Pair Accused of Embezzling $2.8 Million : Valencia: Married couple charged in biggest fraud involving an escrow firm in state history, authorities say.

After nearly two years of investigation, criminal charges have been filed against a married couple who allegedly masterminded the largest embezzlement from an escrow company in state history, authorities said Thursday.

Harold Louis Wiener, 51, and his wife, Kathy, 47, were accused of stealing about $2.8 million from customers at Country Oaks Escrow between 1990 and 1993, according to a complaint filed Monday by the Los Angeles County district attorney’s office. The Valencia-based company, founded and owned by the Wieners, was seized by state auditors in June, 1993.

The Wieners, who moved from Santa Clarita to Utah after the seizure, are expected to surrender to sheriff’s deputies and be arraigned Thursday in Los Angeles Municipal Court, said Harold Wiener’s attorney, Melvyn Sacks.

He said bail for each has been set at $2.7 million, apparently a reflection of the amount they are accused of stealing.

The couple, in response to civil lawsuits, has denied any wrongdoing. Sacks said his client, who underwent a heart transplant in 1990, will plead not guilty to the criminal charges of grand theft, unauthorized disbursement of escrow funds and misstatements pertaining to escrow funds.

“They have to prove a case,” Sacks said. “I haven’t seen any of their investigation yet.”

Deputy Dist. Atty. Pamela Gelman said she did not want to comment about the case until the Wieners are in custody.

Escrow companies hold deposits from real estate purchasers in trust accounts until credit checks and other terms of a sale are complete, then distribute the funds, pay fees and transfer title to complete the sale. The Wieners allegedly spent much of the $4.47 million that should have been in their company’s trust accounts on everything from business expenses to their daughter’s Christmas party.

The transactions were covered up by using a variety of schemes such as falsifying deposits to the trust accounts or disguising the withdrawals, according to reports by state-appointed auditors.

Suspicion about the couple’s activities arose in February, 1993, when the company’s accounting firm discovered discrepancies it considered “reportable,” according to the district attorney’s complaint. Further investigation by the state caused a Country Oaks attorney to report in June “that there was a trust fund shortage in excess of $2 million and that (the) defendants were unable to cure it.”

The state Department of Corporations seized Country Oaks on June 4, 1993, leaving about 100 shocked employees out of work and 2,000 real estate transactions in limbo.

However, Santa Ana-based Burrow Escrow acquired Country Oaks’ accounts four days later and brought most of the employees back to work. Customers were eventually reimbursed by Escrow Agents’ Fidelity Corp. (EAFC), a nonprofit corporation which insures escrow companies.

EAFC has filed a civil lawsuit against the Wieners to recover the missing funds. The Wieners responded by filing countersuits against their auditor for failing to detect the shortfall and against four pharmaceutical companies for prescribing heart-transplant medicine to Harold Wiener that “impaired his ability to tell right from wrong.”

Sacks said he does not know if the Wieners’ drug-impairment allegations will be used as a defense against the criminal charges. However, Sacks used a similar argument to obtain an acquittal in 1993 of an Orange County man who said he tortured and tried to kill his 77-year-old father because he was under the influence of the controversial sleeping medication Halcion.

A request to release Wiener on his own recognizance will be made because of concerns about the county’s ability to deal with his delicate medical condition, Sacks said.

“If he goes in, he’ll be the first person with a heart transplant who’s been in jail,” Sacks said.

The Wieners each face up to 21 years in prison if convicted on all three counts.