Consumer Protection Division v. Morgan

RAKER, J. This case began as an enforcement action brought by appellant, Consumer Protection Division of the Office of the Maryland Attorney General (“Division”), under the Maryland Consumer Protection Act, Md.Code (1975, 2000 Repl.Vol., 2004 ¹⁴⁰ Cum.Supp.), §§ 13-101 through 13-501 of the Commercial Law Article. 1 The Division charged a property-investor, a mortgage lender, and two appraisers with using unfair and deceptive practices to take advantage of unsophisticated, first-time home buyers in Baltimore City. 2 The action concerns forty-eight properties in the Bel Air/Edison area sold in 1998 and 1999. The Administrative Law Judge (“ALJ”) issued a Proposed Order, and, following a hearing on exceptions, the Division issued a Final Order. Appellees Lee M. Shpritz, L & R Properties, Inc., West Star Properties, Inc., West Star Company, LLC, Michael Almony, Almony Appraisal Services, LLC, arid John M. Morgan, Jr., filed an action for judicial review in the Circuit Court for Baltimore County. The Circuit Court affirmed in part and reversed in part, remanding the matter to the agency.

The Circuit Court ordered the three cases against Shpritz, Morgan, and Almony, respectively, consolidated and its opinion considered as governing all three cases. ¹⁴¹ The Consumer Protection Division appealed to the Court of Special Appeals, and Morgan cross-appealed. We issued a writ of certiorari on our own initiative before that court considered the issues. 380 Md. 617 , 846 A.2d 401 (2004). I. A. Federal Housing Administration-Insured Mortgages At its core, this case is about a property seller’s efforts to procure Federal Housing Administration (“FHA”) insured mortgages for his customers, two appraisers’ appraisals of property values, and a lender’s approval of the mortgages. We begin with a description of FHA loans and the process for their approval.

The Federal Housing Administration of the Department of Housing and Urban Development’s (“HUD”) Office of Housing provides mortgage insurance on loans made by FHA-approved lenders. The insurance protects lenders against losses from homeowner defaults. As a result, FHA-insured mortgages require significantly smaller cash investments by the mortgagor to close a loan. The cost of the insurance is passed to the homeowner, enabling the program to be self-sustaining.

U.S. Dep’t of Hous. and Urban Dev., The Federal Housing Administration, at http://www.hud.gov /offices/hsg/fhahist ory.cfm (last modified May 10, 2004). The FHA requires, with a few exceptions, that all FHA-insured single family mortgages originate through its Direct Endorsement program. 24 C.F.R. § 203.5 (b) (2004). Under the program, an approved lender serves in the FHA’s place to review an application and determine whether the proposed mortgage is eligible for FHA insurance. Id. at § 203.5(a).

To be approved as a Direct Endorsement lender, the lender must have five years of experience in the origination of single family mortgages, employ an underwriter authorized to bind the lender, and submit initial mortgages for review. Id. at § 203.3. ¹⁴² A Direct Endorsement lender is bound to exercise the same level of care it would exercise for mortgages not insured by the FHA. Id. at § 203.5(c). HUD publishes a handbook delineating the minimum standards of care for Direct Endorsement lenders.

Id.; see U.S. Dep’t of Hous. and Urban Dev., No. 4000.4, Single Family Direct Endorsement (1994) [hereinafter “No. 4000.4”]. Specifically, the lender is instructed to evaluate the mortgagor’s “credit characteristics, adequacy and stability of income to meet the periodic payments under the mortgage and all other obligations, and the adequacy of the mortgagor’s available assets to close the transaction.” 24 C.F.R. § 203.5 (d) (2004). A seller who is an employee of the lender cannot be involved in processing the mortgage application. No. 4000.4 at 1-14.

The lender plays an important role in ensuring that the purchaser will be able to pay the mortgage. Lenders look to the purchaser’s credit history, income, stability of income, and other factors to determine the purchaser’s capacity to repay the mortgage. 24 C.F.R. § 203.33 (2004); 24 C.F.R. § 203.34 (2004); U.S. Dep’t of Hous. and Urban Dev., No. 4155.1, Mortgage Credit Analysis for Mortgage Insurance, One to Four Family Properties 2-3, 2-6 (2003) [hereinafter “No. 4155.1”]. The FHA requires the purchaser to pay at least three percent of the purchase price before the mortgage is insured. 24 C.F.R. § 203.19 (2004). The lender is responsible for ensuring that the purchaser makes this payment.

No. 4155.1 at 2-10. If a permissible donor, such as a relative or close friend, gives funds to the purchaser for the closing costs, the lender must document the transfer. Such documentation includes a gift letter, providing details about the gift and the donor. Id.

FHA regulations also require that lenders prevent a seller from making large payments to a purchaser that would enable the purchaser to pay closing costs and prior debts, while hiding the purchaser’s inability to pay the mortgage. The seller may contribute up to six percent of the sales price towards closing costs and other expenses, but any contribution above six percent is deducted from the sales price in determin ¹⁴³ ing the mortgage. Id. at 1-7. The seller, may not funnel money to the purchaser by giving money to a “donor” to transfer to the purchaser.

Id. at 2-10. A crucial element of the endorsement process is the appraisal. The Direct Endorsement lender must have the property appraised to determine the maximum mortgage permitted for that property. U.S. Dep’t of Hous. and Urban Dev., No. 4150.1, Valuation Analysis for Home Mortgage Insurance 1-1 (1990) [hereinafter “No. 4150.1”]; see 24 C.F.R. § 203.5 (e) (2004); 24 C.F.R. § 203.18 (2004).

The appraiser is required to complete a Uniform Residential Appraisal Report (URAR), which is the standard form used in the appraisal industry. No. 4150.1 at 8-1. Before completing this report, the appraiser must make a thorough personal inspection of the subject property and all comparable properties referenced in his or her report, inspecting the exterior and interior of the subject property. Id. at 8-2.

After completing the appraisal, the appraiser sends one copy to the lender and one to the HUD Field Office. No. 4000.4 at 3-3. The underwriter then reviews the appraisal and can seek clarifications and further information from the appraiser. Id.

The seller or another party must sign an agreement to deliver a written statement of the appraised value of the property to the purchaser before the sale. 24 C.F.R. § 203.15 (2004). The purchaser signs a “Statement of Appraised Value” form acknowledging that the lender disclosed the appraised value and alerting the purchaser that he or she may elect to cancel or renegotiate the sales contract if the underwriter determines the property value to be lower than the sale price. U.S. Dep’t of Hous. and Urban Dev., Form HUD-91322.3, Statement of Appraised Value for a Mortgage to be Insured Under the National Housing Act (2003) [hereinafter “HUD-91322.3”]. While the lender hires and pays the appraiser, the lender may charge the mortgagor for the appraiser fees.

Id. at § 203.27(a)(3)(v). An FHA-qualified appraiser must adhere to an extensive set of standards. HUD publishes an Appraiser Handbook: U.S. Dep’t of Hous. and Urban Dev., No. 4150.2, Valuation Analysis for Single Family One- to Four-Unit Dwellings (1999) ¹⁴⁴ [hereinafter “No. 4150.2”]. An FHA-qualified appraiser is required to obtain, read, and comply with this handbook and to comply with any other HUD instruction and standard. 24 C.F.R. § 200.206 (2004).

In addition, an appraiser must conform to the Uniform Standards of Professional Appraisal Practice, issued by the Appraisal Standards Board. U.S. Dep’t of Hous. and Urban Dev., Mortgagee Letter 96-26 (1996). The appraiser’s reports must contain sufficient documentation of all information reported so that the underwriter can assess the appraiser’s logic, reasoning, judgment, and analysis. Id.

The FHA requires that an appraiser employ the sales comparison appraisal method when evaluating one or two family houses. No. 4150.1 at 6-1. Utilizing this approach, the appraiser searches for comparable properties (“comparables”) sold within the previous year and uses the sale prices of those properties to ascertain the value of the subject property. Under No. 4150.1, comparable sales should not be over six months old, because older sales might reflect a different market.

If the appraiser does select comparables over six months old, the appraiser should explain why he or she did not choose more recent sales. No. 4150.1 at 9-2; see also No. 4150.2 at 4-6 (directing that comparable sales “should not exceed six months” and “must not exceed twelve months”). The method for selecting comparables is “bracketing.” No. 4150.1 at 8-3. Bracketing involves narrowing the range of values for the subject property.

