A Forest Lake real estate closer has been ordered to pay a $420,000 civil penalty after an investigation revealed that she misappropriated $1.3 million in client funds for her own personal use, the Minnesota Department of Commerce said Tuesday.

The fine-issued to Cynthia Strand-is one the largest that the department has ever imposed on an individual. In addition to being required to pay the fine, Strand's insurance producer, real estate closer, and notary commissioner licenses also have been revoked.

The department said that an investigation by its enforcement unit found that Strand withheld, misappropriated, and then converted for personal use funds that came through her business, Strand Closing Services. The money was supposed to be used to pay off mortgages on specific properties, mostly in the Twin Cities, and to cover transaction fees.

But between January 2007 and September 2009, Strand transferred almost $1.3 million from Strand Closing Services' general account to her personal accounts or to businesses controlled by her and her husband, the Minnesota Department of Commerce said.

The department said that in addition to misappropriating funds, Strand also failed to record several title changes, failed to remit title insurance premiums, and used “fraudulent, coercive, or dishonest practices” or demonstrated “incompetence, untrustworthiness, or financial irresponsibility.”

Strand was charged last summer in Washington County with theft by swindle, insurance fraud, aggravated forgery, concealing criminal proceeds, and racketeering.

Strand Closing Services filed for Chapter 7 bankruptcy protection in March 2010, claiming $1.6 million in assets and $2.1 million in liabilities-but the bankruptcy proceedings were halted in light of the fraud accusations.

The Department of Commerce began investigating Strand's business in October 2009 after receiving a complaint: An attorney who represented a bank claimed that funds given to Strand Closing Services at a 2007 closing weren't used to pay off the first mortgage on a property as was intended. After the investigation was launched, numerous other complaints were submitted. Two transactions reviewed by the department involved the City of Forest Lake, which claimed that funds given to Strand's company at real estate closings weren't used to pay off mortgages and fees associated with the transactions.

Department of Commerce Deputy Commissioner Kevin Murphy said in the department's order that Strand's “inappropriate and illegal real estate activities have caused substantial harm to Minnesota residents and exposed homeowners to potentially catastrophic losses in connection with property purchases and refinancings.” He added that her violations are “numerous, egregious, and warrant substantial penalties to deter others from similar behavior.”