Jonathan Hunt created the Foxtons estate agency empire in his own image - ruthless, single-minded and highly successful. And the rewards have been substantial. His £350m fortune has enabled him to buy Heveningham Hall, a gigantic mansion in Suffolk, and a house in Kensington Palace Gardens, London's most exclusive street.

Foxtons is famous for two things - the racing green Mini Coopers that its ferociously ambitious sales teams drive round London, and the repeated claims of sharp practice made against it.

Such is the animosity the firm attracts that a picture of a crashed and mangled Foxtons Mini in a field was circulated with glee around other agents. No one ever found out how it got there.

Despite the allegations of wrongdoing, Foxtons has survived and prospered. But the latest claims from America, if proved to be true, could put a severe dent in profits and harm the already heavily tarnished name in the US market.

Financial Mail has revealed that Hunt's money-losing American business faces legal action from regulators, which could lead to it paying millions of dollars in damages and costs.

The New Jersey Department of Banking and Insurance is investigating Foxtons' North American mortgage brokerage, Foxtons Financial Inc, which allegedly failed to disclose mortgage application fees to borrowers.

Foxtons has said that if it loses the case, there 'will be a cost of $2.8m (£1.6m) in addition to the suspension or revocation of the mortgage broker licence'.

The NJDBI is also investigating another of the company's financial products, the Smart Money Program, which is no longer being sold or marketed by Foxtons Inc. If Foxtons loses that action, there are numerous penalties, including a fine of £275,000. The company is defending both actions.

The American problems could not have come at a worse time for the firm. Last month it was exposed in a fly-on-the-wall TV documentary, which showed how its London salesmen earn up to £150,000 a year - with some bragging about misleading customers.

It has already been on the receiving end of a stream of negative coverage over its business. It charged one client fees for a sale that did not complete and it removed other agent's notice boards from outside properties.

Even Alastair Campbell, Downing Street's former spin chief, had cause to complain about the firm - it put up an unwanted For Sale sign in front of his home in Hampstead, north-west London. Not that it stopped Campbell's erstwhile boss Tony Blair from using Foxtons to try to find a tenant for his house in Connaught Square, near Hyde Park.

Hunt, 52, started his American expansion in 2001 with a £12m investment in Your Home Direct, a broker based in West Long Branch, New Jersey. He then bought yourhomedirect.com, later renamed Foxtons Inc, but quickly fell out with the company's founder, Glenn Cohen, who left having sold his remaining shares to Hunt.

Despite recently spending tens of millions of dollars on a marketing campaign in America, Hunt's US business has made huge losses. Estate agents in America typically charge six per cent commission for selling a home, much higher than in Britain. When Hunt arrived in America, he aggressively cut commission. Foxtons Inc charges about half that demanded by its US rivals.

Last night, the NJDBI said: 'The Department has a policy of not discussing open or ongoing investigations or complaints.'

A spokeswoman for Foxtons in London said: 'These matters are either not proceeding or not material, as you can see by the fact they are not referred to in the 2004 accounts.' Latest profits fell from £6m to £1.8m.

According to Foxtons, the American arm now has some 400 staff, many speeding around New York and New Jersey in those famous British racing green Mini Coopers. Hunt will be hoping that he can avoid a nasty crash.

Copyright © 2005 First Mortgage Trust