An appraiser brackets by establishing a value range for the neighborhood where the property is located and then selecting comparables of slightly higher and lower value to the subject value. Id. at 2-18. The aim is to select comparables that are as similar to the subject property as possible; appraisers are instructed by the FHA to “[a]lways select the comparables with the fewest dissimilarities.” Id. at 8-3. If there is a difference in the properties that affects value, such as location, view, quality of construction, or age, the appraiser must make an adjustment in the appraised value of the comparable to account for the difference.

Id. at 8-3. To complete the Uniform Residential ¹⁴⁵ Appraisal Report, the appraiser must provide detailed information about the comparables. For example, the appraiser must note the proximity of the comparable to the subject property. If the comparable is more than a mile away, the appraiser must explain why such a distant comparable was selected.

Id. The Uniform Residential Appraisal Report also requires an appraiser to indicate whether the subject or comparable properties were sold during the previous year. The Uniform Standards of Professional Appraisal Practice’s Standard Rules require broad disclosure. See Appraisal Standards Board, Uniform Standards of Professional Appraisal Practice (2005), available at http://209.213.21 7.34/html/USPAP200 5/toc.htm.

Under Standard Rule l-5(a) and (b), an appraiser must analyze any current sale agreement, option, or listing and any prior sales occurring in the year before the appraisal. Appraisal Standards Board, Advisory Opinion AO-1 (1990), available at http://209.21 3.217.34/html/ USPAP 2005/aol.htm. 3 Standard Rule 2-2 calls for the written appraisal report to include a commentary on the appraiser’s efforts to obtain this information. Id. Detailed information is important, because quick resales of the subject property could alert the appraiser and lender to the possibility of an artificially inflated sales price, especially when the original purchaser sells the property at a significant profit.

Similarly, prior sales of a comparable could raise concerns that the comparable was sold at an artificially inflated price or that the prior sale was not an arms length transaction. As such, prior sales of a comparable could alert the appraiser of the comparable’s unsuitability for assessing the subject property’s value. 4 ¹⁴⁶ B. Resources for Appraisers in Baltimore The appraisers and experts on appraising in this case primarily employed two types of listing services. First, all the appraisers relied upon the same property data bases. Before 1997, the data base used in Baltimore was the Greater Baltimore Board of Realtors’ Multiple Listing Service (“MLS”), also called Crabnet.

Beginning in 1996, MLS began integrating into a new regional data base system, the Metropolitan Regional Information Systems (“MRIS”). As part of the transition from MLS to MRIS, the two systems experienced significant problems, including discrepancies between the two data bases and high lag times between when a sale or other event occurred and when it was available in the data base. By the beginning of 1998, these problems had been resolved and only MRIS was available as a source of current data. 5 ¹⁴⁷ The appraisers also used deed reporting services. The two deed reporting services employed by appraisers in this case were SpecPrint and LUSK (also known as Experian).

These services compile information on deeds from local courthouses and send the information to appraisers on a periodic basis, typically monthly. There is a lag time of approximately ninety days between when deeds are recorded and when the information is sent out by the deed services.

II

Pursuant to § 13-403(a), 6 the Division filed a Statement of Charges against Lee M. Shpritz, L & R Properties, Inc., West Star Properties, Inc., West Star Company, LLC (“Shpritz” or “Shpritz parties”), 7 American Skycorp, Inc., Lee P. Woody, III, John D. Hall, 8 John M. Morgan, Jr., Michael Almony, and ¹⁴⁸ Almony Appraisal Services, LLC (“Almony”), alleging participation in an illegal “flipping scheme” against first-time home buyers with poor credit histories. The Division alleged that (1) a “flipper” purchased properties and sold the properties quickly at artificially inflated prices; (2) appraisers filed deceptive appraisals to facilitate federally-backed mortgages sufficient to purchase the homes at the artificially inflated prices; and (3) a lender extended mortgage loans to the buyers and ensured that the mortgages were insured by the Federal Housing Administration. According to the Division, each party to the scheme benefited: the flipper made a profit on the property, the appraisers earned more appraisal assignments from the lender, and the lender made increased profits through higher mortgages without incurring any risk. The Division alleged that the defendants’ actions constituted “unfair or deceptive trade practices” under § 13-301(1), (3), and (6).

This section provides, in pertinent part, as follows: “Unfair or deceptive trade practices include any: (1) False, falsely disparaging, or misleading oral or written statement, visual description, or other representation of any kind which has the capacity, tendency, or effect of deceiving or misleading consumers; (3) Failure to state a material fact if the failure deceives or tends to deceive; (6) False or misleading representation of fact which concerns: (i) The reason for or the existence or amount of a price reduction; or (ii) A price in comparison to a price of a competitor or to one’s own price at a past or future time....” Section 13-303 prohibits such practices: “A person may not engage in any unfair or deceptive trade practice, as defined in this subtitle or as further defined by the Division, in: ¹⁴⁹ (1) The sale, lease, rental, loan, or bailment of any consumer goods, consumer realty, or consumer services; (2) The offer for sale, lease, rental, loan, or bailment of consumer goods, consumer realty, or consumer services; (3) The extension of consumer credit; or (4) The collection of consumer debts.” A. The Parties From August 20, 2001 through September 20, 2001, Administrative Law Judge (“ALJ”) Sondra L. Spencer conducted eighteen days of administrative hearings. Our discussion of the parties is derived from ALJ Spencer’s Proposed Findings of Facts: 9 1. Consumer Protection Division Section 13-201 establishes the Division of Consumer Protection in the Office of the Attorney General, charging the Division with the duty to administer the Consumer Protection Act. 10 The Division has the power and the duty to receive and investigate complaints and to initiate an investigation of any unfair and deceptive trade practice. § 13-204. 11 At the hearing before the ALJ, the Division, acting in its prosecutorial role, presented as witnesses seventeen consumers, a Division investigator, an expert appraiser, an expert in FHA Direct Endorsement loans, one former American Skycorp employee, one Shpritz employee, and one community leader. ¹⁵⁰ 2. Sellers Lee M. Shpritz is a licensed real estate salesperson, who buys and sells residential real estate.

He is the sole owner of L & R Properties, Inc., West Star Properties, Inc., and West Star Company, LLC, all of which have their principal place of business at the same address in Baltimore. L & R Properties, Inc., is a marketing and sales company. West Star Properties, Inc., and West Star Company, LLC, are holding companies used by Shpritz to buy and sell residential real estate. The Shpritz parties purchased property, made certain repairs, and then quickly sold the properties.

In some instances, resale occurred before the Shpritz parties settled on the property. Shpritz violated the Consumer Protection Act by falsifying the buyers’ applications for FHA-insured mortgages to fund their purchases at artificially inflated prices. Shpritz targeted first-time home buyers with past and present credit problems and little or no savings through advertisements on cable television and coupons mailed in cable television bills and published in newspapers. The typical coupon advertisement contained pictures of two moneybags, listings of properties and monthly payments, and the following statements: “This COUPON is worth $1,000 towards the purchase of one of the following houses. “Only $1,000 required to buy these houses. “FHA AND VA FINANCING “Don’t let slow, bad, or no credit stop you from !!!calling!!! “L & R Properties Inc. SPECIALIZES in the FIRST TIME 1HOMEBUYER!” When individuals responded to an advertisement, Shpritz and his companies took advantage of their lack of education and desire to own' a home by: (1) instructing them to sign fully or partially blank documents and falsely asserting that this was standard practice and that the documents would be ¹⁵¹ completed accurately; (2) listing on loan applications personal property the consumers actually did not own, misstating on the applications the consumers’ debt and the amount paid as deposits, and increasing or changing the purchase price, all without the consumers’ knowledge; (3) in six transactions, selling the property for more than the price posted in Shpritz’s office and only informing the buyers at the settlement; (4) advertising and accepting the $1,000 coupons, but not deducting that amount from the sale; (5) falsely telling consumers that the homes had been inspected; (6) failing to disclose to consumers that he was a loan officer for the mortgage lender, American Skycorp; and (7) in six transactions, acting as both loan officer and seller.

Deceiving the purchasers was not sufficient for Shpritz to succeed in his scheme to sell the houses at artificially inflated prices; he also had to ensure that consumers with few assets and poor credit histories would obtain mortgages backed by the FHA at the artificially inflated prices. Shpritz misled the FHA by: (1) misstating on applications the purchasers’ debts and assets; (2) advising consumers on how to falsify gift letters to indicate that relatives or friends, rather than Shpritz, had contributed funds for closing; and (3) leaving blank the space on the Maryland Residential Property Disclosure and Disclaimer Statement for disclosing how long Shpritz had owned the property. Additionally, Shpritz recruited Reverend Christina Holtsclaw of the East Baltimore Deliverance Center, a Baltimore City church, to sign gift letters attesting to providing funds to purchasers. In fact, Shpritz provided the gift funds, not the Church.

