Here's a scam based upon the title business:
TITLE BUSINESS BOOMED, BUT THE CASH VANISHED
BYLINE: JEFF TESTERMAN, Times Staff Writer
SECTION: NATIONAL; Pg. 1A
LENGTH: 1294 words
DATELINE: PALM HARBOR
HIGHLIGHT: Life was hard but lucrative at Gulf Coast, until the owners were charged with stealing millions.
With hundreds of loan closings a month, business boomed at Gulf Coast Title, and the perks were plentiful: Hummers and Escalades for travel, shopping sprees for staffers who wanted outfit upgrades, lavish holiday office parties that included all-expense-paid hotel rooms.
But under the iron-fisted rule of Gulf Coast founder Cheryl L. Wehlau, the perks came with a price.
Loan closers worked 12-hour days, weeks on end without time off. Processors prepared loan packages, napped on cots, splashed water on their faces, then went back to work to meet the volume of loans. Wehlau and her husband, co-owner John T. Wehlau, even insisted employees do what they called "Chinese overtime" - paid not at time-and-a-half, but at half-wage.
"It was really, really stressful," said Anne Bartlett, a loan closer at Gulf Coast. She figures she lost thousands in overtime pay, but kept quiet to keep her job.
"They paid really well, but nobody liked working there," said loan closer John Walsh.
"Cheryl ruled like a totalitarian. She even had cameras and mikes installed in every office so she could monitor what every employee was doing. I didn't know if it was paranoia or what."
The Wehlaus had a secret reason for maintaining high productivity at Gulf Coast, according to state investigators: They were stealing millions from escrow accounts under their trust, laundering the cash through shell corporations and spending it on an extravagant lifestyle.
The stolen funds were replaced by money coming in for new mortgage loans, investigators said, but if the flow of new money was interrupted, the scheme faced collapse.
Things fell part in January 2006, after a tip from an insider. An army of accountants arrived at the title agency at 32815 U.S. 19 N in Palm Harbor, carted off boxes of documents and padlocked the office. An audit revealed an escrow account that should have held $9.4-million contained just $1.5-million. More than $7.9-million had vanished.
The Wehlaus, both 41, were arrested Aug. 13 in a New Port Richey home rented in the name of one of their shell companies. Each was charged with 25 felonies: theft from escrow accounts, grand theft and money laundering. The couple was transferred to the Pinellas County Jail this week, each held on $5-million bail.
Their attorneys declined comment or did not return calls.
The case will be handled by Attorney General Bill McCollum's Office of Statewide Prosecution, appointed because Gulf Coast Title Closings and Escrow Services had three agencies around the state -- in Seminole, Duval and Pinellas counties.
No one is sure where all the stolen money went.
But investigators believe some was funneled into the Just Originals flower shop in the Ridgemoor shopping center in Palm Harbor, a business set up in the name of Cheryl Wehlau's special needs daughter, who is now 21.
As much as $40,000 a week flowed into Just Originals, much of it from the title company, but it was clear Cheryl Wehlau - not the daughter - was running the flower shop, according to former employee Kenneth Carter.
"(Her daughter) wasn't capable of making a business decision," said Carter. "What Cheryl did was put everything in (the daughter's) name to hide it."
Carter noticed payroll checks going out for $800 to $1,000 in the "names of employees who didn't exist" - phantom workers no one had ever seen at the shop.
"We were all led to believe it was on the up and up, but something was really wrong there," said Carter. "The sad part is they used (the daughter's) name like that and ruined it."
Investigators say other funds misappropriated at Gulf Coast helped pay for the Wehlau's $1.32-million home at the Wentworth Country Club in Tarpon Springs and a $271,000 Lansbrook Village condo in Palm Harbor for the daughter.
Other money paid for extravagances at Gulf Coast.
When a local NBA star considered using Gulf Coast and asked for a tour, Cheryl decreed that staffers head over to Stein Mart and buy themselves more presentable clothes. Former marketing department employee Pam Brower came back with a $175 outfit, all on the company expense account.
Brower recalls Gulf Coast's holiday party at the Belleview Biltmore in 2004: Dinner came with Christmas bonuses, open bars, door prizes and a room at the resort for every employee.
"We gave them 150 percent," said Brower. "We thought at the time they treated us well. Now, we understand all the extravagance was just using money stolen from other people.
"It's just appalling."
Brower said she ultimately fell victim to nepotism that added more and more of the Wehlau family members to the Gulf Coast payroll, including Cheryl Wehlau's parents, her sister, an aunt, her sister's brother-in-law, even her ex-husband.
"They put a relative of the ex-husband in the marketing department who could barely speak English, and she couldn't even answer the phones or use the computers," said Brower. "She was just there to collect a paycheck. But when business dropped off, they kept her and laid me off."
Anyone who crossed Cheryl Wehlau, Brower said, faced a dressing down or a pink slip.
After a family argument, Cheryl Wehlau fired her parents and sister. Several ex-employees said the parents, David and Faye Taylor, discovered the misappropriations but were shown the door when they said they wanted it stopped.
It wasn't stopped until Commonwealth Land Title Insurance Co., the underwriter who wrote title policies for Gulf Coast, discovered the thefts and obtained an injunction to shut down the business. Commonwealth covered most of the losses after Gulf Coast checks written to homeowners, real estate professionals and government agencies began bouncing.
"Some people who had dealt with the company didn't even know if they owned their new home after that happened," said Bartlett, the loan processor. "It was a mess."
Marilyn Eddy, 69, who scrapes for every cent because she supports a disabled son, said she lost a $500 deposit at Gulf Coast when she was denied a loan and the title company closed.
"I was going crazy over it," said Eddy. "I'd try to call Gulf Coast, but no one answered."
After the title company went out of business and the Wehlaus' properties went into foreclosure, the family moved to Pasco, again relying on the name of their special needs daughter.
Records show the daughter was the purchaser in August 2006 of a $280,000 home in Hudson. Documents show she paid $100 down and obtained two mortgages for $279,900 for the purchase. It isn't clear how she qualified for the two loans.
In July, a lender filed a foreclosure suit on those loans, and the Wehlau family moved to a rented home in New Port Richey.
Some customers say they lost money with the Wehlaus even after the title agency was shuttered and the couple fell back on the flower shop business.
Shannon Waters, 31, contracted with Just Originals to provide flower arrangements and wedding services for a ceremony scheduled at the Innisbrook resort next month. After meeting with Cheryl Wehlau, Waters handed over a $500 deposit, and later another $500 deposit. After getting the money, John Wehlau offered to perform the wedding ceremony, saying he was an ordained minister.
"I think they were doing all that just to get my trust," said Waters. "I had no idea about the title company stuff at all."
When Just Originals suddenly closed down, the Wehlaus stopped answering calls to their cell phones and Waters figured she had been taken. She filed complaints with the police and the Better Business Bureau and chalked it up to experience.
"I feel bad after all the millions stolen, to be seen as just as another mark by them," the bride-to-be said. "It was not the way I wanted to start a new life."
Times researcher John Martin contributed to this report. Jeff Testerman can be reached at firstname.lastname@example.org or (813) 226-3422.
Answered By: StopSpending - 12/1/2007