Santa Clarita / Antelope Valley : Ill Feelings, Lawsuits Remain in Wake of Escrow Fraud Case : Investigation: Harold and Kathy Wiener, accused a year ago of bilking $2.8 million, have left Santa Clarita for Utah.

Harold and Kathy Wiener were considered one of the community’s most respected and successful couples--until a year ago today.

That’s when state auditors seized their escrow firm, accusing them of bilking $2.8 million from customer deposits in what a state regulatory agency called the largest incident of escrow fraud in state history.

The Wieners, who deny any wrongdoing, have since moved to Utah, leaving behind ill feelings among some people in the community and a tangle of lawsuits.

The couple started Country Oaks Escrow Inc. in 1981 and built it up into one of the state’s largest escrow firms. They were also well-known community leaders, involved in such events as charity auctions for the Santa Clarita Valley Boys & Girls Club.

But Country Oaks employees who arrived at work a year ago today found the state had seized the Valencia-based company after an audit revealed defrauding of customer accounts through such schemes as falsifying deposits and covering up improper transactions.

Escrow companies hold deposits from real estate purchases in trust accounts until credit checks and other terms of a sale are finalized. Country Oaks should have had an average of $4.47 million in its four trust accounts during 1992, but the amount was actually much lower, according to the audit by the state Department of Corporations, which regulates escrow firms.

The department’s investigation concluded that the Wieners were responsible for the shortfall and that the missing funds were spent on, among other things, cleaning services and their daughter’s Christmas party.

About 2,000 real estate transactions were left in limbo, but the funds were insured by Escrow Agents’ Fidelity Corp., a nonprofit corporation that filed a civil lawsuit against the Wieners in June, 1993, to recover the money.

The Department of Corporations has banned the couple from working in the escrow industry in California. The Los Angeles County district attorney’s office has been investigating the matter for several months, but it is uncertain whether charges will be filed, said Deputy Dist. Atty. Pamela Gelmen.

The Wieners have attributed the missing funds to auditing lapses and the effects of Harold Wiener’s heart medication. Kathy Wiener has filed for bankruptcy. The couple could not be reached for comment.

They have filed civil lawsuits against four pharmaceutical companies for allegedly prescribing medication that impaired Harold Wiener’s ability “to tell right from wrong.”

And they are also suing their auditor, Martin and Hedman of Valencia, for allegedly failing to detect and report the shortfall of funds. Jeffrey Karpel, the Wieners’ attorney, said the consequences might have been less dire for the couple and the matter more easily resolved if the fact that funds were missing was known before the state audit.

Randall Dean, an attorney representing the auditing firm, disagrees.

“The purpose of the audit was not to detect embezzlement by the principals of the company, but to present a financial snapshot of the picture of the company to the Department of Corporations,” Dean said.

Karpel said the Wieners may drop the pharmaceutical companies lawsuit, which could prove costly, and focus on the litigation against the auditor.

In Santa Clarita, meanwhile, some people are anxiously awaiting the outcome of the district attorney’s investigation and the lawsuits.

Sue Herrell, manager of the TMC Escrow Co. branch in Santa Clarita, said escrow companies were treated like used-car salesmen for a time after the fall of Country Oaks.

“It ticks me off that nothing was done,” Herrell said. “(Rep.) Dan Rostenkowski (was indicted for allegedly) taking $500,000 and for violating the public trust. Harold and Kathy just did it on a larger scale.

“What they did violated the trust within the industry,” she added. “For a long time after their company went under, we suffered because a lot of people lacked trust in the independent escrow industry.”

Investigators have had to sort through volumes of complicated documents.

Allen Eggers, a state-appointed conservator who spent nearly a year investigating the alleged fraud, said Country Oaks financial records occupy one-fourth of a 1,200-square-foot warehouse.

“It was more voluminous than anything I’ve done in the past because of the size of the company (and) the transactions occurred over a fairly long period of time,” he said.

Country Oaks’ accounts were taken over by Burrow Escrow Co., a Santa Ana-based firm, four days after the state seized Country Oaks’ records. Cynthia Moller, manager of the Burrow Escrow office in Valencia and an employee of the Wieners for six years, said account operations are mostly back to normal after a period of uncertainty.

“I think the community has been very good about separating Country Oaks from what we are and what we’ve done,” she said.

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Moller said the incident still remains on the minds of the many former Country Oaks employees now working for Burrow Escrow, especially since Kathy Wiener’s bankruptcy filing. Country Oaks’ more than 100 employees are still owed paychecks from the Wieners ranging from a few hundred to a few thousand dollars.

“I was going to come back from maternity leave and I couldn’t decide whether to come back in May or June (last year),” Moller said. “I came back in May and worked the whole month and I didn’t get paid for it. I could have spent one more month with my baby.”

But Moller said most of her resentment toward the Wieners has vanished during the past year.

“I feel more pity for them because they threw away what they had,” she said. “But at the same time it hurts because we cared about them.”