In return for this service, Shpritz agreed to contribute $200 to the Church’s building fund per gift letter. 12 Shpritz’s employee, Robert Stagmer, arranged for the Church’s Community Initiatives, Inc. to offer counseling to purchasers and provide them certificates of ¹⁵² completion. In some instances, the Community Initiatives, Inc. would issue certificates to purchasers of Shpritz’s properties, even though the purchasers did not attend the counseling sessions. The certificates were shown to the lender to support the loan applications. As a result of this deception, many of the consumers purchased houses they could not afford and defaulted on their mortgages. 3.

Lenders American Skycorp, Inc. is a residential mortgage lender founded and owned principally by Lee P. Woody III. John D. Hall is the minority owner, owning five percent of the company. American Skycorp was licensed as a mortgage lender by the Maryland Commissioner of Financial Regulation and was an FHA Direct Endorsement lender. The Company was the lender for each property in this case and was aware of Shpritz’s conduct.

Shpritz brought the loan applications to Woody, who assigned them to loan officers. In some transactions, Woody acted as the loan officer. In others, with Woody’s knowledge, Shpritz signed as the loan officer for properties, responsible for certifying the seller’s information, even though he was the seller. In some cases, Woody overrode the underwriter’s objections to and conditions for the loan approvals.

American Skycorp abused its authority and violated federal guidelines by: (1) failing to reconcile appraisal report information, including the differences between the owners listed on the appraisals and on the titles; (2) approving loans when borrowers had unacceptable credit histories, including defaults, garnishments, unpaid judgments, negative payment histories, and collection accounts; and (3) failing to reduce sale prices when Shpritz provided gift funds or contributed more than six percent to the buyer’s closing costs. Through these abuses, American Skycorp approved federal mortgages inappropriately, thereby enabling Shpritz to sell the properties at artificially inflated costs. ¹⁵³ As a result of American Skycorp’s improprieties, HUD informed the Company in September 1999 that its early default claim rate was 236% higher than the average rate of other comparable lenders in Baltimore. By November 2000, one of American Skycorp’s three Maryland offices had surrendered its mortgage lending license, the Maryland Commissioner of Financial Regulation had issued a cease and desist order against the office, and HUD had withdrawn its approval of American Skycorp’s Direct Endorsement status and imposed a $220,000 civil penalty against it. 4. Appraisers Appellee and Cross-Appellant John P. Morgan, Jr., is a real estate appraiser.

He had been approved by the FHA to appraise properties for FHA-insured loans. He regularly performed appraisals for American Skycorp, including thirty-two of the properties in this case. In May 2001, the FHA removed him from its list of approved appraisers based upon one of the appraisals involved in this case. Appellee Michael Almony is a real estate appraiser and the sole shareholder of Appellee Almony Appraisal Services, Inc. 13 Almony was approved by the FHA to appraise properties with loans that would be insured by the FHA.

Almony had performed appraisals for American Skycorp since 1998. He appraised two properties involved in this case, 4106 Harris Avenue and 4230 Seidel Avenue. In December 2000, the FHA removed him from its list of approved appraisers for one year based upon Almony’s appraisal of 4106 Harris Avenue. The Division and the appraisers present conflicting versions about the role of the appraisers in this case.

The Division depicts the appraisers as crucial players in the flipping scheme, deceiving the FHA and the purchasers by artificially inflating the values of the homes and hiding the fact that ¹⁵⁴ Shpritz recently had purchased the properties he was selling. The appraisers view the Division’s charges against them as a baseless maneuver to strengthen its case against the other parties by presenting a picture of a coherent scheme. The Division relied primarily upon the reports and testimony of Robert Hinton to support its allegations against the appraisers. Hinton, who was received by ALJ Spencer as an expert in the field of appraising property, reviewed the appraisals by Morgan and Almony at issue in this case.

For each property, he conducted either a field review or a desk review. In each review, Hinton inspected the exterior of the subject and comparable properties, while in field reviews, Hinton also inspected the interior of the subject property. 14 The Division alleged that the appraisers inflated the values of the properties, enabling Shpritz to sell the properties at artificially inflated prices and burdening consumers with high mortgages. The Division accused the appraisers of three types of misrepresentations in their completion of the Uniform Residential Appraisal Report for the properties: (1) inaccurately representing that the appraised properties had not been sold in the preceding year; (2) choosing unrepresentative properties as comparable sales; and (3) inflating the predominant values of properties in the neighborhood. In their testimony, Morgan and Almony each generally denied any misrepresentations.

In response to Hinton’s reports and testimony, they presented appraising as an art, not a science, and claimed that any discrepancies between their appraisals and Hinton’s reports were based on the inevitable differences between any two professionals’ appraisals of a property. Morgan and Almony conceded that they might have performed less than “A” work on a given appraisal, but asserted that they did not make any misrepresentations. ¹⁵⁵ B. The Administrative Proceedings The Administrative Law Judge conducted hearings and issued a Proposed Decision, concluding that Shpritz and his companies had violated § 18-301(1), (3), and (6) and that American Skycorp and Woody had violated § 13-301(1) and (3). She determined that Morgan did not violate § 13-301(1) and (3) in regard to the comparable sales and neighborhood predominant values, but that he did violate those sections by failing to report accurately past sale histories. She concluded that Almony had not violated the Consumer Protection Act.

The Consumer Protection Division, Shpritz, and Morgan filed exceptions to the ALJ’s proposed findings. Consumer Protection Division Chief William Leibovici held a hearing on the exceptions. He also reviewed all the documentary evidence and transcripts of five witnesses’ testimony. 15 Chief Leibovici reversed the ALJ’s conclusions that the Division had not proven that Morgan and Almony had made misleading statements about comparable sales and neighborhood predominant values and that Almony had made misleading statements about prior sales. The Division issued a Final Order, concluding that each respondent had violated the Consumer Protection Act.

The Division issued a Cease and Desist Order 16 and required each to pay restitution, civil penalties, 17 and costs of the administrative proceedings. The civil penalties amounted to $1,000 per transaction; Shpritz, L & R Properties, Inc., and West Star Properties, Inc. each were ordered to pay $46,000, American ¹⁵⁶ Skycorp and Woody each were ordered to pay $45,000, Morgan $34,000, 18 and Almony $2,000. In its Final Order, the Division ordered restitution against all the appellees. The Division determined the restitution owed for each property sale, calculating restitution for each of the forty-eight properties, and held each violator involved in a given transaction jointly and severally liable.

The Division calculated restitution as the sum of the seller’s, lender’s, and appraiser’s monetary benefits from the transactions. According to the Order, the seller’s benefit equaled the buyer’s purchase price minus the seller’s initial acquisition cost. The lender’s benefit equaled the fee paid to the lender minus the appraisal fee paid to the appraiser. The appraiser’s benefit equaled the appraisal fee received.

These calculations resulted in the following totals: Shpritz: $2,272,801.50 L & R Properties, Inc.: $2,272,801.50 West Star Properties, Inc.: $2,272,801.50 American Skycorp: $2,209,359.00 Woody: $2,209,359.00 Morgan: $1,556,574.00 Almony: $ 75,669.50 The Division postponed allocation determinations to each victim until the violators paid the restitution; a person other than'the individual purchaser might receive part of the restitution. Finally, the Order provided for restitution to any other consumers subject to the violators’ unfair or deceptive trade practices and detailed a procedure for such additional claims, including an administrative fact-finding hearing. Shpritz, Morgan, and Almony filed a petition for judicial review in the Circuit Court for Baltimore County. Shpritz challenged the Division’s order of restitution as to those purchasers who did not testify at the administrative hearing.

Shpritz noted that he was ordered to pay restitution for forty-six transactions, but that individual purchasers testified re ¹⁵⁷ garding only sixteen. 19 The Circuit Court agreed and struck the restitution calculations for the thirty-two individuals who did not testify, stating that while “the Division is correct in saying that reliance is inherent in the process of purchasing, processing the loan and relying on others, that does not mean there is any reliance for the 32 cases where extractions without testimony were used to provide evidence.” Shpritz argued that the Division’s restitution calculations inflated the gains from his misdeeds. In calculating restitution, the Division did not deduct any of Shpritz’s expenses, other than his original purchase of the properties. These payments amounted to significant sums; according to the Division’s findings, Shpritz’s payments through gift letters or payments of the purchasers’ delinquent credit accounts often exceeded six percent of the property’s sale price. The Circuit Court ruled that the Division erred by not reducing the restitution by the amount Shpritz contributed to the transactions through phony gift letters and other payments.

