every transaction the dealer introduced.
Jason Oppenheim on the premiere of Disney+’s “She Hulk: Attorney at Law” on Aug. 15, 2022, in Los Angeles. (Photograph by Gilbert Flores / Selection by way of Getty Pictures)
Such an association, if carried out, would have given Portfolio entry to a gentle stream of high-dollar transactions whereas netting Oppenheim further income from his offers. It additionally possible would have violated legal guidelines that prohibit funds between escrow corporations and actual property professionals, in accordance with compliance skilled Summer time Goralik.
“If a licensee in California — broker or salesperson — receives a commission, fee, or other consideration as compensation or inducement for referring customers to an independent escrow company, the [Department of Real Estate] would likely review that as a violation of real estate law,” mentioned Goralik, a former actual property investigator in southern California.
Oppenheim speaks out
Oppenheim has gained notoriety as a Hollywood dealer who routinely lands listings that may stretch previous $100 million. His rising fame landed him a success actuality present, Promoting Sundown on Netflix, which debuted in 2019 and chronicles the operations of The Oppenheim Group, the brokerage Oppenheim based in November 2014.
When Inman spoke with Oppenheim concerning the allegations, he mentioned he had closed transactions by Portfolio Escrow for a number of years over the course of working The Oppenheim Group. However he mentioned he had not carried out so for no less than the previous couple of years. He recalled coming into right into a “structure” with Portfolio Escrow at one level, about 10 years in the past, the place the corporate may present The Oppenheim Group with advertising {dollars} from transactions closed by Portfolio.
He mentioned he didn’t keep in mind particulars, however Oppenheim mentioned he recalled a gathering with higher-ups at Portfolio through which he requested if the association had been permitted by accountants and authorized counsel, to ensure that it was all above board.
“They assured me, up and down, that it was completely appropriate, and that they had run the structure by their company and their accountants and counsel, etc., and that it was an appropriate structure,” Oppenheim mentioned.
His recollection was fuzzy, Oppenheim mentioned, however he estimated that the funds continued for “maybe a year” and amounted to “a couple thousand a month,” which might have been a complete of about $20,000 or so. He couldn’t keep in mind the small print and mentioned his financial institution doesn’t maintain data that reach past a 7-year interval, so he couldn’t confirm how a lot cash got here in by the construction.
“I don’t mean to discredit the amount of money, but it was — it wasn’t a huge thing for me, obviously. I think [The Oppenheim Group has] done over $100 million.”
In its criticism, Douglas Elliman alleged that the unidentified dealer — Oppenheim — acquired “over $100,000” from the association.
A few yr after the association started, Oppenheim mentioned his personal authorized counsel suggested that he discontinue receiving advertising {dollars} from any third events, whether or not or not they’d been permitted by accountants or counsel, as a result of it “wasn’t worth the liabilities.”
The Oppenheim Group and Portfolio Escrow then terminated the construction, in accordance with Oppenheim, and the brokerage continued to make use of Portfolio’s providers for years afterward, with out the advertising settlement.
Since then, Oppenheim added, he’s been approached a number of instances by escrow and different service suppliers to create structured agreements which may contain possession curiosity or different advantages and has at all times declined them, based mostly on his lawyer’s advice on that event 10 years in the past.
Oppenheim mentioned that calling the association an “illegal kickback,” as said within the Douglas Elliman criticism, was “not a fair characterization.”
“By no means was it sold as some kickback,” he added. “I can’t even tell you how many times agents get together and do this. I’m not suggesting any nefarious nature. This is totally done, and these are agents that I respect and brokerages I respect. There’s no way they’re doing anything untoward.”
Representatives from Douglas Elliman referred questions on the matter and on the litigation involving Invoice Grasska, the founder and former CEO of Portfolio Escrow, to Portfolio Escrow. Grasska is without doubt one of the three staff Douglas Elliman accused of conspiring within the association.
Portfolio Escrow declined to touch upon Oppenheim’s alleged involvement in any so-called kickbacks, and directed Inman to its lawsuit in opposition to Grasska.
Grasska didn’t reply to Inman’s requests for remark.
Paying 20%
The revelation comes as Douglas Elliman stays locked in authorized battles associated to its operations in California, together with with Grasska.
Grasska based Portfolio Escrow in June 2009, in accordance with a submitting he made with the state. Ten years later he and Douglas Elliman engaged to promote the enterprise, and that deal closed in November 2020.
Grasska stayed on with the corporate till abruptly resigning in June 2024. In its criticism, Douglas Elliman mentioned Grasska resigned solely hours earlier than it was set to fireplace him, days after putting him on depart and alerting him it had found alleged improper conduct.
Grasska filed a lawsuit in opposition to Douglas Elliman and Portfolio Escrow on Oct. 14. Lower than two weeks later, Douglas Elliman filed swimsuit in opposition to Grasska.
Invoice Grasska
Each authorized complaints embrace insights into the rocky breakup, together with the allegations of criminality made by either side.
A 3rd lawsuit involving Douglas Elliman of California can also be making its means by the courts proper now. Along with sexual harassment allegations in opposition to Western Area brokerage operations head Stephen Kotler, that swimsuit alleges senior managers inflated closing costs to offer kickbacks to sure Douglas Elliman brokers. That swimsuit was filed by Christina Carillo, former Newport Seashore workplace govt supervisor of gross sales.
