Criminal charges loom after Stewart Title suit: company alleges embezzlement by ex-CFO.Company alleges embezzlement embezzlement, wrongful use, for one's own selfish ends, of the property of another when that property has been legally entrusted to one. Such an act was not larceny at common law because larceny was committed only when property was acquired by a "felonious taking," i. by ex-CFO Glendale-based Stewart Title has accused its former chief financial officer of embezzling at least $450,000 from the title company and/or its clients - and perhaps $1.5 million or more - over an eight-year period. The former CFO See Chief Financial Officer. , Charles L. "Chuck" Scott, expects to face criminal charges in connection with his former employer's allegations, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Scott attorney Wayne McMillan. Last June, the title insurance/services firm filed a civil suit in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. Superior Court against Scott, who worked at Stewart from 1971 until last year. The suit, which alleges fraud, unjust enrichment A general equitable principle that no person should be allowed to profit at another's expense without making restitution for the reasonable value of any property, services, or other benefits that have been unfairly received and retained. , conversion and other charges, also names Chuck Scott's wife Nina Montoya Scott and unspecified "Does" as defendants. Declarations by two private investigators - which Stewart hired to track down irregularities discovered through an internal audit after Scott left the firm - state that Scott "admitted he took the money" when the investigators confronted him with specific evidence. Chuck Scott's formal answer to Stewart's Superior Court complaint states that he denies or has "no information" about the allegations. And attorney McMillan told the Business Journal that Chuck Scott "would disagree that he confessed" to any improprieties in his meeting with the private investigators. Criminal charges expected However, Scott's formal answer to the complaint stales that "the defendant believes that criminal charges are presently being filed or will soon be filed against him based upon certain acts alleged in the plaintiff's complaint." And McMillan said last week that criminal charges will "probably" be filed against Chuck Scott. A spokeswoman for the L.A. County District Attorney's office said last week that no charges have been filed against Chuck or Nina Scott. Stewart's attorneys in the civil litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. didn't return the Business Journal's calls. And new Stewart President Dale Rincon said he has been advised not to comment on the matter. A declaration filed in the Stewart suit by Chuck Scott states he was terminated from a subsequent job at another title company "because of allegations contained in this lawsuit." It also says he and his wife are both unemployed and in the process of divorcing. A declaration by private investigator Lynn Wilburn, filed in connection with the Stewart lawsuit, states Chuck Scott told the investigators that "his wife had no knowledge of 'any of this.'" Nina Scott has filed no formal response to Stewart's allegations. The Business Journal was not able to reach her for comment. Barred from selling assets In July, Superior Court Judge Diane Wayne granted a preliminary injunction A temporary order made by a court at the request of one party that prevents the other party from pursuing a particular course of conduct until the conclusion of a trial on the merits. A preliminary injunction is regarded as extraordinary relief. prohibiting the Scotts from selling any of the real estate they own, and from transferring any personal properly or funds in bank accounts at World Savings Bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. and American Savings Bank. The Stewart complaint states that Chuck Scott was employed by Stewart from 1971 through 1994, that he was controller and chief financial officer, and that he accordingly was responsible for "keeping charge of Stewart's accounts, books and records (and) the trust accounts (and corresponding records) maintained by Stewart for others." Stewart's allegations focus on transactions tied to a so-called "indemnity account" in Stewart's name that Scott allegedly set up at Imperial Bank. Such an account is typically established to hold funds in trust for title company customers "pursuant to indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from agreements" between insureds and insurers, a memo filed by Stewart's attorneys explains. But this account, discovered through an internal audit after Scott left the firm, "was unknown (to Stewart officers) until recently and never previously disclosed," the memo notes. Account allegedly tapped The audit and subsequent investigations revealed that Scott had cashier's checks cashier's check n. a check issued by a bank on its own account for the amount paid to the bank by the purchaser with a named payee, and stating the name of the party purchasing the check (the remitter). drawn against the indemnity account, then made them payable to his and his wife's accounts at American Savings and World Savings and the Scotts' Citibank Visa credit card account. Scott's was one of the signatures endorsing all the checks in question, the Stewart memo alleges. A declaration by a Stewart auditor, filed in connection with the civil suit on Oct. 3. indicates Stewart has "documentation supporting in excess of $450,000 withdrawn from the indemnity trust account at Imperial and either deposited into Scott accounts or used to pay credit card debt Credit card debt is an example of unsecured consumer debt, accessed through ISO 7810 plastic credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. ." A memo Stewart's attorneys filed June 5 notes Chuck Scott "and/or others" may have embezzled em·bez·zle tr.v. em·bez·zled, em·bez·zling, em·bez·zles To take (money, for example) for one's own use in violation of a trust. "as much as $1.5 million over a period of eight years." Exhibits filed in the civil case include records of the Imperial account and copies of the checks in question. The June 5 memo notes that "Stewart's auditors are attempting to ascertain the true owners of the funds from the indemnity account." That memo adds that the defendants "apparently have some or all of the necessary funds to make good on these losses." The complaint specifies that Chuck and/or Nina Scott own condominium condominium In modern property law, individual ownership of one dwelling unit within a multidwelling building. Unit owners have undivided ownership interest in the land and those portions of the building shared in common. properties in La Crescenta, Cerritos and Azusa. |
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