$1.6 million worth of memories

– The downtown scrapbooking store that closed a month ago after
its owner was arrested for embezzlement will re-open today under
new ownership.
By Lori Stuenkel

Gilroy – The downtown scrapbooking store that closed a month ago after its owner was arrested for embezzlement will re-open today under new ownership.

Michelle Marie Martinez, 29, opened Got Memories? in 2002 and owned it until her May 5 arrest.

She is charged with embezzling more than $1.6 million from a San Jose company and stealing her bosses’ wife’s identity. She remains in custody, with bail set at $2 million, facing five felony counts of grand theft and one felony count of identity theft.

Martinez’s Gilroy store profited from her employer’s personal line of credit, according to court records.

Oscar Fragoso, Martinez’s husband since last August, also faces grand theft charges. He is currently serving time in Mule Creek prison for drunken driving.

Although she has yet to enter a plea, Martinez has already begun the restitution process by turning over her assets to former employer Pacific States Industries, PSI.

Her store landed in the hands of San Jose residents Wensday Wagner and Thomas Everett, who wanted store-based retail to complement their online scrapbooking store, HeritageScrapbooking.com. They had recently tried to purchase a San Jose store. Then last month, as PSI sought a buyer for Martinez’s inventory, they recontacted the San Jose store, which put them in touch with Wagner and Everett.

“We thought, ‘When’s the next time an opportunity like this is going to come around?’,” Everett said.

Wagner would say only that they purchased the store two weeks ago for “a very good price.”

You Got Memories’ grand opening is from 10am to 8pm today.

” ‘Got Memories?’ is gone,” Wagner said. “It’s the same inventory, but it’s not going to be the same store, we hope.”

Martinez operated the store on First Street from June 2002 until last February, when she moved it to 7497 Monterey St.

Police records allege Martinez, who was hired by PSI in 2000, was embezzling from her employer since at least January 2001. As an executive administrative assistant to the company’s chief executive and financial officers, Martinez had access to her employer’s personal checking and credit accounts, access to the company’s information and databases, and managed transfers involving her employer’s personal line of credit.

Martinez, a single mother at the time, earned $41,000 per year. She purchased a Ford Expedition in January 2002, opened the scrapbooking store in June 2002, purchased a home in Gilroy by securing a $433,000 loan in March 2003, and purchased a 2004 Hummer H2 in December 2003 using $60,000 from her employer’s line of credit with a San Jose bank.

Martinez’s employer, a Morgan Hill resident, first discovered she was making unauthorized purchases when his American Express account was overdrawn by an on-line automatic debit payment that was unknown to him.

The victim soon found a number of unauthorized charges, some of which could be tied to Martinez, that she had hidden from him, the police report says.

In July 2004, a second card was issued to the victim’s American Express account. By May 3, $300,000 was charged. The Social Security number on the card is Martinez’s.

One of the charges on the account was from a supply company that, when contacted by Martinez’s employer, said the charge was to Got Memories.

Another charge was for 12 round-trip airline tickets to the Bahamas for Martinez, her husband and other family members.

When the victim reviewed his canceled checks for 2004, he noticed payments to Martinez, her husband Fragoso, Got Memories, other unknown people and cash, including one $7,000 check that was endorsed with his signature, but with Martinez’s driver’s license number.

Fragoso’s personal account had at least $110,500 deposited from the victim’s accounts, with deposits dating back to Jan. 7, 2002.

The victim took title to Got Memories on April 23, and to Martinez’s home and car following her arrest.

It is not unusual for a suspect to voluntarily transfer title in a case such as this, said Deputy District Attorney Dale Lohman of the Major Fraud unit.

“One of the things the is going to be looked at how early in the process she pleaded and what steps she took toward paying that back,” Lohman said.

Martinez’s next court appearance, to enter a plea, is scheduled for June 23 in San Jose.

Joseph Thompson, PSI’s lawyer, declined to comment for this story. Merrill Zimmershead, Martinez’s lawyer, did not return a request for comment.

Meanwhile, the new owners of You Got Memories are starting their business with little idea of what to expect.

“In buying it, we had to buy it with all records sight unseen, as-is, and all the problems that come along with it,” Everett said, noting that the store’s register of past sales and computer with catalogued inventory are part of the ongoing investigation. “We also have an accounting background, so having the books would have been nice.”

As family and friends helped Everett and Wagner hang, stack and count acid-free animal stickers, piles of brightly colored paper and stencils earlier this week, the owners were looking forward to their new venture. They plan to continue holding classes and scrapbooking sessions, and are welcoming feedback as they develop the business.

“We hope it will be a whole new store,” Wagner said.

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