The Circuit Court reasoned as follows: “Restitution is what ‘they’ lost. If ‘they’ did not lose a certain sum because it was furnished to them from outside (payments of debts, gifts for the downpayment, then they did not lose it and somehow this has to fit into the restitution formula).” Shpritz appealed the Division’s Order as to joint and several liability. The Circuit Court agreed.with him and reversed, holding that the Division may not hold violators of the Consumer Protection Act jointly and severally liable. The Circuit Court reasoned that the Consumer Protection Act does not mention joint and several liability and that such liability is not consistent with restitution, whose purpose is to disgorge unlawfully obtained benefits from violators.

Shpritz, Morgan, and Almony appealed the ALJ’s denial of their request for a jury trial. The Circuit Court affirmed, ¹⁵⁸ reasoning that the Division sought restitution, restitution is an equitable remedy, and there is no jury trial right for equitable remedies. Morgan appealed the Division’s role as investigator, prosecutor, and adjudicator, arguing that this combination of functions denied him his constitutional right to due process. The Circuit Court affirmed.

Morgan and Almony appealed the Division’s reversal of the ALJ’s proposed findings about the comparable sales and neighborhood predominant values. The Circuit Court reversed and remanded. The Circuit Court agreed with the Division that the ALJ had erred as a matter of law in concluding that the appraisal process was too subjective for her to formulate a conclusion about the selection of comparable sales and the calculation of neighborhood predominant values. According to the Circuit Court, however, the Division should have remanded the matter to the ALJ to assess the competing evidence.

The Division could not have determined based solely on the “paper recitations,” i.e. the transcripts and exhibits, whether the appraisers had violated the Act. The Circuit Court concluded that such a judgment required a demeanor-based credibility assessment of the competing witnesses and that the ALJ, not the Division Chief, must perform that role. Morgan appealed the Division’s determination that he had violated § 13-301(1) and (3) based on misrepresentations of prior sales histories, comparable sales, and neighborhood predominant values. The Circuit Court held that the Division’s findings as to prior sales histories were supported by substantial evidence but reversed as to neighborhood predominant values and comparable sales.

Morgan appealed the Division’s imposition of civil penalties against him. The Circuit Court affirmed. Almony appealed the Division’s reversal of the ALJ’s proposed findings that his failure to note a prior sale for one of the properties was neither false nor misleading. The Circuit Court reversed the Division’s holding, reasoning that the ¹⁵⁹ ALJ’s finding was a demeanor-based credibility judgment and that there was no evidence to indicate that Almony’s inaction constituted misrepresentation, rather than negligence. 20 III.

The Division noted a timely appeal to the Court of Special Appeals. Morgan cross-appealed. Before the Court of Special Appeals considered the issues, we granted certiorari on our own initiative. 380 Md. 617 , 846 A.2d 401 (2004). Before this Court, the Division and Morgan raise the following issues, which we reword: 1.

Did the Division err in ordering restitution for transactions for which the aggrieved consumers did not testify? 2. In calculating restitution, may the Division decline to deduct the violator’s expenses? 3. Does the Consumer Protection Act authorize holding violators jointly and severally liable for a restitution order? 4. Were Morgan’s state and federal constitutional rights violated when the charges against him were adjudicated through the administrative process without a jury? 5.

Was Morgan’s constitutional right to due process violated when the Division served both investigatory/prosecutorial and adjudicatory functions? 6. Was it proper for the Chief of the Division to determine based on the record, without hearing testimony, that Morgan and Almony violated the Consumer Protection Act? 7. Was there substantial evidence for the Division to find that Morgan had violated the Consumer Protection Act? 8. Was there substantial evidence to support the civil penalties imposed against Morgan? 9.

Was there substantial evidence for the Division to find that Almony violated the Consumer Protection Act? ¹⁶⁰ When this Court reviews the decision of an administrative agency, we employ the same standards as would the circuit court, and the inquiry is not whether the circuit court erred, but rather whether the administrative agency erred. See Spencer v. Board of Pharmacy, 380 Md. 515, 523-24 , 846 A.2d 341, 346 (2004). Review of most quasi-judicial state administrative decisions, such as the present one, is governed by the Maryland Administrative Procedure Act, Md.Code (1984, 2004 Repl.Vol.), § 10-222 of the State Government Article. Id. at 527, 846 A.2d at 348 .

We apply “substantial evidence” review to agency findings of fact, overruling factual findings only when they are “unsupported by competent, material, and substantial evidence in light of the entire record as submitted.” § 10-222(h)(v); Spencer, 380 Md. at 529 , 846 A.2d at 349 . The standard for substantial evidence review is “whether a reasoning mind reasonably could have reached the factual conclusion the agency reached.” Christopher v. Dept. of Health, 381 Md. 188, 199 , 849 A.2d 46, 52 (2004) (quoting Board of Physician v. Banks, 354 Md. 59, 68 , 729 A.2d 376, 380 (1999)). We also apply the substantial evidence standard when reviewing mixed questions of law and fact, issues of whether the agency applied the law correctly to the facts. Charles County v. Vann, 382 Md. 286, 296 , 855 A.2d 313, 319 (2004).

As to issues of law, we determine the legal correctness of agency conclusions. 21 § 10-222(h)(3)(i)—(iv); Christopher, 381 Md. at 198 , 849 A.2d at 52 . ¹⁶¹ IV. A. Restitution The Division appeals three of the Circuit Court’s holdings related to restitution. First, the Division challenges the Circuit Court’s holding that the Division could not order restitution to consumers who did not testify. Second, the Division appeals the Circuit Court’s holding that the Division must deduct Shpritz’s expenses in purchasing, maintaining, and selling the property from the restitution calculation.

Third, the Division contests the Circuit Court’s holding that the Division may not hold violators of the Consumer Protection Act jointly and severally liable for restitution. 1. Consumer Testimony The Division appeals the judgment of the Circuit Court striking the restitution calculations for the thirty-two individuals who did not testify. As we have indicated, the Circuit Court struck the restitution calculations for the thirty-two individuals who did not testify, requiring that “[e]ach individual for whom restitution was ordered must be produced to show when, how, why, where and what for the restitution order to be given.” 22 It is the position of the Division that the Circuit Court erred because, in its view, consumer testimony is not a prerequisite for restitution. The Division maintains that the proper consideration is not whether a particular consumer testified, but rather whether there is substantial evidence to support the order of restitution.

Shpritz maintains that with regard to thirty of the transactions in which the Division ordered him to pay restitution, the Division failed to produce any evidence whatsoever of reliance. ¹⁶² Shpritz reasons that there is a distinction between “general” restitution orders and “specific” ones. He defines “general” orders as ones in which the Division orders a certain amount of restitution that will be divided later. In contrast, “specific” orders, such as the restitution order in this case, apportion specific amounts to specific consumers. While acknowledging that Maryland law does not require proof of reliance in advance of “general” orders, Shpritz asserts that testimony showing reliance is required for “specific” orders.

He maintains that in the instant case, the Division did not order a general order of restitution, but rather ordered specific restitution, in specific amounts, to specific consumers. Shpritz conflates the Circuit Court’s requirement that all consumers must testify in front of the Division before restitution may be awarded and the requirement that before a violator may be ordered to pay restitution, the Division must show that the consumer relied on the particular misrepresentation. The key is reliance. In order to establish a violation of the statute, the Division need not prove reliance; once a statutory violation is proven, then, before restitution is ordered to an individual consumer, the Division must prove consumer reliance.

Consumer testimony is not required to prove a statutory violation and is not necessarily required to prove reliance for restitution. Whether consumer testimony is required to support a specific restitution order depends upon the facts and circumstances of each case. As we shall explain, in the instant case, to support a specific restitution order, because many of the consumers were complicit in the unlawful scheme, the Division must call them as witnesses either before the Division or in some other comparable proceeding to show that they in fact relied on the misrepresentation to their detriment. In considering the necessity for consumer testimony, we emphasize that there is a difference between a finding of a statutory violation and an order requiring restitution. 23 ¹⁶³ The Consumer Protection Act provides that “[a]ny practice prohibited by this title is a violation of this title, whether or not any consumer has in fact been misled, deceived, or damaged as a result of that practice.” § 13-302.

In Consumer Publishing, we noted that in not requiring proof of deception or harm to the consumer, the Consumer Protection Act follows Federal Trade Commission practice. 304 Md. at 770-71, 501 A.2d at 68. We observed that “[t]he Federal Trade Commission has consistently analyzed only the advertisements themselves, without requiring testimony by consumers or consumer experts, and the courts have upheld the practice.” Id. at 771, 501 A.2d at 69. This practice is permitted based upon the rationale that the Commission has the expertise to determine whether advertisements have the capacity to deceive or mislead the public. Id.

