The Albert Lea Police Department’s investigation into Freeborn County Commissioner Linda Tuttle reveals a steep gambling debt and alleges felony theft through her title company.

The total alleged theft is $48,228.

The 59-year-old commissioner stood before Freeborn County District Court Judge Steven Schwab on Thursday in a green jumpsuit — the color given to female inmates of the Freeborn County jail — to hear that she faces one felony count of theft.

She was addressed by her full name, Linda Kae Tuttle-Olson. Her husband, Steve Olson, sat behind her in the gallery. Her lawyer, Peggy Rockow, sat next to her at the defendant’s table. Real estate agents, local lawyers, law enforcement officers and other interested parties sat in the gallery to watch the court proceeding.

Tuttle’s charges carry a penalty of up to 20 years in prison or a fine of $100,000 or both. The police investigation alleges that between January and June of this year she took from six bank accounts to deal with her gambling debt at the Diamond Jo Casino seven miles west of Northwood, Iowa.

The means by which she reportedly took the funds is called “check kiting,” and it can be hard to grasp at first.

Consider when you deposit a check from a friend. The bank says you have funds in the account, but it really is crediting you the funds — termed a “float” — until the friend’s bank pays your bank. Kiting is when a person with several accounts shifts funds from one to another to inflate the balances. Sometimes, kiting is done with accounts with nonsufficient funds to appear to have sufficient funds in order to keep checks from bouncing. The account holder seeks to take advantage of the float time, the small window before the other bank pays.

The investigation says Tuttle was kiting to avoid bad checks.

State investigators assisting the Albert Lea police determined Tuttle, the owner and president of title company Albert Lea Abstract Co., has six accounts at three banks: three accounts at Home Federal Bank in Albert Lea, two accounts at American Bank in Albert Lea and one account at Commerce Bank in Geneva.

In providing an example, the investigation says an escrow account at Home Federal holds lump sums and dispurses according to closing agreements. The dispursements typically do not occur until deposits clear. Because of this, there should never be a negative balance. The company also had a sweep account at Home Federal, intended to gain interest on client holdings.

The investigation found that client money had been transferred to the sweep account and back to the escrow account. It found the same sort of transferring with other accounts.

“Financial records demonstrate numerous instances in which a sweep account is at zero, but the primary escrow account and the other accounts are negative, demonstrating a fraudulent use of client escrow funds,” the investigation states.

It adds the suspicious transactions of check kiting for large amounts are documented from January through April.

To give an idea of just how negative that escrow account was, on March 5, it was $54,095 in the red and on March 8 it was down to $95,040.

The investigation said bank records found that after transferring funds out of escrow accounts into Albert Lea Abstract’s business accounts, she then wrote checks to herself or made cash withdrawals through an ATM or Diamond Jo Casino.

The Albert Lea Police Department worked with the Iowa Division of Criminal Investigation. It produced a Diamond Jo record of Tuttle’s player card. From February 2008 to June 2010, she played $2.4 million on slot machines, getting a little more than $2 million in payouts, leaving her $309,000 in the hole.

Records showed she withdrew $8,317 at Diamond Jo, $2,100 from the ATM at Home Federal, $8,200 in checks payable to “cash,” and $29,611 in checks payable to “Linda Tuttle.” The total suspect fraudulent transactions comes to $48,228.

What’s more, the investigation found $1.5 million in checks bounced on the accounts she allegedly sought to kite.

The Albert Lea Police Department and the Minnesota Division of Insurance Fraud Prevention executed search warrants on her business and home on Tuesday.

On Thursday in court, she was advised of her rights. She was released on $100,000 bail on the conditions that she appear at court hearings, maintain communication with her lawyer, obey laws and sign a waiver of extradition. Judge Schwab ordered the six accounts mentioned in the charges frozen.

Tuttle’s next hearing is 1 p.m. July 6.

Chief Winkels said on Thursday that the Police Department will set up a means for real estate transactions awaiting closing at Albert Lea Abstract Co. to move forward.