Crime & Courts

Wichita’s largest pawn broker, A-OK, sues over $1.5 million embezzlement

A-OK pawnshop, owned by Bruce Harris, declared bankruptcy in 2017.
A-OK pawnshop, owned by Bruce Harris, declared bankruptcy in 2017. The Wichita Eagle

Editor’s note: Some A-OK locations in Wichita are no longer owned by Bruce Harris. An earlier version of this story did not make that clear.

Wichita’s largest pawnbroker, A-OK, is suing its insurers and a local accounting firm over what it says were failures to protect it against an employee embezzlement blamed for its multimillion bankruptcy filing last summer.

A-OK, in separate lawsuits filed July 3, says the companies it relied on to find and cover losses from an estimated $1.5 million theft by an A-OK staff accountant didn’t do their jobs. A-OK is listed in the suits as A-OK Enterprises and A-OK, Inc.

A-OK’s attorney, Randall Rathbun, said Wichita-based Lucke and Associates and its founder, certified public accountant Jeff Lucke, were hired to perform financial audits for A-OK but “failed to detect” the ongoing embezzlement. When the firm did notice money was missing, it deliberately “took actions contrary to A-OK’s interest” in part because Lucke had become a business partner in some of A-OK’s dealings and wanted to “protect himself,” Rathbun said.

A-OK’s insurers, meanwhile, made mistakes that resulted in A-OK not getting the coverage it asked for — and then refused to pay out on a claim connected to the embezzlement, Rathbun said. Underwriters at Lloyd’s London, Hutchinson-based Fee Insurance and Cinncinati-based Wexler, Wasserman and Associates are named as defendants in that lawsuit.

“We told the agent what we needed (for insurance) and instead Lloyd’s London says we have virtually no coverage on it, even though we bought conversion theft and embezzlement insurance,” Rathbun said.

The suits each seek more than $75,000 in damages.

Asked for comment on the lawsuit filed against him and his firm, Jeff Lucke said there are “a lot of inaccuracies in the petition” and that he is working with Wichita attorney Kurt Harper on the case. He would not comment further.

Harper didn’t comment other than to say that he and Lucke “anticipate presenting a defense to the claims being asserted.”

Fee Insurance owner Bob Fee turned down a request for comment on the lawsuit filed against A-OK’s insurers. He said that he and his company “are dealing with attorneys on this” but did not want to refer The Eagle to them.

A message left with a Wexler, Wasserman and Associates spokesperson was not returned. Lloyd’s said it was not able to comment on pending litigation.

The lawsuits come more than a year after A-OK discovered that a staff accountant whose job duties included running the pawnbroker’s online eBay sales was transferring large sums of money from A-OK’s PayPal account into his personal bank account. A-OK filed suit in March 2017 seeking a restraining order against Phillip Jelinek to freeze his checking account, according to court records.

Sedgwick County prosecutors filed felony theft and computer crime charges against Jelinek last June, court records show.

Around the same time, A-OK’s bank, Simmons First National, sought to foreclosure on A-OK’s owner, Bruce Harris, and six of Harris’ businesses for not repaying a $4 million loan, for allowing his total net worth to fall below $3 million and for failing to provide timely financial statements.

About a week later, Harris filed for Chapter 11 bankruptcy. He cited Jelinek’s embezzlement in the filing.

“It was obviously a horrible incident for us and put him in bankruptcy,” Rathbun said of Harris. “But he’s come out on the other side.”

Harris didn’t return a message from The Eagle left at A-OK’s corporate office.

A-OK has shops located at 2021 N. Amidon and 410 N. West St. in Wichita, according to its website, and provides a host of services including pawn and payday loans, check cashing, gold and gem purchasing and jewelry repair.

Two other A-OK locations in Wichita — 1547 S. Oliver and 1525 S. Broadway — used to be owned by Harris. But those were sold by Simmons Bank in October as part of Harris’ bankruptcy proceedings, according to local businessman Morrie Sheets, who bought the locations with a partner.

Sheets said Monday both south side stores “are doing extremely well.”

“We put in new management and new people in place and we’ve almost doubled the volume of the stores already,” Sheets said. “We’re very upbeat about the stores’ future.”

To date, A-OK hasn’t yet recovered any of the embezzled cash from Jelinek — nor has it seen a payout from its insurance company, Rathbun said.

Last month, Jelinek pleaded guilty to one count of felony theft, Sedgwick County District Court records show. He’s expected to be ordered to pay $587,450.83 in restitution and may end up in prison when he is sentenced on Aug. 14, according to his plea agreement.

Amy Renee Leiker: 316-268-6644, @amyreneeleiker