Similarly, the Maryland Legislature determined, in enacting § 13-302, that the Consumer Protection Division also has the expertise necessaiy to make that determination without testimony by consumers or consumer experts. Id. Accordingly, the Division need not call each consumer to establish an unfair or deceptive practice and need not prove consumer reliance to prove a violation of the statute. For the Division to order a violator to pay restitution to a particular individual, however, the Division must determine that the consumer relied upon the misrepresentation.

In Maryland, “[t]here is a reliance element in restitution.” Luskin’s v. Consumer Protection, 353 Md. 335, 385 , 726 A.2d 702, 727 (1999); see Consumer Protection v. Outdoor World, 91 ¹⁶⁴ Md.App. 275, 291, 603 A.2d 1376, 1384 (1992) (noting that “actual restitution may not be ordered in the absence of some evidence that the individual purchaser was deceived by and relied upon the offending communication”). We have vacated restitution orders that award restitution to individual consumers without requiring proof of reliance. See Consumer Publishing, 304 Md. at 781, 501 A.2d at 74 (holding that a blanket order of automatic restitution to all consumers was improper because restitution to particular purchasers was appropriate only after verification of actual reliance by those purchasers on the company’s misleading or deceptive advertisements). While an individual consumer must make a showing of reliance before the consumer is awarded restitution, the Division may issue general orders of restitution without consumer testimony.

In Consumer Publishing, a company that sold diet pill plans argued that the Division could not order restitution to all the company’s consumers, because the Division had not presented evidence that the purchasers relied on the company’s misleading advertisements. Id. at 775, 501 A.2d at 71. We held that the Division may issue a general restitution order before the consumers make a showing of reliance. After reviewing cases from other states permitting restitution orders without individualized proof of reliance and scholars’ advocacy for such a rule, we stated as follows: “While there is no direct evidence that any consumers actually relied on the Company’s deceptive or misleading advertisements, we do not believe that such evidence is necessary.

In accordance with the authorities previously discussed, we believe that the Division may include a general restitution provision in a cease and desist order without direct proof of consumer reliance.” Id. at 781, 501 A.2d at 74. Since the Division may issue a general restitution order without any direct evidence of individual consumers’ reliance, the Division need not present consumers as witnesses. Similarly; in State v. Andrews, 73 Md.App. 80 , 533 A.2d 282 (1987), the Court of Special Appeals held that the Division ¹⁶⁵ could issue a general restitution order without consumer testimony. The Grecian Spa violated the Consumer Protection Act when it closed its salon, weight loss, and exercise facilities despite representing to consumers who purchased memberships that the spa’s services would be available through the duration of their memberships.

Id. at 82-83 , 533 A.2d at 284 . The Circuit Court held that the Division could award restitution only to consumers who testified at trial. Id. at 83 , 533 A.2d at 284 . Relying on Consumer Publishing, the Court of Special Appeals reversed.

The court held that “the testimony of consumer claimants at trial is not a prerequisite to recovery in a consumer protection action involving numerous similarly situated victims and that oral testimony is not the only method for establishing entitlement.” Id. at 84 , 533 A.2d at 284 . The court explained that requiring all consumers to testify would run counter to the Consumer Protection Act’s public enforcement provisions. The court stated as follows: “Nowhere in the Act is there any indication that the framers intended live, in court, testimony to be a prerequisite to recovery. By providing for a ‘public remedy’ through the Office of the Attorney General, in addition to the private right of action referred to in § 13-408, the General Assembly implicitly recognized that many consumers will be deterred from pursuing individual actions due to the cost and time involved in private litigation.

The procedure required by the circuit court in this case flies in the face of the General Assembly’s logic because it increases the ‘private’ costs of the ‘public’ remedy by requiring that each aggrieved individual come to court and give live testimony.” Id. at 85, 533 A.2d at 285 . When a violator’s misrepresentations and deceptions affect a number of similarly situated individuals, like the purchasers of diet pill plans in Consumer Publishing and spa memberships in Andreios, the Division may issue a general order of restitution. In order to award restitution to individual consumers, however, the Division then must establish a procedure to determine whether individual consumers relied on the misrepresentations. We said in Consumer Publishing: ¹⁶⁶ “Although we reject the Company’s broad argument that proof of reliance is necessary before a general restitution order may issue, we do recognize that some of those purchasing the Company’s products may not have relied on the false impressions created by the advertisements.

Some of these consumers may not want refunds. Accordingly, we believe that the Division’s order was defective because it did not provide a procedure for processing individual consumer claims. We agree with the cases in other jurisdictions which, under statutes like Maryland’s, require that a restitution order provide a procedure for individual determination of consumer restitution claims. The Division may not simply require the mailing of refunds to all Maryland consumers who bought Company products during a certain period.

Purchasers should be notified that they may obtain a refund; in order to be entitled to such refund, they should be required to state that they relied on the false impressions created by the advertising. In this way, purchasers who were not deceived will not receive an ‘automatic’ refund. It should not be necessary that each purchaser present additional evidence that he was actually deceived and relied on the misrepresentations in the advertisements. To require proof of reliance, beyond the purchaser’s statement, would make recovery difficult and complicated.” 304 Md. at 781, 501 A.2d at 74.

The Division, thus, can issue a general order of restitution without proving an individual consumer’s reliance, but may not award restitution to the individual consumer without a showing of individual reliance. The Division argues, however, that it could issue a specific order of restitution in this case, without making a showing of reliance, because reliance is inherent here. It is accurate that the consumers could not have obtained the FHA-insured mortgages without the appraisers, sellers, and lenders’ misrepresentations. Regarding the appraisers, Department of Housing and Urban Development regulations require the appraised value be disclosed to the consumer, 24 C.F.R. § 203.15 (2004), and if the appraiser finds the sales price greater than the true market value, then the FHA- ¹⁶⁷ insured mortgage cannot be issued and the borrower may-cancel the transaction without penalty.

See HUD-91822.3. Similarly, the purchasers would not have been able to obtain the mortgages necessary for the property sale had Shpritz not made illegal payments to the consumers and misrepresented the consumers’ financial situation and had American Skycorp and Woody not approved the mortgages. It is not accurate, however, that reliance is inherent, because some consumers could have been complicit or willing purchasers. The Circuit Court concluded “that most of the buyers were looking for that free lunch and willing to participate in the misrepresentation to obtain the home they desired, and probably could not have otherwise purchased.” Indeed, there is evidence that at least some of the consumers were complicit in Shpritz’s misrepresentations to the FHA.

Such complicity could have precluded reliance on some or all of the violators’ misrepresentations. Independent of any complicity, some of the consumers might have been willing to purchase the properties at inflated rates. As the Division notes, the consumers were first-time purchasers with poor credit histories. In some cases, the individual consumer’s desire to purchase a home might have outweighed the consideration of price.

The ALJ recognized this possibility when she wrote, ‘While some of the buyers were more than happy to be able to purchase a house they never thought they could afford, had some material facts not been omitted, some buyers may have seriously rethought their decision to go ahead with a deal that seemed too good to be true.” We agree with Shpritz that the record is devoid of any evidence to support a specific restitution order regarding the non-testifying home purchasers, ie., that there is no evidence of reliance. We hold that the Division presented no evidence that these consumers relied on the sellers, lenders, or appraisers’ misrepresentations. That we vacate the restitution awards for these consumers does not preclude the Division from awarding them restitution in the future. Having proved by substantial evidence Consumer Protection Act viola ¹⁶⁸ tions and having established in the Cease and Desist Order a method for calculating restitution, the Division may initiate a procedure for awarding the consumers restitution.

Through this procedure, the Division must determine whether the individual consumers relied on Morgan, Shpritz, or Almony’s misrepresentations. Considering the possibility of complicity, the Division can show reliance only if the individual consumers testify. 24 '1 2. Shpritz’s Expenses The Division appeals the Circuit Court’s holding that it must deduct Shpritz’s contributions to the transactions in calculating the restitution he must pay. We agree with Shpritz and the Circuit Court.

There are two types of deductions involved in this case: (1) investments to repair and refurbish the properties in preparation for resale, and (2) illegal payments to the consumers, such as payments of the consumers’ debt and closing costs. In general, the Division contends that restitution is measured by the amount the violator received. The Division labels the repair and refurbishment costs “business expenses” and argues that such costs should not be deducted. The Division argues that crediting Shpritz for his illegal payments would violate public policy.

