Dean Brewer says he feels much better these days.
The 40-year-old former owner of Charter Title Agency, which was seized by the state last October after $8 million turned up missing, has plenty of reasons to feel upbeat.

Topping the list is his ability, so far, to escape an indictment for allegedly diverting more than $5 million from the title company's escrow accounts into CTA Financial Corporation, a company Brewer owned along with his former Charter Title partner, R. Bruce Harshey.

Three months ago, Brewer was concerned that he would face criminal charges stemming from Charter Title's collapse, so he hired Tom Henze, one of the Valley's top defense lawyers.

Court documents filed since clearly show Charter Title was improperly diverting escrow funds into CTA Financial. There was only one person in charge of moving the money, and, by his own admission, that was Brewer.

But Brewer now says no one from the state Attorney General's Office has been in touch with him, and now he believes the uproar over Charter Title's collapse is diminishing to a whisper.

"I really think that things are starting to be taken care of," he says.
Adding to his euphoria is the knowledge that someone else is covering the losses suffered by thousands of investors who placed their trust in Charter Title, only to see a good portion of the money squandered on Brewer's 121-foot yacht, wild parties in an America West Arena skybox, $1,500 tips to topless dancers, and extravagant adventures to the Super Bowl, Final Four and Kentucky Derby ("Charter Runs Aground," December 29, 1993).

"I don't feel as bad as I did, because I do feel most of the people are being taken care of," Brewer says. "They are not being left to hang out."
No thanks to Brewer. Charter Title's losses are being covered by First American Title Company, which signed a 1991 underwriting agreement with Charter Title to make good on any shortages that may arise. First American already has paid more than $3 million to cover losses suffered by customers who relied on Charter Title to hold funds in escrow while purchasing homes or refinancing existing mortgages, says John Graham, head of the First American's legal department.

It's no coincidence that First American signed the underwriting agreement with Charter Title. Harshey, who held Charter's state Banking Department license, is nephew of Mike Maloney, who was First American's president when the pact was signed.

"Mr. Harshey was related by marriage to the president of the division when it [underwriting agreement] happened in 1991," Graham says.

Graham says Harshey failed to disclose key financial information, including the 1990 bankruptcy of Cal Star Financial Corporation, a company Harshey and Brewer operated in California. He also failed to mention that Cal Star was the target of a federal grand jury investigation. Harshey could not be reached for comment.

"The facts of what happened in California should have been disclosed to us then, but they weren't," Graham says. "Had they been disclosed, we would have never entered" the underwriting agreement.

First American has sued Brewer, Harshey and Larry Kruidenier, a 5 percent owner of Charter Title, in Maricopa County Superior Court to recover the funds it is paying to investors.

Although Brewer has failed to respond to the lawsuit, he says he and the other Charter Title owners eventually will be able to repay First American Title. Brewer was particularly confident that Kruidenier has enough money to cover the losses.

Kruidenier, who operates a Scottsdale home-building company with his brother, was far less enthusiastic. "I'm not responsible for that," Kruidenier says.

While much about the financial shenanigans at Charter Title remains murky, some facts have slowly surfaced. Bank records disclosed in connection with the state Banking Department's lawsuit against Charter Title indicate that millions of dollars were diverted from Charter's escrow accounts into Brewer's and Harshey's company, CTA Financial.

From "October 14, 1992, through October 20, 1993, approximately $5 million was withdrawn, misappropriated or otherwise wrongfully taken from Charter Title's escrow accounts and deposited . . . at the American National Bank for the benefit of CTA Financial," Banking Department lawyers state in court filings.

Of that sum, about $3.2 million was then transferred from CTA into Charter Title's operating accounts, where at least a portion of the money was used to pay Charter's extravagant expenses, says Patrick Murphy, an attorney for the state-appointed receiver liquidating Charter Title's remaining assets.

Bank records reveal that large sums from Charter Title's escrow funds held at Bank of America, Chase Bank and National Bank of Arizona routinely were transferred into CTA's bank account at American National Bank. Brewer often moved the money through wire transfers on his personal computer, Murphy says.

Murphy says he is investigating whether officials overseeing the escrow accounts and Charter's operating account violated any banking regulations. "We are looking at the banks to see if we have any potential claims that might be filed against them," Murphy says.

Charter's collapse has attracted the attention of the state lawmakers. The Senate last month passed a bill overhauling regulations governing title and escrow companies. A key provision of the bill, which is pending in the House, doubles to $4 million a recovery fund to cover losses suffered by the public.

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