Lawsuit Claims Owners of Country Oaks Escrow Used Embezzled Deposits : Courts: Restitution of $2.6 million is sought from Harold and Kay Wiener and other unnamed employees of the Santa Clarita firm.

A Huntington Beach escrow company that backed the trust account of troubled Country Oaks Escrow Co. has filed a lawsuit contending the Country Oaks owners and some employees used embezzled escrow deposits to purchase personal property and operate other businesses.

Cheryl Wyland, a member of the board of directors of the nonprofit Escrow Agents’ Fidelity Corp., the escrow firm that insured the Santa Clarita firm’s deposits, is an owner of Burrow Escrow, the Santa Ana-based firm that acquired Country Oaks assets on June 8.

Country Oaks also owned and operated offices in Valencia, Palmdale and Lancaster.

The lawsuit, filed Monday in Los Angeles County Superior Court, seeks restitution from Country Oaks owners Harold and Kay Wiener and several unnamed employees for an estimated $2.6-million deficit discovered in a routine audit earlier this year of the company’s $4.4 million trust account.

It also seeks punitive damages and reimbursement of legal costs.

The Wieners, who built Country Oaks into the state’s third-largest escrow firm over 12 years, used escrow deposits to finance their company, the lawsuit contends.

Rose Pothier, an attorney representing the Wieners, did not return numerous phone calls.

The civil suit is an attempt to salvage any assets to help cover the losses, and reaches beyond the business assets and into the couple’s personal assets, said Dale Lucas, chief examiner for the state Department of Corporations.

“They are fairly certain that they are going to have to pay a large claim, about $2.6 million, because they are responsible for the loss,” Lucas said.

Escrow Agents’ Fidelity is a nonprofit corporation established by state law about 10 years ago to insure escrow deposits for about 800 escrow companies operating in more than 1,000 California locations, Lucas said.

When state regulators stepped in June 4 to close the firm, it held the escrow deposits of 800 to 1,000 prospective home buyers, and company officials said it was involved at various stages with several thousand other deals. Country Oaks was the third escrow firm seized by regulators this year.

Another firm operating in Valencia, Ruth Altman Escrow, was closed in March when regulators discovered the diversion of about $164,000 from the trust account, Lucas said.

Disclosure of missing funds rocked both the local and professional community, where the Wieners were highly regarded as business and community leaders.

State regulators are currently conducting an audit to untangle the string of companies owned by the Wieners that are suspected as being part of a scheme to launder funds from the trust account for use in other companies and purchases.

Alan Eggers, a state-appointed conservator, said the audit of the company’s records could be completed as early as next week.