shawn.mcgrath@heraldbulletin.com

An Elwood company is suing a former employee and her husband in an attempt to reclaim what the business says was hundreds of thousands of dollars in stolen funds.

But attorneys for Melissa and Mark Hazelwood, of Jonesboro, say MDSC Corp. is going too far to recoup the allegedly stolen money, including literally seizing the couple’s children’s toys and food from the family’s cupboards.

“I cannot imagine why they would take those items,” said David Happe, the attorney representing Mark Hazelwood. “And I’d love to hear plaintiff’s counsel explain why they took those items.”

Elwood police Capt. Carl Caldwell said final figures show Melissa Hazelwood allegedly embezzled $706,036.51 from MDSC Corp., previously known as Modern Die Systems, 1104 North J St., beginning in 2000.

The company hired Hazelwood in 1999, and she was working as office manager when she was fired the same day the alleged thefts were discovered.

According to police, Hazelwood would give the company’s owners checks to sign that were to be sent to vendors for various materials. But instead of sending the checks, Hazelwood would erase the vendor’s name and replace it with her own and then deposit the check into her account. Hazelwood’s bank alerted the company in late February after she deposited several large checks.

Caldwell said he forwarded his completed investigation to the Madison County prosecutor’s office on Wednesday, June 13, but no charges have been filed against Hazelwood.

She was arrested on March 2 on suspicion of 16 counts each of forgery and theft and a single count of corrupt business influence. Hazelwood posted $10,000 bond and was released from the Madison County Jail a few hours later.

Caldwell declined to comment on whether Mark Hazelwood was involved in the alleged embezzlements. Jeffery Lockwood, who partners with Happe, is representing Melissa Hazelwood.

MDSC filed a lawsuit against the couple in Grant Superior Court 1 on March 20 and pegs the allegedly stolen amount at $685,578. The lawsuit seeks triple damages — or slightly more than $2 million. Under state law in certain circumstances, plaintiffs can seek triple damages if a loss was caused by theft.

According to court documents, MDSC owners got a court order to remove items from the Hazelwoods’ Jonesboro home until the legal battle is finished. Happe said the company’s owners, employees, friends and spouses brought a few moving trucks to the house and took nearly everything from the couple.

They “removed items of personality such as all furniture, all clothing, framed pictures, shower curtain, financial and personal papers, computers, appliances (except built-in), all food (except refrigerator items), curtains, and all the contents of the detached garage and playhouse,” Judge Jeffrey Todd writes in court documents. They also took the belongings — including toys and money — of the Hazelwoods’ three children, 13, 10 and 7.

In an order issued in April, Todd required the company to return some of the property back to the Hazelwoods, with the exception of some things that could be sold and repaid to the company if it wins its lawsuit.

But Todd writes: “The seizure should not have included financial records, correspondence, family pictures, and other property of nominal, if any, resale value, such as food, family member undergarments, and a shower curtain.”

Happe said not all of the children’s belongings have been returned, despite the judge ruling they weren’t a party to the lawsuit.

“To my knowledge, they haven’t returned any of the parents’ property,” he said.

Happe said the next step in the legal battle is a short, pretrial conference scheduled for Wednesday, July 11.

Indianapolis-based William Hosbrook and Thomas Hunt, of Marion, are representing MDSC. Hosbrook is in the midst of a several-days-long trial and could not be reached for comment. Hunt is currently out of the country, according to representatives of his law firm.

Robert Davis, who owns the company with Dan Neuendorf, declined to comment because the lawsuit is ongoing. However, he said, Melissa Hazelwood’s alleged thefts nearly ruined the company that makes metal stamping dies. But since her arrest, and as word of the company’s plight spread, the business has rebounded, and he credits God for its success.

“We’re going to get through this with the word of God,” Davis said. “This place is going like gangbusters.”

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