Earnest money deposits

Broker Harris makes profitable investments with his earnest money deposits.  Broker Harris:

  1.  Must give 50% of the profits to the owner of the earnest money deposit.
  2.  Is under no obligation to share the profits.
  3.  Is breaking the law.
  4.  Has to pay taxes on the profits to the state.

The answer is C. Investing earnest money deposits is against the law.