CFO Sink Announces Arrests in $8 Million Escrow Theft
Tara Klimek or Nina Banister
NEW PORT RICHEY—Florida Chief Financial Officer Alex Sink announced today the arrests of a husband and wife on multiple counts of theft of escrow funds and money laundering for allegedly stealing nearly $8 million from their title company escrow accounts.
The charges against John T. Wehlau, 43, and Cheryl T. Wehlau, 41, owners and operators of Gulf Coast Title Closings & Escrow Services in New Port Richey, are the result of an investigation by the Department of Financial Services’ Division of Insurance Fraud (DIF), a statewide law enforcement agency that investigates insurance fraud. The primary victim, Commonwealth Land Title Insurance Company, covered hundreds of homebuyers’ missing funds.
“Fraud hurts all Floridians and our economy by artificially driving up costs that are passed on to all consumers,” said CFO Sink, who oversees the department. “We will protect our citizens by rooting out these costly crimes and holding those involved accountable.”
The Wehlaus are charged with 21 counts of theft of escrow funds, three counts of money laundering and one count of grand theft. The couple was arrested Thursday at their New Port Richey home and booked into the Pasco County Jail. Bond was set for each at $5 million, $200,000 for each charge filed against them. If convicted on all of the charges, they could face a sentence of up to 30 years in prison on each count.
Detective Steven Firestone, DIF’s lead investigator in the case, said the investigation revealed that the alleged thefts of escrow funds began around January 2004 and consisted of 21 documented defalcation transactions of over $100,000, and that the defalcations, or thefts, were documented to have increased in amounts through October 2006. These alleged thefts ceased only when an audit revealed a drastic shortfall in Gulf Coast’s escrow accounts and Commonwealth Land Title Insurance Company stopped Gulf Coast’s business in early January 2006.
The Civil Court of the 6th Judicial Circuit, Civil Division, ordered a receiver appointed on January 19, 2006, to take over the company and wind down Gulf Coast Title Closings & Escrow Services, Inc. At the time of the audit, the escrow accounts held more than $9.4 million in escrow monies. The receiver found only $1.5 million in Gulf Coast’s accounts, including their escrow accounts and operating accounts, and found more than $7.9 million missing.
The investigation indicated that the Wehlaus allegedly used the money to fund a lavish lifestyle, including the purchase of a $1.3 million dollar home using $390,000 in misappropriated funds from the Gulf Coast escrow account as a down payment, and a $271,000 condominium for their daughter paid in cash. Other purchases included vehicles, trips, a single monthly American Express bill of more than $72,000, a single $3,200 Ruth’s Chris Steakhouse dinner bill and other personal expenses that allegedly were documented as funded via stolen escrow monies.
These charges will be prosecuted in Pinellas County by Attorney General Bill McCollum’s Office of Statewide Prosecution. The department anticipates filing action against the Wehlaus’ title agency license in the next few days.
The Department of Financial Services, Division of Insurance Fraud, investigates fraud in all types of insurance, including health, life, auto, property and workers’ compensation. To report information about this case or any other possible insurance fraud case, call the department’s Fraud Fighters hotline at 1-800-378-0445. A reward of up to $25,000 may be offered for information leading to a conviction.
As a statewide elected officer of the Florida Cabinet, Chief Financial Officer Alex Sink oversees the Department of Financial Services, a multi-division state agency responsible for management of state funds and unclaimed property, assisting consumers who request information and help related to financial services, and investigating financial fraud. CFO Sink also serves as the State Fire Marshal.