Appointment of Conservator May Not Prevent Exploitation

JUNE 1, 1998 VOLUME 5, NUMBER 48

Financial exploitation of the elderly has been a growing problem across the country in the past several decades. In many cases, the only way to protect vulnerable adults from continuing thefts and abuses has been to seek court intervention, usually in the form of conservatorship (or, as it is still called in some states, guardianship of the estate). Now a new and even more troubling trend is being observed: financial exploitation of vulnerable seniors by their court-appointed conservators.

In Tucson last year, insiders in the elder care community were shocked by the revelation that local paralegal Marilyn Summers had systematically looted hundreds of thousands of dollars from conservatorship and probate estates. In many cases, Summers had been appointed as conservator for an incapacitated adult, or as personal representative of the estate of a deceased person. In other cases, she took over administration of estates for family members, or for lawyers who had been appointed. Summers was well-known in Tucson legal circles, and had done free-lance paralegal work for dozens of lawyers over a twenty-year period.

Tucsonans should not have been surprised. Financial exploitation by court-appointed fiduciaries has become disturbingly commonplace in recent years. In fact, several of the more notorious incidents had occurred in Arizona, ranging from the 1992 indictment (and 1997 conviction) of a leading probate attorney in the Phoenix area to the 1997 conviction of the Mohave County Public Fiduciary. In both of those cases, the convicted fiduciaries had enjoyed favorable reputations in their communities, even as they were bilking the estates of incapacitated adults and decedents.

Other states have seen similar cases. Just last year, Denver lawyer Michael Dice was indicted after a three-year investigation by the Colorado State Bar into allegations that he had stolen money from ward’s accounts. In January, he was sentenced to an eight-year prison term. Until his indictment, however, he enjoyed a reputation as a distinguished probate practitioner, and regularly served as conservator of the estates of disabled adults.

A professional fiduciary in Michigan is presently under scrutiny by the U.S. Attorney’s office in that state. Guardian Inc., of Detroit, was accused of taking over $600,000 from wards’ estates. The organization apparently claimed that the payments were fees it had earned, but they were not disclosed in the annual accounts filed with the court.

Until recently, most lawyers assumed that court-appointed conservators would not be able to steal from their wards, at least not on a wide scale. Conservators are required to file annual accountings, and the court has the power to follow up as may be appropriate. What a naive (and understaffed) court system failed to anticipate, however, was the possibility that a larcenous fiduciary might simply fabricate an accounting, or omit important details of transactions.

Since courts seldom have the staff necessary to conduct audits on fiduciary accounts, such thievery can go undetected. In fact, even audits might fail to disclose the theft; Tucsonan Summers routinely transferred funds into accounts just before filing annual reports, then transferred the money back into other accounts–her actions were apparently aimed at making sure there would be sufficient funds on deposit as of the date of her accounting in case there was a later audit of the books.

The vast majority of private fiduciaries, of course, are honest. And in most cases they must post a bond to guarantee proper performance of their duties. Still, theft by fiduciaries is a growing problem, and new court procedures and statutes, while helpful, will not replace the vigilance of family members and advocates.

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