VERO BEACH — Little did Danielle Hatch know just how bad things had gotten for her father – accused money launderer Ira Hatch – when she started an email exchange with him on Sept. 3, 2007 asking for money. Prosecutors say Hatch had been raiding the trust account at his Coastal Escrow Services business, which was supposed to safe harbor rent security deposits, home down payments and other money.
Within hours of that exchange, Coastal Escrow would be closed, distraught clients – including some of Vero’s largest real estate firms – would be demanding return of hundreds of thousands of dollars that supposedly were being safeguarded for them, and police would be launching an investigation that culminated three months later in Hatch’s arrest. Danielle wrote to her father: “Hey Dad, you forgot to deposit rent money into my account last week. It’s no big deal since I had enough to cover things. Don’t forget the tuition is due on Friday. I have to have the check to the law school by 1:30. Mom said things are slow so if you want to wait another week or so to reimburse me for my rent that is fine. Tuition is clearly the more important of the two…. Love, Bear.”
Ira Hatch wrote back: “Bear how much is your tuition? I will put it in your account. – Dad.”
Danielle’s email responded: “$5,043.92.”
For the past two years, Hatch has sat in Indian River County Jail, charged with 57 counts of money laundering, grand theft and other crimes. The missing money totals $4.5 million, prosecutors say.
Among local firms that utilized the services of Coastal Escrow and Coastal Title and were left holding the bag are Coldwell Banker Ed Schlitt Realtors and Michael Thorpe Real Estate.
In all, there are some 250 victims, records show.
Hatch’s case is one of the biggest white-collar cases in Treasure Coast history and, prosecutors say, has left a trail of robbed, angry residents in Vero Beach and throughout the region.
Hatch, a well-known attorney, and his family lived in a riverfront home (titled in his wife’s name) in Castaway Cove on the barrier island, and their children had attended St. Edward’s before both went off to established out-of-town colleges.
His escrow and title company had worked with numerous barrier island real estate companies on hundreds of transactions.
The period just before and after Coastal Escrow was shut down in September of 2007 was fraught with tension for Hatch’s employees. They knew something terrible was happening but, like some family members, were kept largely in the dark by their boss, according to chronologies contained in 8,200 pages of court documents not previously reviewed by the public.
Hatch, who was also a partner in the law firm Hatch & Doty before he was voluntarily disbarred, told his associates that money had been stolen from the company, asked a former employee for help erasing a computer hard drive and made last-ditch attempts to get huge loans to try to save himself – or, perhaps, merely put off the inevitable.
Hatch ran Coastal Escrow with his wife Marjorie, who has not been charged.
The trial currently is scheduled to start May 1 but that date has been repeatedly pushed back.
Prosecutors have been faulted for the delay, accused of not being specific enough in showing how Hatch had misspent the money.
“The defense threw out a whole plethora of arguments and the court kind of latched on to that one,” Assistant State Attorney Lev Evans said.
Greg Eisenmenger, the Viera attorney representing Hatch, said that prosecutors can’t allege $4 million in theft because they’ve only identified $2 million in transfers from the escrow company account to the law firm account. That means some of the evidence would have to be used for multiple counts, which he said is unconstitutional.
“They’re using $2 million in transfers as allegations of $4 million in theft,” Eisenmenger said. “That’s a classic double jeopardy problem.”
Besides, the state has to prove that Hatch & Doty was not entitled to the money transferred.
“Not a single escrow person has said that Hatch and Doty were not absolutely legally entitled to those transfers,” Eisenmenger said.
The court recently ruled that prosecutors have met at least the basic requirements for evidence disclosure.
Evans said the path to trial is now clear.
“The state’s ready,” he said.
But Eisenmenger said the state has to meet a Jan. 29 deadline to share evidence. He’ll decide whether the disclosure is sufficient or whether further court motions are needed, he said.
The documentation in the case is sprawling. In addition to the most crucial 8,200 documents at the State Attorney’s Office, additional material, including computers and office equipment, sit in the Vero Beach Police Department’s evidence room.
There is one four-inch thick file just for copies of checks written to Coastal Escrow.
The documents paint a picture of employees growing increasingly uneasy. As far back as 2004, there were always deficits in the Hatch & Doty accounts, Janette Granberg, the accounts payable clerk for the firm, told investigators.
She was under the impression that it was because Hatch wasn’t billing for some of the work he was doing because he was busy with legal work on a development project in Orlando that was bringing in $23,000 a month. When Granberg asked Hatch about the deficits, he told her “not to worry, I know what I’m doing,” according to the documents.
