Heroux charged with theft of $200,000

EPHRATA - A Moses Lake business man is accused of stealing more than $200,000 from a trust fund.

Prosecutors charged Alan R. Heroux, 42, with theft in the first degree in Grant County Superior Court.

He pleaded not guilty on Monday and was imposed with the requirement of a $10,000 signature bond to remain free of jail.

"As much as I'd love everybody to know my side of the story right now, my attorney insists that I don't discuss the facts at this time," Heroux stated.

Heroux was appointed as trustee for John H. Denton Testamentary Trust. The fund was set up for Denton's wife and daughter, according to a Moses Lake police report. The trust was established in February 2006 with an opening balance of $205,213. The account's balance was less than zero by May 2009.

Denton's wife's son, Steve Wendel, allegedly became suspicious of Heroux after not receiving any interest payments on his mother's behalf, according to the report. He reportedly started contacting Heroux to ask what was going on.

"Wendel said that Heroux kept offering excuses, such as he had been busy or he had been to Montana hunting and said he would be getting to it shortly," according to the police report.

Wendel contacted a Moses Lake attorney to assist about a year ago. The attorney received documentation about the trust fund from Heroux's attorney.

The documents reportedly showed 40 transfers from the account totaling $229,050, labeled "Operating loan to JLS," according to the police report. JLS allegedly stands for John L. Scott, the business Heroux owned before it closed in May 2009. The records allegedly showed deposits to the account labeled "Deposit from JLS-Loan Interest."

"These 'interest' payments totaled $500 and were deposited when the account balance was at or below zero," according to a police investigator's account in court documents. "The money was taken out as soon as it was deposited."

Heroux reportedly told police he was borrowing the money from the trust. He wrote and signed a contract turning the assets of the trust over to his company Real Estate Services of Moses Lake. The company operated the John L. Scott franchise.

"The agreement specified that the trust would act as the 'operational lender' for (the company), specifying that (the company) shall have use of the trust funds for operational purposes as needed," according to the police report.

The agreement specified Heroux had options on three waterfront lots, and placed them into the company, according to the police report. It stated he would sell the lots to support Denton's wife if she needed money, and any profits would be split between Heroux and the trust.

Heroux reportedly signed for his real estate company and for the trust. He allegedly told the investigator it wasn't unusual for someone to sign both sides of an agreement if they're managing both sides, according to the police report.

"Heroux said at the time of the agreement that he wrote and signed himself, the going value for the waterfront lots comparable to the ones he held options on was in the range of $245,000 to $315,000," according to the police report. "If sold for that cost, (it) would cover any amount received from the trust ... He said he was currently asking between $220,000 and $250,000 for the lots."

He reportedly told police he planned to repay the trust, including the 6 percent interest.

The investigator allegedly pointed out two $30,000 transfers from the trust fund in June 2006 to Heroux in an interview. The transfers reportedly went into different accounts at Sterling Savings Bank. Heroux reportedly told officers he only had two accounts, a personal and business account, at the bank.

Heroux reportedly told the investigator he must have mistakenly transferred the money into his personal account and transferred it out. The documents reportedly don't list any transfer back of the $30,000.

Police allegedly suspect he used the money to pay back taxes and pay off a credit card, and used the rest as cash, according tot he police report.

Heroux allegedly used some of the money to legitimately purchase a rental property, according to the police report. As his business started to fail, he reportedly sold the rental property, and started transferring money out of the trust fund account. He reportedly used the money to pay business debts, transferring the money into his business account.

"Since Heroux is characterizing the transfer of the money as a legitimate business loan gone bad, I also looked at the transactions and money that were spent out of the business account," the investigator listed in a police report. "In reviewing the checks, I found quite a number that were written that did not have a logical connection to the real estate business."

The checks reportedly included ones made out to a dance studio, an orthodontist, doctors and dentists, according to the police report.

"These charges that appear to not be business-related continue right through the period of time that Heroux's legitimate business income dries up and he finishes cleaning out the trust account," according to the police report.