CHARTER RUNS AGROUND

DEAN BREWER WAS ALREADY UNDER CRIMINAL INVESTIGATION FOR BANKRUPTING A MORTGAGE COMPANY, SO ARIZONA REGULATORS LET HIM TAKE OVER CHARTER TITLE, AND $8 MILLION IS MISSING.

Title and escrow companies are supposed to deposit these funds in secured bank accounts. Apparently, Brewer managed to short-circuit whatever safeguards were in place.

"The weak link is he was able to get in a position of sole authority over an account with money that wasn't his," says state Senator John Huppenthal.

Huppenthal is holding informal meetings with officials from the title industry, the banking department and the Attorney General's Office to determine what happened at Charter Title and what legislation is needed to prevent such occurrences in the future.

"We have to come up with a system so that people who are putting money in a trust situation are 100 percent sure their money is safe," Huppenthal says.

That Brewer ever assumed control of Charter Title is testament to the failure of the current system, and to extraordinarily shoddy regulation by the state banking department. State regulators bent over backward to assist Charter's rapid expansion, even though they had plenty of warning about Brewer's potential to wreak financial havoc.

The banking department's ineptitude in regulating Brewer is no aberration. The department's look-the-other-way attitude has allowed unscrupulous title-company officials to abscond with $16 million since 1990. Meanwhile, Attorney General Grant Woods, who promised during his 1990 election campaign to vigorously attack white-collar crime, has taken little public action on, and made less noise about, the string of title-company disasters.

@rule:
@body:Charter Title grew rapidly after Brewer took control of the company in 1991. The company expanded from 25 employees in five offices to 125 employees scattered across ten offices. Then it collapsed.

The company paid premier salaries and threw extravagant catered parties every month. It became the talk of the industry. Brewer took clients to the Super Bowl, the Kentucky Derby, the Final Four.

He threw parties at the company's $60,000-per-year America West Arena sky box, and occasionally chartered jets to Phoenix Suns away games. He frequently entertained clients on his 110-foot yacht, the Crystal, docked in San Diego.

"All my life has been devoted to entertaining clients," Brewer explains. "You try to get them to like you so they will give you their business."
Brewer spent lavishly while garnering clients' favor, even though he now claims to feel "pretty shitty," knowing how few of these people really liked him, and how many just wanted to wallow in his money trough.

Former Charter employees say Brewer worked at a frenetic pace, frequently shifting gears. He had a habit of constantly moving office furniture around, and it was considered amazing if you could keep his attention for more than a few minutes.

Stories swirl about Brewer throwing wild parties--sometimes on the Crystal--that included expensive prostitutes and illicit drugs. Several former Charter Title employees say they saw such activity firsthand.

Brewer vehemently insists he never uses illegal drugs. "You will not find anybody who has ever been in a position with me doing drugs. That's something I do not condone at all," he says.

A former senior associate says Brewer used money to keep a circle of friends nearby, and was especially free with cash when it came to women. "I saw him personally tip a topless dancer $1,500," the associate says.

Brewer, who is married, admits to having a girlfriend and to spending large amounts of money at topless bars. But he denies having numerous women on the side. "I have a girlfriend, not girlfriends," he says.

While many Charter employees elected to look away from the company's unusual activities because of pay and perks, competing title firms kept a close eye on Charter's operations. Before long, industry executives were wondering how the company stayed in business.

Industry observers say it is relatively easy to estimate the cash flow a title agency generates, because nearly all of the business is a matter of public record.

"We knew there was no way in the world they could be making a profit. They had to be losing money," says Robert D. Dorociak, a principal in United Title Agency.

Former Charter executives, however, claim the company was beginning to make a profit in the months before the collapse, and that there was no indication that the company was on the verge of failure.

"Bills were being paid. Salaries were being paid. Usually, when a company has problems, creditors are looking for them, checks are bouncing," say former Charter chairman Tom Eccles.

Brewer lured Eccles from a competing company to become Charter's chairman in 1992. Eccles, who had a stellar reputation in the title business, was pleased at the opportunity to assist in the growth of the small company. Eccles, however, says that he was never given the oversight responsibilities promised when he joined Charter. He now believes Brewer only wanted him on board to lend a sense of credibility to the company.

"I wouldn't have suspected anything. That may be naive, but 30 years in the business, and I didn't spot a thing," Eccles says.

@rule:
@body:Soon after she started working in Charter Title's main office on Central Avenue, Julie Hendrix (not her real name) attracted the eye of R. Bruce Harshey, who had been issued a state banking department license to operate Charter Title.

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