ST. PAUL, Minn. (KMSP) - Renters Warehouse, which claims to be the second larges real estate management company in the country, has agreed to change its business practices and pay a $150,000 fine, after an audit by the Minnesota Commerce Department.
Renters Warehouse is owned by Brenton Hayden, 30, who Fox 9 profiled last May. Former business associates said in 2007, Hayden had orchestrated fraudulent real estate schemes with a previous company he owned, Hot Properties. The Commerce Department revoked Hayden’s real estate license in 2007 and he was "permanently barred from the mortgage originating and servicing industry.” Commerce said Hayden had engaged in “…fraudulent, deceptive and dishonest practices by participating in a scheme to defraud mortgage lenders.”
In the latest action from the Commerce Department, a consent cease and desist order signed Friday, auditors reveal a number of violations of state law. Among the allegations:
FAILURE TO DEPOSIT ALL TRUST FUNDS: Renters Warehouse was not depositing all trust funds, like security deposits and other funds, into a trust account.
SELLING INSURANCE WITHOUT A LICENSE: Renters Warehouse was selling various insurance policies, for property damage or eviction, but they did not have an insurance license.
OVERCHARGING FOR BOUNCED CHECKS: For checks that came back “non-sufficient funds” (NSF), Renters Warehouse was charging a $65 fee. Under state law, only a $30 penalty fee is allowed. Renters Warehouse needs to refund at least $45,000, meaning by Fox 9’s calculations, they may have overcharged more than 1,200 clients.
As part of the order, Renters Warehouse and its umbrella company, Hayden & Company LLC, acknowledges the allegations and agrees to pay fines, make restitution, and change its business practices. $50,000 of the $150,000 penalty will be stayed on the condition that Renters Warehouse complies with the order.
Statement from Renters Warehouse, LLC
"Renters Warehouse confirms that the company was recently audited by the Department of Commerce and that certain business practice issues arising from the audit have been resolved with the Department. As stated by the Department, steps were taken correct some procedures before the Department audit began, and following the audit we have made additional changes to our business practices. The company will continue to work with the Department to ensure full compliance now and in the future.”
FIRST REPORT - Investigators: Selling the dream