Santa Clarita / Antelope Valley : Escrow Funds Diversion Found

An investigation into the business records of Country Oaks Escrow Co. has revealed that nearly $3 million in deposits were funneled to the company’s operating account from different trust fund accounts, state investigators have concluded.

Escrow companies are prohibited by state law from using clients’ deposits.

A conservator appointed to audit the Santa Clarita firm said Monday that shortages began appearing in four trust fund accounts at Guardian Bank in February, 1991. Funds were mainly diverted to the firm’s operating account, said Dale Lucas, chief examiner for the state Department of Corporations.

He said state conservator Allen Eggers placed the losses of the $4.4-million trust account at $2.8 million. Most of the funds were removed from the accounts in a series of fraudulent withdrawals, Lucas said.

Country Oaks, which also operated offices in Palmdale, Lancaster and Valencia, was the state’s third-largest escrow firm until regulators seized control of the business June 4. Its escrow accounts were purchased four days later by Burrow Escrow Co. of Santa Ana.

Harold and Kathy Wiener, the former owners of the business, are named in a lawsuit filed last week by Escrow Agent’s Fidelity Corp., an Encino nonprofit agency that insures deposits for about 800 escrow companies statewide.

Michael Evans, an attorney representing Escrow Agent’s Fidelity Corp., said there is a court hearing scheduled July 8 to show cause for a preliminary injunction to be filed against the couple to freeze all future business transactions.

When it was seized the firm held the escrow deposits of 800 to 1,000 customers who have not been reimbursed. There were about 2,000 other customers involved with the company at various stages of escrow or refinancing services.