judicial

National College of Probate Judges: 

National College of Probate Judges 2002 Fall Conference Tucson, Arizona

How to Spot a Guardianshipor Conservatorship Going Bad;Effective Damage Control and Useful Remedies: 

How to Spot a Guardianship or Conservatorship Going Bad; Effective Damage Control and Useful Remedies Richard T.Vanderheiden Maricopa County Public Fiduciary

Questions to Consider: 

Questions to Consider Is the Court the ultimate guardian? Whose problem is this? What is the balance to achieving effective monitoring without overburdening the fiduciary and the estate?

The Systems Necessary to Recognize a Case “At Risk”: 

The Systems Necessary to Recognize a Case 'At Risk' Maximizing the use of technology Qualified staff to review reports and accounts Using all available resources

Ten Years of Failing Fiduciaries and Reform in Arizona: 

Ten Years of Failing Fiduciaries and Reform in Arizona What can be learned from Arizona’s process and events The horror stories of financial abuse by AZ fiduciaries The role of the media The reaction of the judiciary Resulting reforms

Articles and Investigations: 

Articles and Investigations

September 1993: 

Weber Mackey Private Fiduciary Wayne Legg Attorney September 1993

Weber Mackey Case: 

25 Cases, 1.2 million in losses Civil Recovery on bonds of at least 80% by the Public Fiduciary News Articles revealed weakness in Court monitoring Wayne Legg convicted of criminal offense after second trial Weber Mackey Case

Weber Mackey Case(cont.): 

Resulting reform: Legislation in 1994 to register private fiduciaries Personal lobby by Probate Judge for new legislation Initial draft of regulations exempted Public Fiduciaries No exemption for trust departments Problem: No funding for legislation Weber Mackey Case (cont.)

Michael Daw, Mohave County Public Fiduciary 1996: 

20 Cases, approx.1.2 million in losses Recovery out of the Mohave County budget and insurance Now serving 10 year sentence Result: Concern over how Public Fiduciaries operate Michael Daw, Mohave County Public Fiduciary 1996

Robert Farrer, Attorney 1996: 

Overcharging of fees in about 15 cases Suspended from law practice for 5 years This case led to push for funding of legislation by Probate judge Public Fiduciary took over cases and recoveries Robert Farrer, Attorney 1996

Arizona Dept.ofVeterans Services: 

Arizona Dept. of Veterans Services 1997- 1998

Arizona Dept. ofVeterans Services: 

Arizona Dept. of Veterans Services Mismanagement of funds only Replacement of unaccounted funds Restricted by Court in accepting cases For about 2 years - Public Fiduciaries and Private Fiduciaries received their new cases

Deborah Merritt, Private FiduciaryFormer Adult Protective Services Caseworker: 

Outright theft of $180,000 from three estates Civil recovery on bonds - 100% No criminal prosecution Deborah Merritt, Private Fiduciary Former Adult Protective Services Caseworker

Marilyn Summers, Private FiduciaryPima County - 1997: 

$2 million in about 30 cases Some un-bonded losses Criminal Conviction Marilyn Summers, Private Fiduciary Pima County - 1997

1997 - 1998Private Fiduciary Certification Program Coordinator Hired: 

New regulations include Public Fiduciaries and Trust departments All fiduciaries now must be certified Training and Testing 1997 - 1998 Private Fiduciary Certification Program Coordinator Hired

Nancy Elliston: 

Nancy Elliston Past President of AFA First Private Fiduciary in Arizona Expert witness in Wayne Legg criminal conviction

Nancy EllistonSeptember, 1999: 

Nancy Elliston September, 1999 Discovery of losses in about 15 cases Public Fiduciary appointed on civil recoveries Criminal referral made Everyone betrayed and embarrassed

New Times Article January 26, 2000: 

Focus of article on Probate Court History of late accountings Was restricted from taking new cases No accounting filed, for over 9 years, in one case Losses amounted to about $160,000 All recovered through bonds New Times Article January 26, 2000

Rita Reill CorbinGila County Public Fiduciary: 

Rita Reill Corbin Gila County Public Fiduciary 2000 - Fiduciary’s attorney reports to Superior Court funds unaccounted for from client’s estates. Auditor General’s Office investigation Thirteen years of no bank reconciliations $1.2 million discovered embezzled from 80 clients Fiduciary sentenced to seven years in prison

Frances GoldsmithPrivate Fiduciary (3 counties): 

Frances Goldsmith Private Fiduciary (3 counties) June 2001 - Total assets embezzled over $1 Million plus purchased vehicles for family family vacations, cruises etc. Some cases without bonds Complaint from an heir of an estate brought immediate response by the Court and Law enforcement.

15 Red Flags of Fiduciary Abuse, Exploitation, Neglect and Misappropriation: 

15 Red Flags of Fiduciary Abuse, Exploitation, Neglect and Misappropriation Protected Person has no relatives or active friendships Large estates Late or no accountings filed Multiple ATM transactions

Red Flags (cont.): 

Red Flags (cont.) Health or personal problems of the fiduciary Use of several attorneys by the fiduciary Attorneys representing the fiduciary withdrawing from the fiduciary’s cases

Red Flags (cont.): 

Red Flags (cont.) Singular control of information by the fiduciary No automated record keeping by the fiduciary Financial difficulty of the fiduciary, e.g. (tax liens, judgments, bankruptcy, divorce)

Red Flags (cont.): 

Red Flags (cont.) Revocation or failure to renew fiduciary bonds Large expenditures in the accounting not appropriate to the client’s setting The fiduciary has minimal experience.

