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It is a well-known adage, "Someone can steal a lot more with a briefcase than they can with a gun." Guardianships, conservatorships, personal representatives, durable power of attorney--these are all terms with which every adult in America should become familiar. Why? A lack of planning for temporary or permanent incapacity could spell a loss of your physical freedom, choice, savings and control over any future income.
Once recruited to Pinellas County audit operations, by my former employer, the City of Dallas Auditor, I became acquainted with the area of probate and guardianships. My first assignment, by the newly appointed Director, was to review Clerk of the Court guardianship and probate operations.
According to the National College of Probate Judges, reform efforts in the area of guardianship and fraud abuses, reached dramatic proportions after the Associated Press, in 1987, published a series on results of a study entitled, Guardians of the Elderly: An Ailing System.
Statewide, Florida auditors were also corroborating to crack down on guardianship and probate fraud. Meanwhile, fraudsters who had escapped detection of their guardianship schemes, turned to alternative and less detectable ways of siphoning savings of unsuspecting invalids.
After an initial review of operations, I advised the Director that our first line of defense for the Clerk's staff should be to establish a fraud hotline, increase training for guardianship oversight , strengthen controls regarding fraud prevention and to employ ethics training and policy development for local professional guardianship associations.
After about a year of uncovering a number of guardianship and probate schemes, I received an interesting out-of-state complaint from our fraud hotline. A local Floridian's niece, whom I will refer to as Ms. Smith, reported guardianship fraud in reference to her uncle. At first glance, I was unable to locate any court-filed or appointed guardianship for Ms. Smith's relative.
I phoned Ms. Smith and asked if she was sure that a guardianship or conservatorship was established on behalf of her uncle. A perfect stranger, in the process of liquidating the uncle’s out-of-state assets, presented paperwork to Ms. Smith, which she then forwarded to me. Unbeknownst to Ms. Smith, her uncle vested full decision-making authority with a perfect stranger through the execution of a durable power of attorney.
While I was looking further into this complaint, I advised Ms. Smith to seek counsel, since her uncle may have been incapacitated at the time he signed away his rights. Unfortunately, the property-pilfering suspect, armed with a signed and notarized durable power of attorney, had already skipped town.
Sometimes, to the dismay of many out-of-state families or friends, a number of retired baby-boomers leave colder climates to set-up residence in what have come to be known as "sunshine states;" like California, Florida and Arizona. Generally, there are few problems associated with such moves, unless of course, the loved-one is isolated, in a weakened state and unable to care for themselves.
In the case of Ms. Smith, her uncle resided in a Florida-based assisted living facility. According to Smith, she kept up with her uncle through regular phone contact; at which times, he appeared lucid. Once liquidation of her uncle's property commenced, Ms. Smith was no longer able to contact him. Her uncle had been moved, his phone disconnected and the assisted living facility was provided with only the fraudster's forwarding address.
Fraudsters often develop inside-contacts for locating victims with whom they can offer business services. In order to facilitate transactions, a targeted victim is encouraged to execute a durable power of attorney. This type of authority remains in effect, even in the event of total incapacity; as long as, the individual remains alive. A weakened person and any out-of-state family members are usually grateful to receive assistance. Suspicions, fostered from any questionable activity, are often dispelled once such skeptics are named in the victim-testator's will and the fraudster is named only as a personal representative.
Allowing someone exclusivity for inventorying, transacting and reporting on one's assets creates a material risk for fraud. A durable power of attorney provides the fraudster with authority to liquidate and sequester assets without any compensating controls; such as, those provided by the court through guardianship and/or conservatorship monitoring.
Typically, a fraudster will work quickly to gain abosolute control over the life of his/her victim, so that (s)he can liquidate assets. Because this relationship fails to ensure any separation of duties, the fraudster is not required to prepare and file a beginning inventory for the "client." The only report (s)he files is one which is prepared after the testator is deceased, for purposes of probate.
Before his death, Ms. Smith immediately attempted to enjoin the sale of her uncle’s possessions, but it was too late. Although Ms. Smith was named as a sole beneficiary in her uncle's will, she discovered there was nothing left of his estate to probate. Ms. Smith's lawyer contacted me during my investigation and indicated that pursuing a civil fraud case would be too cost-prohibitive. I considered that perhaps, individually, no one had an incentive to pursue this fraudster, but given the sophistication of the reported heist, I surmised that this was not a first for this swindler.
Courtesy of pspupdates.qj.net
I met with staff at the Clerk's probate department and requested they run a database sort, matching the personal representative's name in Ms. Smith's complaint with names of other designated personal estate representatives on file. Sure enough, there was a match between the uncle's estate representative and 12 other personal representative probate filings, of which none of the twelve were established as formal guardianships.
I pulled a sample of named beneficiaries from the 12 cases. I phoned some of them to inquire whether their experiences were similarly situated with Ms. Smith's.
Although, some of the estates had a remaining balance of assets, values of the estates were just under the threshold for probate. Thus, family members in these other cases had the choice of suing the personal representative, perhaps waiting several years and exhausting any remaining assets in the process, or, to petition the court for a waiver and immediately receive their remaining share.
Since the fraudster in Ms. Smith's case had created such a well-established trail of of deception and instances of undue influence , after my investigation was complete, I organized all 12 case files with an accompanying witness list and presented a package to the District Attorney's office for possible criminal prosecution.
The Smith hotline complaint case demonstrates an alternative means of stealing, outside a formal guardianship or conservatorship. The fraudster knew the system and evaded detection by identifying means which were outside the scope of the court's review; i.e., power of attorney and designation of the same individual as a personal estate representative.
Fraudsters, who are intent on stealing through probate and guardianship fraud, are always seeking alternative means for operating without detection (see 10 dirty tricks); therefore, it is imperative to consider your own risks. There are a number of strategies for preventing a stranger, or unwanted guardian/conservator (i.e., court appointed), from taking over your life, in the event of your illness or incapacity.
It is far more cost effective to invest in securing your wishes in advance, than to wait until you can no longer manage your own affairs. Protect yourself by becoming informed and setting up business systems and estate planning through competent professionals.
For more info: There are a number resources, such as, www.StopGuardianAbuse.org & http://NASGA-StopGuardianAbuse.blogspot.com, www.businessfraudprevention.com/ ; the above-noted American Association of Retired Persons (AARP);and for finding a lawyer, the American Bar Association has a national referal service at www.abanet.org/legalservices/lris/directory/.