One of the state's largest real estate brokers has agreed to pay $48,000 to settle a federal investigation that alleged the broker provided illegal kickbacks in the form of trips to Thailand, Las Vegas and San Francisco.

The U.S. Department of Housing and Urban Development said that Prudential Locations LLC provided kickbacks to real estate agents who referred business to an affiliated company, Wells Fargo Home Mortgage Hawaii LLC.

"When real estate companies tie gifts and other benefits based on the referral to affiliated businesses, that's a kickback and that's against the law," said Brian Montgomery, HUD's Assistant Secretary for Housing-Federal Housing Commissioner.

Bill Chee, Prudential's chief executive officer, could not be reached for comment. As part of the $48,000 settlement, Prudential did not admit to any wrongdoing but agreed to the terms to resolve the matter.

In the five-page settlement agreement, HUD said that local realtors who referred more than $1 million worth of mortgage business to Wells Fargo were invited to a party in January 2003 where they received the free travel and other prizes such as restaurant gift certificates.

The party, dubbed the "First Annual Wells Fargo Friends Party," included a drawing for a three-year lease on a Mercedes-Benz automobile which was awarded to a local real estate agent, HUD said.

According to HUD, the drawing for the Mercedes-Benz was open only to agents who referred business to Wells Fargo.

The Prudential settlement comes as HUD has recently handled a number of high-profile investigations into illegal payments involving real estate companies around the country.

Earlier this month, Coldwell Banker Residential Real Estate's Atlanta office was fined $250,000 for illegally referring business to an affiliated title company.

In July, a Detroit-based company, Metropolitan Title Co., agreed to pay $150,000 for paying illegal referral fees to real estate brokers.

The federal Real Estate Settlement Procedures Act was enacted in 1974 to provide consumers advance disclosures of settlement charges when buying real estate and to prohibit illegal kickbacks and excessive fees, according to HUD.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.