Red Flags Raised for Years Over Vulnerabilities in Guardianship System

A nonpartisan federal report released in the fall warned of flaws in the guardianship system that leave vulnerable people open to exploitation similar to that detailed in a criminal complaint against an Appleton man accused of stealing hundreds of thousands of dollars from clients.

The report from the Government Accountability Board is the latest to raise a red flag about the system. A 2007 study released by U.S. Sens. Herb Kohl, D-Wis., and Gordon H. Smith, R-Ore., suggested improvements to safeguard people who rely on guardians, and a 2006 report by the AARP Public Policy Institute cautioned that checks on guardians were lax.

Jeffrey M. Schend, who owns the company Outagamie County hired to serve as guardian for 48 people, hasn't told investigators where about $500,000 went after disappearing from some clients' accounts. But there were signs Schend wasn't properly reporting financial transactions, including a $4,700 judgment Shawano County won against him in 2010 for his mishandling of a client's account.

Confidentiality concerns
Sylvia Rudek, a director of the National Association to Stop Guardian Abuse, says Wisconsin's system is weighted so heavily in favor of confidentiality that it prevents adequate oversight of guardians, who are hired mostly by counties after a court has determined a person cannot make safe and sound financial decisions. Most of the people represented by guardians are mentally ill, disabled or old.

Rudek said she ran into roadblock after roadblock after learning that a guardian had stolen more than $78,000 from her great-aunt, a Wisconsin resident. Though the guardian, Kathleen Simane, ultimately was sentenced to two years in prison on two theft convictions by a Rock County judge, Rudek said getting the case into the criminal justice system took Herculean efforts.

"We had no idea of what was going on," Rudek said. "I couldn't get any information."

In many states, she said, families can examine a guardian's books, but Wisconsin keeps those records sealed.

"The legislators will tell you the files are closed to protect the ward," she said, using a term often applied to a person represented by a guardian. "In reality, closed files protect the guardian team from oversight."

The report released in September by the federal Government Accountability Office backs up Rudek's contention that guardians are not properly supervised.

The office wasn't able to determine whether abuse by guardians is widespread, but researchers found hundreds of cases in 45 states between 1990 and 2010. Researchers thoroughly reviewed 20 of the cases to try to find commonalities.

"In 12 of 20 cases, the courts failed to oversee guardians once they were appointed, allowing the abuse of vulnerable seniors and their assets to continue," the report says.

Schend was required to file annual reports with Outagamie County's register in probate, Sue Lutz, but she declined last week to discuss his record keeping, citing confidentiality provisions. In all, Outagamie County has 1,065 people served by guardians.

Clients suffer
Sorting out the finances of clients represented by Schend likely will be a long process. Investigators searched his home as well as two rental storage complexes at which Schend rented space and seized several documents from one storage unit. Schend at a Thursday hearing said police took all of his financial documents.

Assistant Dist. Atty. Kyle Sargent said last week some of Schend's clients had limited assets that can make it hard to tell the difference between legitimate expenses and thefts, while some clients had sizable estates that vanished.
"It could get bigger," Sargent said. "It all depends."

Schend has been unable or unwilling to tell investigators where the money went, but two former employees say Schend lived a luxurious lifestyle, taking expensive vacations, buying expensive cars and gambling frequently.

Schend was bonded, which means that his clients might get some of their money back, but Rudek, the director of the National Association to Stop Guardian Abuse, said those victimized by inept or criminal guardians bear the weight of the problem for years.

"I still feel it, mentally and physically," she said. "My aunt saved; she was frugal. (She was) a good woman who worked all her life."

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Red Flags Raised for Years Over Vulnerabilities in Guardianship System

See Also:
Read the GAO report: GUARDIANSHIPS - Cases of Financial Exploitation, Neglect and Abuse of Seniors

NASGA: Helen Fabis, Wisconsin Victim

Remembering a Treasured Aunt 10 Years Later

Guardian System Flaws Allow for Exploitation