Often, Hatch would cover deficits by having checks written from the Coastal Escrow accounts. In June of 2007, for instance, a Coastal Escrow check for $25,000 was written to daughter Danielle Hatch, Granberg told investigators. Danielle was leasing a BMW at the time.
Brenda Klotzer, a bookkeeper at Coastal Title, was becoming similarly concerned.
In the last half of August, she started getting calls from clients who’d had their Coastal Escrow checks bounce, including one for $100,000 to George and Patricia Allen, who had placed money in escrow for a home purchase.
When Klotzer asked Hatch about the bad checks, Hatch said, “I’ll take care of it.”
He met with Klotzer and told her to pay certain bills. As for others, including clients named the Clydes who wanted a $51,000 check, he told her, “Push them off.”
Others noticed trouble as well. Courier Bruce Lennon would deliver Coastal Escrow checks to title companies for house closings and pick up checks for Coastal, which were then deposited.
A month before the business closed, Lennon was told to reverse his routine: Before delivering the checks to be drawn on Coastal Escrow’s account, he was to first bring to the office the checks that were to be deposited into Coastal Escrow’s account.
“Hatch continued to make this request until the business closed,” according to the documents.
On August 28, 2007, Hatch finally decided to say something to Kevin Doty, his law partner, according to the documents, and they met in Hatch’s office the next afternoon. There, he blamed someone else for the shortfalls.
He told Doty he had “discovered some embezzlement.” He blamed a man and a woman who were “lovebirds.” The next day he asked Doty not to pay $148,000 to two clients, Doty told investigators.
Doty had his attorney contact the Florida Bar.
Money was coming in and money was due to go out, but there seemed to be less coming back in all the time, like a malfunctioning tide.
On September 4, 2007, the tide went out at Coastal Escrow and never came back in.
Linda Schlitt-Gonzalez, co-owner of Coldwell Banker Ed Schlitt, got in touch with authorities that day about tens of thousands of dollars in renters’ security deposits missing from a trust account at Coastal Escrow. Plenty of others also talked to police about missing money.
Hatch told his employees there were cash problems and that the escrow company would be shutting down. He also sent a letter to his bigger clients telling them he didn’t have their money and the company was closing.
He told Amelia Lennon, a title processor, that he was “working a new project that would cover all of the missing money.”
The e-mails from that day capture the heartache.
“I’m really sorry about whatever is going on,” employee Angela Smith wrote to Hatch in a Sept. 4 e-mail. Brenda Klotzer e-mailed him with the bad news that Gulfstream Bank had called about a stop payment on a check. At the end of the message, she kept her standard closing that automatically appeared at the end of all her e-mails: “Thank you and have a great day!!”
And, in another, she wrote to Hatch, “Sandy at Wachovia wants to know when the $4,423.70 is going to be covered from Friday,” again with the chipper, “Thank you and have a great day!!”
At 6:54 a.m. that morning, Hatch had written to Doty: “I need you to call me as soon as possible.”
Five hours later, Doty wrote: “I have been pondering these developments. Not pretty to be sure. Please let Wendy go at the end of today. I am very concerned with cash-flow. Sandy can do the phones thru end of week.
“BUT -” he continued, “we need to set up a phone protocol system that separates the ‘crisis’ calls from legit client (on-going) stuff.
“Designate a place to transfer any calls you probably don’t want to answer ’til the dust settles. I don’t want to get bogged down in crisis management at the cost of billings. Mary K needs to stay at least for the foreseeable future. Will Fran stay? Part time?”
When Hatch’s notice went out to the clients about their lost money, paralegal Fran Nelson told investigators, “several angry clients came to the locked office door, pounding on it to be allowed entrance to the offices requesting their money.”
Other employees told her to just stay in her office and ignore them. Hatch, it seems, was scrambling to get big loans to head off the disaster.
“I spoke earlier today with Mr. Mejia,” South Florida attorney Leslie Rozencwaig wrote to Hatch the evening of Sept. 4. “He advised me that you had inquired whether he would be willing to make a loan in the amount of Two Million Dollars ($2,000,000). Please call me to discuss.”
There is no mention that the loan was ever given.
On Sept. 24, three weeks after the business closed and with authorities swarming, Hatch made a call to former employee Carlos Muentes, who had worked as a computer technician.
Hatch asked him whether he knew of any computer software that would “cleanly erase a hard drive.” Muentes didn’t want to get involved, he told investigators.
But two weeks later, Hatch called him again asking about the software. Muentes said he would call him back.
Muentes, it seems, never did.
Three months later, Hatch was arrested. Eisenmenger said Hatch is eager to get to trial.
“He’s frustrated with the delays but he’s doing as well as can be expected,” he said.
“He’s been incarcerated for more than two years. He’s looking forward to his day in court.”