Shpritz responds that restitution is the required disgorgement of benefits unlawfully obtained, and as such, it is not “damages.” Restitution should be measured by a merchant’s “net” profits as a result of a violation of the Act. Restitution involves the disgorgement of unjust enrichment. Quoting Dobbs, Law of Remedies § 4.1 (1973), in ¹⁶⁹ Consumer Publishing, we contrasted restitution to damages, stating as follows: “ ‘The damages recovery is to compensate the plaintiff and it pays him, theoretically, his losses. The restitution claim, on the other hand, is not aimed at compensating the plaintiff but at forcing the defendant to disgorge benefits it would be unjust for him to keep.... “ ‘Restitutionary recoveries often amount to about the same as the plaintiffs losses, and thus serve many of the compensatory purposes served by a damages recovery.

The justification lies, however, in. the avoidance of unjust enrichment on the part of the defendant.’ ” 304 Md. at 776, 501 A.2d at 71-72; see also Luskin’s, 353 Md. at 384-85 , 726 A.2d at 726-27 (holding that restitution for a company’s deceptive free airline ticket promotion should be measured by the additional net profit from selling more of its inventory). In this case, the unjust enrichment is Shpritz’s additional profit from his deception. As Shpritz flipped the properties, selling them very soon after he purchased them, his increased profit will mirror his actual profit from the sales. In measuring restitution, the Division should deduct Shpritz’s investments in repairing and refurbishing the houses.

In his testimony, Shpritz’s employee, Robert Stagmer, described the repairs as follows: “Well, first of all, the roof is checked, plumbing and electrical are checked. Our people go in then and begin reconditioning the house. The walls are gone over, whatever needs to be done there. Many times we replace the windows.

And then the house is checked for any structural — potential structural problems, and those are solved, whatever they might be. Often we replace doors, outside doors and inside doors. And then finally the house is prepared in terms of maybe a new kitchen, new bathroom, if necessary. Then basically the final thing is the house is painted and then the floors are redone or carpet is placed on the floors.

And ¹⁷⁰ when the houses are finished, they’re in very good condition.” The Division’s expert, Robert Hinton, testified that these activities constitute “normal maintenance,” as opposed to “rehabilitation,” which he defined as “bringing the property up to modern standards, such as a modern kitchen, modern wiring, modern plumbing fixtures.” Either way, Shpritz invested money in the houses. The Division confuses matters by labeling these investments “business expenses.” The Division need not deduct expenses incurred as part of maintaining a business, such as rent, office supplies, utilities, and regular salaries, but it must deduct investments in purchasing, repairing, and refurbishing the house. The Division also should deduct the payments Shpritz made to the purchasers, albeit those payments were not in accordance with the law. In so ruling, we do not condone the unlawful transactions, but instead apply the rules for restitution rather than impose civil or criminal penalties.

By seeking to compel Shpritz to pay these amounts again, the Division forsakes unjust enrichment for what is in effect punitive damages. As we have held, “any punitive assessment under the CPA [Consumer Protection Act] is accomplished by an imposition of a civil penalty recoverable by the State under § 13-410, as well as by criminal penalties imposed under § 13-411.” Golt v. Phillips, 308 Md. 1, 12 , 517 A.2d 328, 333 (1986); accord Luskin’s, 353 Md. at 387 , 726 A.2d at 727 . Accordingly, the Division must recalculate its restitution order to exclude the actual costs incurred by Shpritz. 3. Joint and Several Liability The Division appeals the Circuit Court’s holding that violators of the Consumer Protection Act may not be held jointly and severally liable for restitution.

The Division argues that it has the power to order joint and several liability, reasoning that joint liability is a common law tort principle under which all the tortfeasors are liable for the injuries they inflict and that a violation of the Act is in the nature of a tort action. Joint liability is proper, the Division argues, because in this ¹⁷¹ case appellees are concurrent tortfeasors and participated in a common scheme. Almony’s argument primarily is a factual one. He argues that restitution may be imposed, if at all, on a several basis, but not on a joint and several basis.

The essence of his argument is that joint and several liability requires a showing of some concert of action combining to result in a single harm and that such evidence is lacking in this case. As an alternative argument, Almony asserts that even if this Court finds him jointly and severally liable, he can be jointly and severally liable only for that part of the restitution order involving the two properties he appraised — 4320 Seidel Avenue and 4106 Harris Avenue. Morgan’s argument also is primarily a factual one. He contends that joint and several liability is improper because there is no “substantial evidence of substantial participation in a scheme to mislead or deceive consumers.” Shpritz’s argument is a legal one.

He contends that restitution is, by its nature, several, because restitution is calculated by the benefit each wrongdoer received. The issue of whether restitution ordered under the Consumer Protection Act, when brought by the Attorney General in a public enforcement action, may be joint and several as opposed to several is one of first impression before this Court. The resolution of this question is a close one, with little legislative guidance for us to ascertain legislative intent. The Act does not provide explicitly for joint and several liability, the Act provides no textual guidance as to how restitution is to be ordered, and the legislative history sheds no light on the issue.

In resolving this question, we are mindful of several precepts. First, we look to the purpose of the Act. Section 13-102 sets out the declaration of findings and purpose of the Act. The Legislature stated as follows: “The General Assembly of Maryland finds that consumer protection is one of the major issues which confront all levels of government, and that there has been mounting ¹⁷² concern over the increase of deceptive practices in connection with sales of merchandise, real property, and services and the extension of credit.” Section 13 — 102(a)(1).

The Legislature concluded as follows: “The General Assembly concludes, therefore, that it should take strong protective and preventive steps to investigate unlawful consumer practices, to assist the public in obtaining relief from these practices, and to prevent these practices from occurring in Maryland. It is the purpose of this title to accomplish these ends and thereby maintain the health and welfare of the citizens of the State.” Section 13—102(b)(3). Second, in § 13-105, the Legislature mandated that the Act “be construed and applied liberally to promote its purpose.” Finally, in construing “unfair or deceptive trade practices,” the Legislature required that “due consideration and weight be given to the interpretations of § 5(a)(1) of the Federal Trade Commission Act by the Federal Trade Commission and the federal courts.” § 13-105; Golt, 308 Md. at 10 , 517 A.2d at 332 n. 3. A review of federal cases brought by the Federal Trade Commission reveals that restitution under the federal Act is awarded on a joint and several basis.

It appears to be a regular practice and remedy under the federal Act. In Fed. Trade Comm’n v. Gem Merch. Co., 87 F.3d 466 (1996), the United States Court of Appeals for the Eleventh Circuit let stand a restitution order holding both the Corporation and the individual jointly and severally liable. Id. at 468 .

The individual, Estfan, argued that he was found liable on the basis of corporate acts with which he was involved and that under corporate liability only consumer redress would be permissible. He argued that “disgorgement is not an appropriate remedy in this case because he was not found individually liable.” Id. at 470 . The court rejected his argument, holding him liable individually as well as the Corporation. The court stated: “Estfan misunderstands the basis of his liability.

He is individually liable. The fact that the actions for which he ¹⁷³ was responsible were performed by Gem Merchandising does not lessen his individual liability. Once the FTC has established corporate liability, ‘the FTC must show that the individual defendants participated directly in the practices or acts or had authority to control them.... The FTC must then demonstrate that the individual had some knowledge of the practices.’ Amy Travel Service, Inc., 875 F.2d at 573.

Having found that Estfan had direct control over the activities of Gem Merchandising, and that he was aware of the illegal practices, the court properly held Estfan individually liable.” Id.; see also Fed. Trade Comm’n v. Gill, 71 F.Supp.2d 1030, 1050 (C.D.Cal.1999) (awarding restitution against Gill and Murkey, jointly and severally); Fed. Trade Comm’n v. Atlantex Assocs., 1987-2 Trade Cas. (CCH) Para. 67,788 (S.D.Fla.1987) (holding defendants jointly and severally liable for violations of § 5 of the federal Act); Fed. Trade Comm’n v. Publ’g Clearing House, Inc., 1995-1 Trade Cas. (CCH) Para. 71,006, 1995 WL 367901 (D.Nev.1995) (rejecting defendant’s argument that restitution was proper only to the extent of her de minimis participation in the offense and awarding restitution jointly and severally); Fed. Trade Comm’n v. Cyberspace.com, LLC, et al, 2003-1 Trade Cas. (CCH) Para. 73,960, 2002 WL 32060289 (W.D.Wash.2002) (holding that the FTC had shown that, as a matter of law, all defendants were jointly and severally hable for the corporate misconduct of the subsidiaries); cf. Sec. and Exch.

