Charge: $7.7M in fraud scheme
A Clearwater man is accused of skimming from his title insurance company.
By JONATHAN ABEL, Times Staff Writer
Published January 23, 2008
CLEARWATER - Jarrell Britts always had a quick answer for his bookkeepers.
When his company, Eagle Title and Abstract, came up $2-million short in its escrow accounts, Britts, 55, passed it off as a computer glitch. Later, he blamed missing funds on redundant, erroneous wire transfers. Be patient, he told his employees, the funds would balance out.
But according to authorities, the reason the money was missing had more to do with Britts than with computer glitches or wiring errors. They say he wired $4.7-million from the title insurance company into the coffers of other companies he owned.
On Tuesday, just before dawn, officers from the fraud division of the Florida Department of Financial Services arrested Britts in Clearwater. He will face 19 counts, including grand theft, scheme to defraud, title fraud and money laundering.
His wife, Katherine Britts, 47, was also arrested on a count of grand theft.
Jarrell Britts was being held at the Pinellas County jail in lieu of $150,000 bail Tuesday. Katherine Britts was released on her own recognizance.
All told, Britts is said to have stolen almost $7.7-million - $4.7-million from the skimming and another $3-million from selling his company in 2004 without disclosing the company's troubled finances.
His was a pyramid scheme of sorts, where he stole from escrow accounts and then drained other escrow accounts to cover the shortfall, according to authorities. And it might have gone undiscovered in the flurry of transactions surrounding the real estate boom except that Britts got greedy.
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Britts built a comfortable life for his family in the real estate business. He drove nice cars, owned a 37-foot boat and bought a $1.6-million house in Clearwater at the end of a quiet cul-de-sac overlooking the water.
That's where authorities came to arrest him and his wife just before dawn on Tuesday.
At one time, Britts was on the other side of the law.
In the 1970s and 1980s, Britts worked in law enforcement, first for the Clearwater Police Department and then the Pinellas Sheriff's Office. He resigned in January 1988, three years after being demoted from sergeant to deputy.
In 1993, he incorporated Eagle Title and Abstract. During flush economic times, business was brisk, employing as many as 75 people and sometimes handling 100 real estate closings a day.
With so much money passing through the company, it was easy for a little of it to get diverted, authorities said. Funds that title companies typically hold inviolate in escrow accounts were shuffled around in a bewildering web of transactions. Britts' own bookkeepers testified in a civil deposition that they didn't understand what was going on until the whole scheme was exposed.
By the summer of 2004, when Britts sold his company to First American Title Insurance, he had managed to skim off $2.6-million, according to arrest affidavits. He made a little more than $3-million from the sale of the company, after doctoring the company's records to make the books look balanced.
First American retained him as general manager of the company even after the sale, allowing him to divert another $2.1-million, according to authorities. Some of the funds were funneled into other businesses that Britts controlled, including Liberty Financial Funding, Eagle Fitness and Liberty Financial Real Estate.
The skimming and shuffling went unnoticed until February, when First American learned that Britts had violated his no-compete clause. He was put on administrative leave, later to resign, and a forensic audit was launched.
In March, the company filed a suit in Pinellas County against Britts and a minority owner in the business, Todd Jewett. The company tipped off state investigators about the alleged crime, which resulted in Tuesday's arrest.
"This is not a simple matter," said John LaJoie, division council for the southeast middle Atlantic division of First American. "This is not a case of someone committing a crime that is easy to describe and easy to charge."
All of the customers received the money they put in escrow; it was First American that was forced to cover the shortfall with its own money and thus take a loss.
"Title insurance underwriters like First American have a statutory liability for the funds held in escrow," LaJoie said. "We paid that shortage and no customers were harmed."
He said the lawsuit is on hold until the criminal case wraps up.
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The Brittses' arrest marks the second major crackdown on a Pinellas title business in recent months.
In September, agents from the Florida Office of Financial Regulation arrested Cheryl L. and John T. Wehlau and charged them with looting the escrow accounts at their Palm Harbor Title company, Gulf Coast Title Closings and Escrow Services.
The Wehlaus, charged with 25 felonies apiece and now awaiting trial, are accused of misappropriating $7.99-million from trust accounts under their care and using the cash to finance a lavish lifestyle: a country club home, a condo for their teen-age daughter, luxury cars and expense accounts that paid for jewelry, art designer shoes and steakhouse soirees.
"These things are coming to light now because the market is no longer that active," said Lt. John Womer of the state Department of Financial Services. "When the closings stopped coming in so quickly, they ran out of funds."
Times researcher Carolyn Edds and staff writer Jeff Testerman contributed to this report. Jonathan Abel can be reached at jabel@sptimes.com or 727 445-4157.
How it worked
According to authorities, Jarrell Britts stole almost $7.7-million, including $4.7-million from skimming from his title insurance company and another $3-million from selling his company without disclosing its troubled finances. Authorities said Britts stole from escrow accounts and used funds from other accounts to cover the shortfall. First American Title Insurance, which bought Britts' company, was forced to cover the difference with its own money, and thus take a loss.