When Arizona veterans become too ill to manage their own health needs or finances, they are able to turn to the Arizona Department of Veterans' Services for help.
For more than three decades, the department has served as guardian or conservator for hundreds of veterans at a fraction of the cost charged by many of the state's private, for-profit fiduciaries.
But a state report by the Office of the Auditor General released this week said the department should stop offering fiduciary services, which is one of two such programs in the country.
In a sobering 44-page report, the auditor general found that the department's fiduciary program costs the state $508,000 annually and suffers from mismanagement problems resulting in complaints and increased legal costs.
The auditor recommended phasing out the program over the next three years.
The report's conclusions, however, have left some veterans voicing concerns about the lack of options available if the state shuts the program down.
The department is currently managing 260 fiduciary cases. A typical client is a male in his late 60s or 70s and a veteran of the Korean or Vietnam wars. The total value of his assets is $30,000 to $60,000.
A department spokesman said Wednesday that no decision has been made about whether to cut or save the program.
A 2010 review of 15 client files by the Arizona Supreme Court, which licenses and regulates fiduciaries, found 14 problems. Those included an inaccurate inventory of client assets, incomplete client records, inaccurate court reports, inaccurate accounting and untimely court filings.
As a result, the court restricted the department from taking on new cases for six months and then put a limit on the number of new cases this year.
The problems also resulted in two formal complaints being filed with the court against the department, which cost more than $65,000 in legal fees.
"The operational problems . . . are serious because they involve the department's fiduciary responsibility to undertake for another person a special obligation of trust and confidence," the auditor's report said. "Left uncorrected . . . the department cannot ensure that it is properly serving and protecting its clients."
In a 2009 case cited by auditors, the department did not discover that one of its clients had died for three months. As a result, the department paid out $1,600 in rent to a New Mexico hotel and wrote checks for $1,000 that were cashed by an unidentified person.
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Maricopa County Probate Court: Errors May Doom State's Fiduciary Help to Veterans