Ira Hatch fraud saga: Client funds used as private piggy bank

VERO BEACH — Ira Hatch was keenly aware that his companies were running in the red, and yet he once directed a bookkeeper to cut a $22,000 check from a Coastal Escrow account to Leigh & Company jewelers for a Rolex watch for his then-wife, Marjorie, according to testimony at his fraud trial.

If early testimony is indicative of what’s to come, the state’s case hinges on jurors believing that Hatch used money from his Coastal Escrow Services accounts as a personal piggy bank, funding a lavish lifestyle for his family and propping up his fledgling law practice with Kevin Doty.

Hatch’s lawyer, Gregory Eisenmenger, has said that the money paid to Hatch and to the law firm of Hatch & Doty was in payment for legitimately earned legal and professional fees.

“There’s no evidence that Mr. Hatch transferred any money that he did not earn or was entitled to,” Eisenmenger said.

As the witnesses for the state are rolled out and bank records are entered into evidence, Eisenmenger is building a case for repudiation of the State Attorney’s Office for not conducting a forensic audit and for not following the “money trail.”

The state has been unable to pinpoint a specific date on which any of the money from Coastal Escrow was taken largely because Hatch comingled all of the money, making it virtually impossible to separate one deposit check from another.

“You can’t, if you try, begin to determine whether or not money from Coastal Escrow Services illegally went to Ira Hatch,” Eisenmenger said.

Eisenmenger has also said that, at most, prosecutors could account for only about $2 million that was lost under Coastal Escrow.

Yet court testimony indicates Hatch was actively moving money from various accounts, with some of it going to cover his own personal expenses.

Indeed, during the time that his businesses were operating, his children attended St. Edward’s School, where tuition can top $20,000 a year.

The family had three BMWs and a Yukon, and his daughter attended the University of Florida, and later the $22,000-a-year UF law school while his son enrolled at the even pricier Rice University in Houston.

The couple lived on the river in a two-story million-dollar home in Castaway Cove, and Hatch is said to have invested in various projects, including a development in Orlando.

Yet his former office manager, Janette Granberg, who worked for both Coastal Escrow Services and the law firm of Hatch & Doty, told jurors last week that in her nine years employed by Hatch from 1998 to 2007, the law firm would frequently run in the red.

Still, the firm paid Hatch a salary ranging from $200,000 to $250,000 per year plus $20,000 per year for automobile expenses, she testified.

To make the books balance, Granberg said, she and the other bookkeepers would frequently transfer money in sums of $5,000 to $30,000 — often twice per month — out of the funds deposited with Coastal Escrow Services.

She said she and others created “dummy accounts” for these transfers, accounts with names indicating that the funds were considered loans to Ira C. Hatch or to Hatch & Doty.

“The perception was that it was going right back into the account, that it was a temporary solution to a problem,” she said.

When Granberg expressed her concerns to Hatch about the dwindling funds, she said he told her that he “had a plan” and that he was aware that he needed to pay back the money. When Hatch closed the business on Sept 4, 2007, Granberg said he called her to let her know.

In regard to the fact that millions in depositor funds were gone, Granberg said Hatch told her “he was responsible, that he would take the responsibility for that.” He also told her to consult an attorney for her own protection, Granberg said.

Defense attorney Eisenmenger attempted to discredit Granberg’s testimony by pointing out that she did not know every detail of the finances or about the accounts held at Coastal Escrow.

He pointed out that, because she was only one of several people entering transactions into the Quickbooks program, she was not aware of the entire financial picture.

For example, Eisenmenger indicated that Hatch’s children Danielle and Rory — now in their 20s — may have had trusts on deposit with Coastal Escrow which were funded by their grandparents.

Granberg said she had no knowledge that the Hatch children had trust funds on deposit.

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What remains in question is just how much his family – and others around Hatch – knew about what he is accused of doing.

Marjorie Hatch, now divorced from her husband, has asserted that she had no knowledge of the alleged thefts and that she was not involved in the business enough to know what Hatch was doing.

Yet, despite a divorce decree that shows her only income to be his $1,500 a month Social Security check to cover expenses she put at in excess of $150,000 a year, it will be up to the courts to decide if she deserves to share in the debt owed to former clients of Coastal Escrow Services and if the divorce protects her from what may have occurred while the couple was still married.

Numerous civil suits have been filed and are on hold awaiting the disposition of the criminal case. The only cases which have been settled are ones with clients who lost money deposited in Hatch & Doty’s Interest Only Trust Account or IOTA, which was insured against misappropriation and legal malpractice.

Coastal Escrow clients have not been so lucky, as those funds were in regular business checking and money market accounts.

At least one of those suits still in limbo — one filed by Vero Beach attorney  John Stewart of beachside law firm Stewart and Emmons, on behalf of Norris & Company Real Estate for the sum of $240,000 — names Margaret “Marjorie” Hatch as a defendant.

The suit alleges that Marjorie Hatch is partially liable for the losses of depositors of Coastal Escrow because she was involved with the day-to-day management of the business. The suit also claims she was negligent and did not fulfill her fiduciary duty within the company. Other counts in the suit are gross negligence, fraud, breach of contract and theft.

The complaint alleges that “Margaret P. Hatch knew or should have known of the misappropriation of funds by Ira C. Hatch Jr.” The complaint also names Hatch employee Amelia Lennon, who was listed as vice president of Coastal Escrow Services on company paperwork.

Stewart said he does not intend to let up on Marjorie Hatch, regardless of whether she claims Ira Hatch held or still holds any claim to the family home or other assets.

“We fully intend to prevail in this suit against Marjorie Hatch,” Stewart said. “We have a good case or we wouldn’t have filed the suit.”

Stewart said Norris & Company is suing because when nine of its clients lost deposits and down payments entrusted to Coastal Escrow Services, Norris & Company brokers made the clients whole at their closings in September, October and November 2007, refunding the money no longer available from Hatch and his company.

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