In its criticism, Douglas Elliman named Kari Yocam, Maria Trangelo-Molina and Grasska as the first staff at Portfolio Escrow who carried out the association with the “high-profile Los Angeles real estate broker” presumed to be Oppenheim.
Reached by cellphone for touch upon Tuesday, Trangelo-Molina confirmed that she labored with Oppenheim.
“I was the second escrow officer who handled his account,” she mentioned in a quick cellphone name with Inman.
Yocam didn’t reply to requests for remark concerning the obvious association. Her LinkedIn profile reveals she left Portfolio Escrow in October. Trangelo-Molina didn’t reply to a written record of questions.
In the meantime, Douglas Elliman’s criticism claims the association was unlawful.
“Bill Grasska’s illegal kickback arrangement, which he and his co-conspirators knew to be prohibited by the Real Estate Settlement Procedures Act, provided to the real estate broker up to twenty-percent of the total escrow fees for each transaction that the real estate broker provided to Bill Grasska and his co-conspirators,” Douglas Elliman attorneys wrote within the criticism.
The corporate mentioned that Grasska and others created varied corporations to switch the cash between themselves and Oppenheim, an quantity the corporate mentioned exceeded $100,000.
Douglas Elliman alleged in its criticism that Grasska, Yocam and Trangelo-Molina supplied “illegal kickbacks to various Realtors in the form of providing and paying for coffee cart services at open houses in exchange for the receipt of escrow business” since no less than 2017.
“The California Department of Real Estate, the Department of Financial Protection and Innovation, the Los Angeles Police Department and the Internal Revenue Service have all been placed on notice of the improper activities referenced herein and evidence supporting [Douglas Elliman’s] claims is being provided to these agents,” the corporate wrote in its criticism.
Grasska has since change into CEO of his personal escrow enterprise, Ravello Escrow, in accordance with paperwork filed in October with the state of California. Douglas Elliman mentioned that place violates non-compete agreements as a part of the Portfolio Escrow sale.
The corporate mentioned it was getting ready “separate actions” in opposition to Yocam and one other worker, Britney Geissel.
In Grasska’s criticism, he alleged that Portfolio was nonetheless engaged in unlawful kickback schemes beneath the path of Douglas Elliman, together with brokers who Grasska mentioned acquired increased fee splits if their purchasers labored with Portfolio.
Portfolio claimed that Grasska’s lawsuit was a distraction from his personal allegedly unlawful actions.
“Portfolio Escrow’s complaint against Grasska was filed after uncovering a deliberate scheme by Grasska and certain other individuals to defraud the company,” a spokesperson for Portfolio Escrow mentioned in a press release.
“Portfolio Escrow’s standalone complaint includes allegations of fraud, embezzlement of company funds, and other egregious misconduct. Grasska’s own complaint was only filed to distract from his fraud and kickback scheme that had been going on for some time and which he knew Portfolio Escrow had recently discovered.”
In his lawsuit, Grasska alleged that Portfolio staff had been instructed to inflate a closing assertion to permit for celeb Douglas Elliman brokers the Altman Brothers to obtain increased commissions.
Grasska additionally alleged that, beneath Douglas Elliman’s possession, Portfolio staff had been inspired to offer advantages to actual property licensees that might quantity to unlawful kickbacks.
Matt and Heather Altman denied the allegations in a press release to Inman final month.
“This happens often as we are both at the top of the real estate game and on TV,” the assertion mentioned. “People like Bill [Grasska] and Christi [Carrillo] use our name and throw it around to catch attention to themselves and their lawsuit that we are not even involved in. We are used to it. Unfortunately, outlets like The Real Deal use our names as clickbait. It’s already been proven. We have nothing to do with any of this and it’s just desperate people looking for attention. The Altman Brothers are not named in either lawsuit.”
California’s kickback legal guidelines
Escrow corporations and brokers are regulated by the Division of Actual Property (DRE) and Division of Monetary Safety and Innovation (DFPI), and the Client Monetary Safety Bureau.
The DFPI regulates impartial escrow corporations. Beneath California’s monetary code, escrow corporations are forbidden from paying for referrals.
“Except for the normal compensation of his own employees, it shall be a violation of this division for any person subject to this division to pay over to any other person any commission, fee, or other consideration as compensation for referring, soliciting, handling, or servicing escrow customers or accounts,” the legislation says.
An escrow firm paying an agent to refer purchasers to the corporate is also a violation of the Actual Property Settlement Procedures Act (RESPA).
RESPA does permit for advertising preparations if an entity agrees to advertise the providers of one other firm in change for affordable compensation in return. The providers can be spelled out in a advertising providers settlement (MSA).
“A lawful MSA is an agreement for the performance of marketing services where the payments under the MSA are reasonably related to the value of services actually performed,” in accordance with the CFPB, which regulates RESPA and scrutinizes such agreements for compliance.
Goralik, the compliance guide who beforehand labored as an investigator for the DRE, declined to remark particularly about Portfolio Escrow or Oppenheim.
She mentioned that any illegal referral price association would violate three units of legal guidelines regulated by the DRE, DFPI and CFPB.
“While these allegations involve a celebrity broker, illegal kickbacks are a broader concern in the real estate industry,” Goralik mentioned. “Consumers, whistleblowers, consumer advocate groups, attorneys, and industry professionals frequently raise concerns about such practices. Reporting these activities to the appropriate authorities is essential to addressing the problem.”
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