Comm’n v. Blatt, 583 F.2d 1325 , 1335 n. 31 (5th Cir.1978) (noting that the district court ordered a party to share jointly and severally in payment of the trustee’s expenses); Fed. Trade Comm’n v. Int’l Diamond Corp., 1983-2 Trade Cas. (CCH) Para. 65,725, 1983 WL 1911 (N.D.Cal. 1983) (holding that any of the defendants found liable under § 13(b) of the federal Act will be held jointly and severally hable for the monetary equivalent of rescission); Fed. Trade Comm’n v. Kitco of Nevada, Inc., 612 F.Supp. 1280, 1281 (D.Minn.1985) (finding the defendants jointly and severally liable under the § 13(b) of the federal Act for the monetary equivalent of rescission). ¹⁷⁴ After reviewing the purpose of the Maryland Act, affording the Act the liberal construction as required by the General Assembly, and considering what appears to be a longstanding federal practice, we hold that the Division may award restitution jointly and severally. We next consider whether the Division may award restitution jointly and severally in this case. In its Order, the Division applied joint and several liability to parties with two types of relationships.

First, the Division held individuals and the companies they own jointly and severally liable: Shpritz and his companies, Woody and American Skycorp, and Almony and Almony Appraisal Services. Second, the Division held the sellers, lenders, and appraisers all jointly and severally liable to each other. In this second category, the Division raises two bases for joint and several liability: concerted and concurrent action. We first address the test for holding individuals jointly and severally liable for restitution when the Division has determined that the corporation has violated the Consumer Protection Act.

As cited supra, a number of federal circuit courts have addressed this issue and adopted the standard articulated in Fed. Trade Comm’n v. Amy Travel Serv., Inc., 875 F.2d 564 (7th Cir.1989). In Amy Travel, the FTC charged three corporations and two individuals who owned and directed the corporations with deceptive trade practices in the marketing of discount vacations. Id. at 566 . On appeal, the defendants challenged the decision to hold all of them jointly and severally liable for restitution to consumers.

Id. at 578 . The United States Court of Appeals for the Seventh Circuit adopted the following three prong test for holding individuals jointly and severally liable with corporations for deceptive practices: “An individual may be held liable under the FTCA for corporate practices if the FTC first can prove the corporate practices were misrepresentations or omissions of a kind usually relied on by reasonably prudent persons and that consumer injury resulted. Once corporate liability is estab ¹⁷⁵ lished, the FTC must show that the individual defendants participated directly in the practices or acts or had authority to control them. Authority to control the company can be evidenced by active involvement in business affairs and the making of corporate policy, including assuming the duties of a corporate officer.

The FTC must then demonstrate that the individual had some knowledge of the practices.” Id. at 573 (citations omitted). The court defined knowledge as including “actual knowledge of material misrepresentations, reckless indifference to the truth or falsity of such misrepresentations, or an awareness of a high probability of fraud along with an intentional avoidance of the truth” and noted that “the degree of participation in business affairs is probative of knowledge.” Id. at 574 (citations omitted). The court then looked to the individuals’ involvement in all aspects of the business and authorship of the deceptive' scripts and held the individuals to be jointly and severally liable. Id. at 574-75 .

The Amy Travel standard requiring participation or control and knowledge is consistent with the standard we have adopted in the tort context. In Tedrow v. Deskin, 265 Md. 546 , 290 A.2d 799 (1972), the purchaser of a used car sued the car dealership, its owners, and employees claiming that they had altered the odometer. In addressing whether the individual defendants could be held liable for the Corporation’s acts, we stated the following: “The general rule is that corporate officers or agents are personally liable for those torts which they personally commit, or which they inspire or participate in, even though performed in the name of an artificial body. Of course, participation in the tort is essential to liability.

If the officer takes no part in the commission of the tort committed by the corporation, he is not personally liable therefor unless he specifically directed the particular act to be done, or participated or cooperated therein. It would seem therefore, that an officer or director is not liable for torts of which he has no knowledge, or to which he has not consented.... ¹⁷⁶ “The superior or managing officer of a corporation cannot be held liable for the misconduct of a subordinate servant or employee unless the act is done with his consent or under his order or direction. But liability is not limited to tortious acts which he actually and physically commits; it extends as well to tortious acts which he actually brings about.” Id. at 550-51 , 290 A.2d at 802-03 (citations omitted). Accordingly, we held that Tedrow was entitled to prove his allegations that the individuals were liable.

Id. at 552 , 290 A.2d at 803 ; accord Metromedia v. WCBM Maryland, 327 Md. 514, 519-21 , 610 A.2d 791, 794-95 (1992) (quoting Tedrow and holding that the owner of WCBM could be held liable for WCBM’s alleged unlawful detention of Metromedia’s property, because he participated in the alleged activity). Amy Travel is also consistent with Court of Special Appeals jurisprudence interpreting the Maryland Consumer Protection Act. In State Collection v. Kossol, 138 Md.App. 338 , 771 A.2d 501 (2001), the Consumer Protection Division found corporations and individuals liable for deceptive and misleading practices in the sale of food plans and freezers. The Circuit Court held that Kossol, who was an officer of the Corporations and participated in the deceptive acts, could not be held jointly and severally liable with the Corporation.

After quoting the ALJ’s conclusions, which cited Tedrow, Metromedia, and Amy Travel, the Court of Special Appeals held that Kossol could be held jointly and severally liable for restitution, because he personally violated the Consumer Protection Act and received benefits from the corporation. Id. at 348-49 , 771 A.2d at 507 . Accordingly, we adopt the Amy Travel standard set out by the Seventh Circuit. We hold that the Consumer Protection Division may hold individuals jointly and severally hable for restitution for the Consumer Protection Act violations of corporations, when the Division proves that (1) the individual participated directly in or had authority to control the deceptions or misrepresentations, and (2) the individual had knowledge of the practices. ¹⁷⁷ The Circuit Court ruled that joint and several liability is not applicable in this case.

We disagree and hold that joint and several liability is proper as to Shpritz and Almony and their respective companies’ violations. Shpritz participated directly in and had knowledge of his companies’ Consumer Protection Act violations. Similarly, assuming that there was sufficient evidence to support the Division’s findings against Almony Appraisal Services, an issue we will discuss infra, the Division could hold Almony individually liable. It is undisputed that Almony performed the two appraisals.

Therefore, if there were Consumer Protection Act violations through the appraisals, Almony participated in and had knowledge of the violations. Next, we consider whether the Division properly held Shpritz and his companies, Woody and American Skycorp, Morgan, and Almony and his company, each jointly and severally liable. While Consumer Protection Act violations are not tortious acts, we again look for guidance from the law of joint and several liability developed in the tort context. We have recognized joint and several liability for “true” joint tortfeasors, defined as tortfeasors who act in concert, and “concurrent” tortfeasors.

See Underwoodr-Gary v. Mathews, 366 Md. 660, 669-70 , 785 A.2d 708, 713-14 (2001); Morgan v. Cohen, 309 Md. 304, 310-17 , 523 A.2d 1003, 1005-09 (1987). The Division argues that we should apply both categories of joint tortfeasors to the Consumer Protection Act context and hold the parties jointly and severally liable based on concerted and concurrent action. 25 ¹⁷⁸ A review of the rationales for joint and several liability for concerted and concurrent action reveals that only concerted action applies to the Consumer Protection Act context. In discussing concert of action, we repeatedly have cited William L. Prosser, Joint Torts and Several Liability, 25 Cal. L.Rev. 413 (1936).

See, e.g., Morgan, 309 Md. at 311 , 523 A.2d at 1006 ; Trieschman v. Eaton, 224 Md. 111, 115 , 166 A.2d 892 , 894 n. 3 (1961). In that article, Prosser wrote as follows: “A. Concerted action. It is settled definitely that all who act in concert will be liable for the entire result____Those who actively participate in the wrongful act, by cooperation or request, or who lend aid, encouragement or countenance to the wrongdoer, or approval to his acts done for their benefit, are equally liable with him. Express agreement is not necessary; all that is required is that there shall be a common design or understanding.” Prosser, supra, at 429-30 (footnotes omitted).

The rationale for joint and several liability for this category is that tortfeasors who joined together should be liable for the entire damage, independent of whether any one of them directly caused more or less of the damage. Prosser’s rationale is as follows: “There was a common purpose, with mutual aid in carrying it out; in short, there was a joint enterprise, so that ‘all coming to do an unlawful act, and of one party, the act of one is the act of all of the same party being present.’ Each was therefore liable for the entire damage, although one might have battered the plaintiff, while another imprisoned him, and a third stole his silver buttons.” Id. at 414 (quoting Sir John Heydon’s Case 11 Co. Rep. 5, 77 Eng. Rep. 1150 (1613)) (footnotes omitted). In contrast, the predicate for concurrent tortfeasors’ joint and several liability is the indivisibility of the injury.

