Posts Tagged ‘theft’

Court Sets Aside Agent’s Transfers to Self Using Power of Attorney

JUNE 13, 2016 VOLUME 23 NUMBER 22
John Richardson was 86, living on his family farm in rural Nebraska, when he became ill enough that he could no longer take care of himself. His long-time companion Elaine had been living with him and providing care, but she could no longer handle his care, either. John’s nephew Larry moved in to help with care.

As is our usual practice, the names of most of the principals in this story have been changed.

Within about a month of his arrival at the farm, Larry had been named as agent on a power of attorney signed by his uncle John and prepared by John’s long-time lawyer. The power of attorney included language allowing Larry to do anything John could have done for himself, “including but not limited to the power to make gifts.”

John had no children. He did have four nieces and nephews, including Larry. He had signed several wills over the years, each one leaving most of his property to his nieces and nephews and naming his attorney to be the personal representative of his estate. That was the status of his estate planning as of the time he gave a power of attorney to Larry.

As Larry took care of John, he learned from John’s companion Elaine about a brokerage account in John’s name. Larry used his power of attorney to get more information from the broker, and then used it again to liquidate the account. He transferred some of the account to John’s other nieces and nephews, and put one portion of the proceeds into his uncle’s checking account. He then used John’s checking account to pay some of his own bills.

Two months after that, Larry used his power of attorney again — this time to sign a deed transferring his uncle’s farm to himself and the other nieces and nephew. The transfer deed did retain a life estate for John.

At about the same time as the deed transferring the farmland, John’s companion Elaine moved out of the farmhouse. Several months later Larry was arrested and charged with abuse of a vulnerable adult and theft by deception.

Meanwhile, John contacted his attorney once again, and asked him to prepare a new will. This will left nothing to Larry or the other nieces and nephew; instead, the bulk of John’s estate would go to a charitable foundation.

Shortly after the new will was signed, John’s attorney decided that it would be better if he had not prepared John’s last will. Accordingly, he arranged for another attorney to meet alone with John, and prepare a second new will. That document substantially mirrored the other will, leaving the bulk of John’s estate to charity.

John died about a month later, and his last will was admitted to probate. As personal representative, his attorney sought return of the farm property and the brokerage account transferred by Larry. The probate court agreed with the attorney’s position, and ordered that a “constructive trust” be imposed on the properties for the benefit of John’s estate.

The Nebraska Court of Appeals reviewed the decision, and concurred. According to the appellate court, the key question was whether John’s power of attorney expressly authorized Larry to benefit himself. Since the general rule is that an agent may not transfer assets to himself, any evidence that Larry had done so would be viewed closely and could support a presumption of improper behavior by Larry.

Interestingly, the appeal was filed not by Larry but by John’s other nieces and nephew. They argued (among other things) that the presumption of breach of fiduciary duty by Larry did not apply to them — after all, they had not taken any steps to transfer anything to themselves, and should not be penalized as if they had done so. The Court of Appeals, however, was unimpressed by this argument, and upheld the probate court’s order reversing the transfers.

The appellate court also responded to John’s nephew and nieces’ argument that he was aware of the transfers signed by Larry, and did nothing about them. The fact of his knowledge (or lack of knowledge) was irrelevant, ruled the judges — the transfers exceeded Larry’s authority and were void regardless of John’s knowledge. Stehlik v. Rakosnik, May 17, 2016.

Since the events involved in John’s case, Nebraska has adopted a uniform multi-state law governing powers of attorney (the Uniform Power of Attorney Act). The Court of Appeals decision takes pains to note that it addresses only the general common law principles in place before the adoption of that Act, and the rules might now be different. The uniform law has now been adopted by almost half of the states (not including Arizona).

 

Video by Exploiters Leads to Witness Tampering Conviction

DECEMBER 21 , 2009  VOLUME 16, NUMBER 65

Washington State resident Shirley Crawford, then age 80, had a difficult problem to deal with. She had fallen in 2001 and was hospitalized. Her only child, Anne, was severely mentally disabled and lived in Ms. Crawford’s home. Ms. Crawford needed someone to help her with management of her financial affairs and care of her daughter.

Ms. Crawford turned to a long-time friend and distant relative, Judith Thompson. With the help of a lawyer Ms. Crawford signed a power of attorney form giving Ms. Thompson wide-ranging powers over her finances.

Within three months Ms. Thompson was trying to use the power of attorney to make gifts to herself. The broker where most of Ms. Crawford’s money was held refused to honor the power of attorney for that purpose, saying it did not include gift-making authority.

In the following year Ms. Thompson and her husband secured a new power of attorney from Ms. Crawford — this one specifically allowing them to make gifts to themselves. They sold her house and used more than $300,000 of the proceeds to pay off their own debts and to buy a $200,000 boat for their Alaska fishing charter business.

It took almost three more years before the state Adult Protective Services office and, ultimately, the Washington courts to begin to undo what the Thompsons had done. While investigations and court proceedings were pending, the Thompsons apparently thought it would be helpful to their cause if they had Ms. Crawford on videotape approving of the gifts they had made.

The videotape showed Mr. Thompson telling Ms. Crawford that he had compiled a series of statements from things she had told the Thompsons. The list included such items as “I wanted [the Thompsons] to have my house.” Ms. Crawford was shown nodding and agreeing with the statements as Mr. Thompson read them.

The Thompsons’ videotape never got introduced in the guardianship matter. It did, however, get used in court — in a criminal trial in which Mr. and Ms. Thompson were accused of tampering with a witness. At that trial Ms. Thompson testified that she and her husband had transferred Ms. Crawford’s assets to their name to protect her from thieves, and that the “investment” in their fishing charter business was safer than the stock market.

A jury found the Thompsons guilty of witness tampering, and the Washington Court of Appeals upheld their conviction. The appellate court ruled that the Thompsons had reason to believe that Ms. Crawford would be called as a witness in her own guardianship proceeding, and that they were trying to induce her to give false testimony. State v. Thompson, November 23, 2009.

As often happens in exploitation cases, the Thompsons insisted vehemently that they were following Ms. Crawford’s wishes, and that they intended to take care of her developmentally disabled daughter. The facts did not bear out that assertion, however — over the course of their involvement, virtually all of Ms. Crawford’s money went to the Thompsons, and none of it went to the care of Ms. Crawford’s daughter.

The Thompsons were also charged with (and convicted of) theft. That much makes an all-too-common story of exploitation of a vulnerable elderly woman. It is even common for exploiters to try to enlist their victims in an attempt to whitewash the evidence of misbehavior. What makes the Thompsons’ case stand out is their successful prosecution for what that attempt was: tampering with a prospective witness in a contested court proceeding.

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