The Minnesota Department of Commerce is alleging former Freeborn County Commissioner Linda Tuttle violated state laws by kiting more than $1 million in client checks through her title company.

As a result, the Department of Commerce, which regulates mortgage originators and title companies, is seeking civil disciplinary action against Tuttle and her company, Albert Lea Abstract Co. The action could include a real estate license revocation and a fine, among other consequences.

Tuttle will have the chance to show why this action should not take place during a prehearing conference June 16 at the Office of Administrative Hearings in St. Paul.

She faces a fine of up to $10,000 per violation. The Department of Commerce is alleging there were 37 violations.

Kenneth R. White, of Mankato, who has represented Tuttle in other civil lawsuits, said Thursday morning he had not yet spoken to Tuttle since this action was filed, so he did not know whether he would represent her in this case. However, he expected to do so.

If this were the case, he said, there would probably not be an objection to the termination of Tuttle’s license because of her guilty plea last week in U.S. District Court to wire fraud. There may, however, be some objection to the alleged amount of misappropriated funds.

Tuttle’s company was one of three title agencies and mortgage originators announced this week to have been at the center of investigations by the Minnesota Department of Commerce.

“We want to send a clear message today that companies doing business in our state must act responsibly and abide by our laws,” said Commerce Commissioner Mike Rothman in a news release. “These scams and swindles not only hurt consumers, but threaten healthy competition in the marketplace.”

Tuttle, who was arrested in June 2010 after state and local police executed a search warrant at her business, is accused of transferring money into her own accounts to pursue a gambling addiction at Diamond Jo Casino in Northwood, Iowa. She resigned from the commissioner seat in August.

The department’s investigation, which began in May 2010, alleges that in at least 37 instances, Tuttle misappropriated funds from escrow accounts and moved them to other bank accounts and to herself by “kiting” checks and issuing checks on accounts without sufficient funds.

The Department of Commerce is alleging 10 violations, including failing to observe high standards of commercial honor and breaching fiduciary duty to her clients, among others.

According to the documents, records from Diamond Jo Casino allege that from Jan. 1 through June 18, 2010, Tuttle played a total of a little more than $1.5 million and lost a little more than $250,000 while playing about 190 hours.

This action is separate from any criminal action being taken by state and federal prosecutors.

Also investigated were Costa Mesa, Calif.-based Meredian Financial Corp. and Fortis Title Solutions Corp., along with their current and former owners. They are accused of operating a “bait-and-switch” scheme.

The companies and their owners have been subject to enforcement actions in other states as well.

The Department of Commerce is also charging New Millennium Title Group of Bloomington with failing to properly supervise a partner title company.