Red Flag Samples: 

Red Flag Samples

Red Flag Samples: 

Red Flag Samples

Red Flag Samples: 

Red Flag Samples

Red Flag Samples: 

Red Flag Samples

Red Flag Samples: 

Red Flag Samples

Red Flag Samples: 

Red Flag Samples

Red Flags (cont.): 

Red Flags (cont.) Pattern of letters and verbal complaints against the fiduciary Lack of oversight on the case by Counsel assigned or Court staff

Other Red Flags ?: 

Other Red Flags ? Warning signs or red flags from your horror stories.

What can the Court do to Help Prevent Financial Abuse and Control Losses?: 

What can the Court do to Help Prevent Financial Abuse and Control Losses? Ensure there is full bonding for all liquid assets and annual income by calendaring a review annually. Be proactive. The dishonest fiduciary will recognize it, if you are not.

Proactive Courts : 

Proactive Courts Are systematic and organized in the monitoring of cases Develop a computerized tickler system showing due dates on mandatory reporting requirements on the case guardian reports accountings inventories annual bond reviews

Court Ordered Investigations: 

Court Ordered Investigations Who’s problem is this?

Preventing Financial Abuse and Controlling Losses: 

Preventing Financial Abuse and Controlling Losses Monitor the caseload through available technology. Seek necessary funding to obtain the technology. Know your fiduciary and hold them accountable

Fiduciaries Should Be . . .: 

Fiduciaries Should Be . . . Aware of ethics and standards of the fiduciary profession Certified Nationally as either Registered Guardians or Master Guardians (NGF) Certification  Qualification

Use of Court Powers: 

Use of Court Powers Investigative powers Audit powers Orders to Show Cause Status Hearings

Reasonableness of Fees: 

Reasonableness of Fees Scrutinize the fees for reasonableness Do not rely on others to object to the fiduciary’s fees

Utilizing Court Personnel to Monitor Cases: 

Utilizing Court Personnel to Monitor Cases Court Investigator / Visitor Court Appointed Attorney Guardian ad Litem Public Guardians Public Administrators Volunteers

Responding to Failing Fiduciaries: 

Responding to Failing Fiduciaries Be vigorous in the obtaining of information Issue subpoenas or Orders to Show Cause Require status reports when interested parties complain AZ Fiduciary Arrest Warrant

Responding to Failing Fiduciaries: 

Responding to Failing Fiduciaries If the accounting or inventory are in question, require the filing of the original bank statements or other documents

Suspected Theft . . .: 

Suspected Theft . . . Order an audit Determine the number of cases and assets under the fiduciary’s care Immediately investigate all of the accounts of the fiduciary Refer financial abuse cases to the criminal justice system

Raising the Bar: 

Raising the Bar Provide the necessary training to fiduciaries and court appointed counsel Require standardization of forms Incorporate judicial training throughout the probate court

Final Questions and Comments: 

Final Questions and Comments Is the Court the ultimate Guardian? Whose problem is this? What is the balance to achieving effective monitoring without over-burdening the fiduciary and the estate?

November 15, 2002Richard T. Vanderheiden: 

November 15, 2002 Richard T. Vanderheiden Rich Vanderheiden has served as the Maricopa County Public Fiduciary in Phoenix, Arizona since 1991. He was formerly Vice President of Trust Administration with Chase Manhattan Trust Company from 1987 to 1991 and previous to this position was an estate planning and probate attorney for 14 years. He has a Bachelor of Business Administration degree and Juris Doctor degree, both from the University of Nebraska. Mr. Vanderheiden is currently the Chair of the Board of Trustees for the National Guardianship Foundation. Formerly, he was Vice President of the National Guardianship Association (NGA) and Chair of the NGA Certification Committee responsible for implementation of national guardian certification. He also served on the Arizona Supreme Court’s Private Fiduciary Committee in 1994 during the formation of state fiduciary certification in Arizona. He was also appointed to serve on the Arizona Supreme Court’s Fiduciary Advisory Committee that has resulted in additional legislation and reforms to the fiduciary profession in Arizona. The Maricopa County Public Fiduciary’s Office administers 1150 guardianships, conservatorships, probates and investigations per year and regularly seeks civil recovery actions for financial abuse involving family members and professional fiduciaries. Mr. Vanderheiden’s other fiduciary responsibilities since 1995 include serving on the National Association of Counties (NACo) Deferred Compensation Advisory Committee that provides investment and program oversight and acts as an advocate for counties and their employees who participate in the NACo Deferred Compensation Program. He was also Chairman of the Maricopa County Deferred Compensation Committee from 1994 through 2001. Rich Vanderheiden has been a speaker at state and national conferences on guardianship issues, fiduciary liability and guardian certification. Richard T. Vanderheiden Maricopa County Public Fiduciary 111 W. Monroe, Suite 500 Phoenix, AZ 85003 Phone 602-506-5801 Rvanderh@mail.maricopa.gov