Editorial: Red flags should matter in NM guardianship cases

Asleep at the wheel.

That’s a polite way to describe oversight by the courts and the Attorney General’s Office of New Mexico’s scandal-rocked guardianship system over the years – a point hammered home by the revelation that independent audits of Ayudando Guardians Inc. in 2011 and 2012 pointed to clear financial impropriety. That’s impropriety in the form of top company executives “borrowing” tens of thousands of dollars from client accounts.

“There is no justification for any organization to borrow money from clients,” said Wendy York, who chairs a commission appointed by the state Supreme Court to recommend ways to improve the state’s guardianship system.

The two independent audits filed with the AG’s Office also noted Ayudando hadn’t complied with generally accepted accounting procedures. The 2011 audit noted $72,321 in employee advances, with only $23,766 in repayments during the audit year.

But despite the fact auditors red-flagged Ayudando – and despite being delinquent in filing its annual AG registration every year since 2012 – there is no indication the AG’s Office did anything, and judges in New Mexico went right on appointing the company as guardians and conservators in charge of the lives and finances of people who had been declared incapacitated and unable to care for themselves.

Perhaps that’s because the system isn’t set up in a way that the needed information gets to those judges – some of whom previously have defended the system and dismissed complaints as coming from “emotional” family members.

It was York who asked a forensic accountant to look at Ayudando’s audits and then relayed findings to the commission. The AG’s Office says it is reviewing the issues.

And Ayudando was slick. A company representative even showed up at one of the commission hearings chaired by York to defend the system by pointing to the fact that – get ready for this – it was audited every year by the state.

Ayudando had more than 176 guardianship or conservator appointments outstanding in Bernalillo County District Court in July when federal law enforcement filed a massive money laundering and fraud indictment that named the company and its two top officials – president Susan Harris and chief financial officer Sharon Moore. Federal investigators have identified more than $4 million in client money that was allegedly diverted to finance a “lavish lifestyle” by the two women and their family members. The U.S. Marshals Office says the company had about 1,400 clients, some of whom received financial management or representative payee services.

One federal agent in a search warrant affidavit described the company as “permeated by crime.”
But there is hope.

York says there are important lessons to be learned from the Ayudando debacle, including the need for an accountant who reports to the court. Improving the annual forms required of guardians/conservators to include more detailed financial information would also help.

Those are among the many reforms under consideration by York’s commission.

And York has asked the state’s chief disciplinary counsel to weigh in because her research has raised questions about potential conflicts of interest and other ethical issues surrounding lawyers that can arise in cases involving third-party corporate guardians and conservators. That’s an important step in a system in which professional guardianships involve a relatively small group of insiders.

Going forward, the courts can make some meaningful reforms. Others will require legislative action. But in the aftermath of the Ayudando case, one thing is clear: We can no longer accept being asleep at the wheel.

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Editorial: Red flags should matter in NM guardianship cases