We have long recognized that when tortfeasors act independently ¹⁷⁹ and their acts combine to cause a single harm, the tortfeasors are jointly and severally liable. See Morgan, 309 Md. at 316 , 523 A.2d at 1008 (discussing whether the defendants’ torts were concurrent); Balto. Transit Co. v. Bramble, 175 Md. 334, 348 , 2 A.2d 416, 423 (1938) (noting that “the general rule is that, where the injury to the plaintiff is the result of concurring causes, the question is one which should be submitted to the jury”). Under the “single indivisible injury rule” or “single injury rule,” the necessary condition for concurrent tortfeasors to be held jointly and severally liable is that they caused a single injury incapable of apportionment.

See Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256, 260 , 99 S.Ct. 2753, 2756 , 61 L.Ed.2d 521 (1979) (noting that the common law “allows an injured party to sue a tortfeasor for the full amount of damages for an indivisible injury that the tortfeasor’s negligence was a substantial factor in causing, even if the concurrent negligence of others contributed to the incident”); Mitchell v. Gilson, 233 Ga. 453 , 211 S.E.2d 744, 745 (1975) (upholding the lower court’s holding that concurrent tortfeasors were jointly and severally liable when they produced a single indivisible injury and the resulting damages lacked a rational basis for apportionment); Ruud v. Grimm, 252 Iowa 1266 , 110 N.W.2d 321, 324 (1961) (holding that “where two or more persons acting independently are guilty of consecutive acts of negligence closely related in point of time, and cause damage to another under circumstances where the damage is indivisible ... the negligent actors are jointly and severally liable”); Palleschi v. Palleschi, 704 A.2d 383 , 385 n. 3 (Me.1998) (defining the “single injury rule” as “when joint tortfeasors by their separate negligent acts cause a single injury that is incapable of apportionment, each actor is liable for the entire amount of the damages”); D & W Jones, Inc. v. Collier, 372 So.2d 288, 294 (Miss.1979) (holding that “the separate, concurrent and successive negligent acts of the appellees which combined to proximately produce the single, indivisible injury to appellant’s property ... rendered appellees jointly and severally liable”); Azure v. City of Billings, ¹⁸⁰ 182 Mont. 234 , 596 P.2d 460, 469-71 (1979) (discussing the origins of the single indivisible injury rule); Landers v. East Texas Salt Water Disposal Co., 151 Tex. 251 , 248 S.W.2d 731, 734 (1952) (holding that where “the tortious acts of two or more wrongdoers join to produce an indivisible injury ... all of the wrongdoers will be held jointly and severally liable”); Restatement (Second) of Torts § 879 (1979) (stating that “[i]f the tortious conduct of each of two or more persons is a legal cause of harm that cannot be apportioned, each is subject to liability for the entire harm, irrespective of whether their conduct is concurring or consecutive”); cf. Restatement (Second) of Torts § 881 (stating for apportionable injuries that “[i]f two or more persons, acting independently, tortiously cause distinct harms or a single harm for which there is a reasonable basis for division according to the contribution of each, each is subject to liability only for the portion of the total harm that he has himself caused”). An indivisible injury is required, because the rationale for holding concurrent tortfeasors jointly and severally liable is premised on the indivisibility of liability. As Judge Learned Hand explained in Navigazione Libera Tnestina Societa Anonima v. Newtown Creek Towing Co., 98 F.2d 694 (2nd Cir. 1938), in cases with indivisible injuries, if the plaintiff had the impossible burden of proving each concurrent tortfeasor’s share of liability, then the plaintiff would not be able to recover any damages. Id. at 697 .

This “absurd result” is solved by shifting the burden of apportioning liability to the defendants through joint and several liability. Id. William L. Prosser and John Henry Wigmore employed the same rationale in arguing for holding concurrent tortfeasors jointly and severally liable in cases of single, indivisible injuries. Prosser wrote as follows: “D. Concurrent causation of a single, indivisible residt, which neither would have caused alone.

Where the acts of two defendants combine to produce a single result, which is incapable of being divided or apportioned — such as the death of the plaintiff — each may be the proximate cause of ¹⁸¹ the loss, and each may be held liable for the entire damage. ... “Entire liability in these cases rests upon the obvious fact that each defendant is responsible for the loss, and the absence of any logical basis for apportionment....” Prosser, supra, at 432. Wigmore wrote as follows: “The rule should be: Wherever two or more persons by culpable acts, whether concerted or not, cause a single general harm, not obviously assignable in parts to the respective wrongdoers, the injured party may recover from each of the whole. In short, wherever there is any doubt at all as to how much each caused, take the burden of proof off the innocent sufferer; make any one of them pay him for the whole, and then let them do their own figuring among themselves as to what is the share of blame for each.” John Henry Wigmore, Joint-Tortfeasors and Severance of Damages; Making the Innocent Party Suffer Without Redress, 17 Ill. L.Rev. 458, 459 (1923); see also Azure, 596 P.2d at 469-71 (discussing the single indivisible injury rule and citing Hand, Prosser, and Wigmore).

In Woods v. Cole, 181 Ill.2d 512 , 230 Ill.Dec. 204 , 693 N.E.2d 333 (1998), the Illinois Supreme Court articulated the different reasons for joint and several liability for concerted action and concurrent torts. The special administrator of Woods’s estate brought a wrongful death action, claiming that Cole negligently entrusted Hill with a firearm and made Hill think that the gun would be empty when he pointed it at Woods and pulled the trigger. Id. at 204, 693 N.E.2d at 334 . The sole issue was whether a comparative negligence statute mandated that the damages be apportioned between him and his fellow two tortfeasors, with whom he had acted in concert.

Id. at 204, 693 N.E.2d at 335 . In considering this question, the court distinguished between the common law joint and several liability doctrines for concurrent and concerted action torts. The court explained as follows: “In perhaps the most frequently occurring situation, a tortfeasor who acts independently and concurrently with other ¹⁸² individuals to produce an indivisible injury to a plaintiff may be held jointly and severally liable for that injury, even though the tortfeasor does not act in concert with the other individuals, and shares no common purpose or duty with them. Such an independent concurring tortfeasor’ is not held liable for the entirety of a plaintiff’s injury because he or she is responsible for the actions of the other individuals who contribute to the plaintiffs injury.

Rather, an independent, concurring tortfeasor is held jointly and severally liable because the plaintiffs injury cannot be divided into separate portions, and because the tortfeasor fulfills the standard elements of tort liability, ie., his or her tortious conduct was an actual and proximate cause of the plaintiffs injury. The fact that another individual also tortiously contributes to the plaintiffs injury does not alter the independent, concurring tortfeasor’s responsibility for the entirety of the injury which he or she actually and proximately caused. “In contrast, a tortfeasor who acts in concert with other individuals in causing a plaintiffs injury is held jointly and severally liable for that injury because the tortfeasor is legally responsible for the actions of the other individuals. A determination that a tortfeasor has acted in concert with other individuals establishes a legal relationship with those individuals. By virtue of this relationship, the tortfeasor becomes liable for the actions of those with whom he acted in concert....

Thus, while the tortfeasors who act in concert in causing a plaintiffs injury may all engage in some affirmative conduct relating to that injury, the legal relationship which exists among them eliminates the possibility of comparing their conduct for purposes of apportioning liability. Indeed, if an apportionment of liability were permitted, the act of one tortfeasor would no longer be the act of all, and the essence of the doctrine of concerted action would be destroyed.” Id. at 204, 693 N.E.2d at 336-37 (citations omitted). The court then concluded “it is legally impossible to apportion liability among tortfeasors who act in concert,” and thus, the ¹⁸³ comparative negligence statute could not apply to tortfeasors acting in concert. Id. at 204, 693 N.E.2d at 337 .

We agree with the Illinois Supreme Court that tortfeasors acting in concert and concurrent tortfeasors are jointly and severally liable based on different rationales. Tortfeasors acting in concert legally are responsible for the tortious actions each commits. In such situations, there is no apportionment of liability between them. See also Prosser, supra, at 414 (stating that in cases of concerted action “[t]he jury would not be permitted to apportion the damages”). 26 Concurrent tortfeasors are not responsible for each other’s actions, because concurrent tortfeasors do not act in concert.

Instead, concurrent tortfeasors are held jointly and severally liable to prevent the “absurd result” articulated by Hand, Prosser, and Wig-more that would follow from burdening plaintiffs with apportioning damages in cases of indivisible injury. This result is not considered unjust', as each concurrent tortfeasor caused the harm. Applying the rationales for these two categories of tortfeasors to the