It was New Year's Eve 1991. And Dean Brewer wanted a little cash.
Like he had so many times before, Brewer tapped into Charter Title Agency escrow trust funds at the Bank of America. And he simply transferred other people's money--money held in trust for real estate transactions--into his personal Merrill Lynch cash management account.
It was a rather small sum for Brewer--a mere $23,000.
The transfer was just a drop in the bucket, compared to the $8 million Brewer allegedly looted from Charter Title Agency escrow trust-fund accounts between 1991 and 1993, according to a state banking department lawsuit filed in Maricopa County Superior Court.
The banking department seized Charter Title last October after receiving a tip from an employee that money was missing ("Charter Runs Aground," December 29, 1993). Brewer, who was chairman of the title company and its primary internal accountant, has yet to respond to the banking department suit, first filed in October 1993. He also is avoiding service of a racketeering lawsuit filed against him and two of his former partners by First American Title Company, court records claim.
Although the lawsuits have not officially made it to Brewer, the flamboyant businessman (also under a federal criminal investigation stemming from the failure of a California mortgage company) doesn't appear to have skipped town.
Associates say he still frequents favorite Scottsdale watering holes. They contend he is living comfortably in his $350,000 North Scottsdale home.
As civil suits pile up, and the federal investigation proceeds, there appears to be relatively little action at the state Attorney General's Office, which has responsibility for prosecuting any state criminal charges that might be lodged.
A source close to the case says Brewer has rejected a plea bargain offered by the state and fired his criminal defense attorney. Brewer did not return phone calls. The Attorney General's Office also declined comment.
The attorney general's slow response seems surprising; the state banking department certainly is convinced that Brewer stole millions.
The department's lawsuit was updated June 30 to include new details of Brewer's allegedly wide-ranging chicanery.
Even Brewer has admitted that money is missing and that he bears some responsibility. In an interview last March, Brewer said he was going to have to eventually pay for the losses.
"We ultimately are going to have to work out a deal with First American Title," he said.
First American was the underwriter for Charter Title's escrow accounts and has paid out more than $5 million in claims. First American has agreed to pay another $1.2 million to investors who lost money in Charter.
There was nothing very sophisticated about the way Brewer siphoned money out of Charter Title. The banking department's amended suit contends that Brewer used two primary paths while diverting the money.
Between August 1991 and January 1993, Brewer moved approximately $2.6 million out of Charter's escrow accounts and deposited the money into Charter's corporate operating accounts. Some of the money was spent on extravagant parties, lavish sporting vacations, an America West Arena skybox and racy entertainment, the suit claims.
Brewer also moved $5 million of escrow trust funds into another company he owned, CTA Financial, between October 1992 and October 1993. He then transferred $3.2 million of this money back into Charter's corporate accounts to help finance the company's wild spending and abnormally high salaries.
From these two pathways, Brewer siphoned $448,000 directly into his pocket via a Merrill Lynch cash management account, the suit charges. Brewer used this money for a number of personal items; he allegedly spent $277,000 on his luxury home, $16,500 on a swimming pool, and $13,790 toward the purchase of a Phoenix condominium.
At the same time, Brewer was also trying to take control of a Valley company that was struggling through bankruptcy. He used $258,500 in Charter Title escrow funds to invest in Interactive Media Technologies. It appears that Brewer intended to invest additional funds in the company, but was unable to come up with the cash before the state seized Charter Title in October 1993.
The biggest single diversion of trust funds was to Brewer's 121-foot oceangoing yacht, the San Diego-docked Crystal. The state alleges Brewer "misappropriated and diverted" $1 million of Charter escrow funds to another company he owned, Crystal Yachting Adventures, Inc.
Crystal Yachting Adventures is a strange beast. The company is incorporated in Oregon, but shows its principal office in the Camelback Esplanade. It also reports a Newport Beach, California, address and appears to own another yacht called the Don Elegante.
Court records claim Brewer pulled $216,000 directly out of Charter escrow accounts to help finance the purchase of the Crystal. He also diverted $772,000 of Charter escrow funds to Crystal Yachting via CTA Financial.
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The state sold the luxury yacht last month for $1.79 million. But the proceeds won't go far. The state had to pay a $1.65 million mortgage on the yacht and $57,000 in expenses related to the seizure and sale of the vessel. The $86,000 balance from the sale will go to a recovery fund to cover investor losses.
Patrick Murphy, a Phoenix attorney representing the state in the civil suit, says the banking department is seeking court permission to seize Brewer's house and condominium, as well as all the remaining assets of Crystal Yachting and the money Brewer invested in Interactive Media.
Even if the state is successful in gaining control over those assets, a great deal of the money Brewer diverted from Charter's escrow accounts was spent long ago or remains hidden away.
"It's difficult to find all the dollars," Murphy says. "A lot of that money got used up. He didn't run a profitable business.