I-Team: How a Florida guardian stole $400k from his wards

by Danielle DaRos

Because Larry Leonhardt keeps meticulous records of his father's accounts and court paperwork, he was able to flag missing money and launch an investigation into his father's guardian. (WPEC)

WEST PALM BEACH, Fla. (CBS12) — Lynrod Douglas is sitting in the Palm Beach County Jail waiting to be sentenced on 15 charges relating to guardianship fraud.

Prosecutors say he concealed and stole hundreds of thousands of dollars from the people he was being paid to protect, and used their money to pay off his mortgage, pad his business account, and even buy a Mercedes Benz.

Larry Leonhardt tells the I-Team he will be at Lynrod Douglas' court hearing and will ask a judge for the maximum sentence.

"I'd like to see him off the streets forever, myself," Leonhardt said. "It would send a good message to the guardians. That if you play, you're going to pay a little bit here."

Larry Leonhardt is fighting for justice on behalf of his late father, Richard, a WWII veteran who retired in Stuart. When Richard's health declined, his children couldn't agree on who should manage his estate, so a judge appointed a professional guardian: Lynrod Douglas.

Larry and Richard Leonhardt, shortly before Richard's death. A court appointed guardian was managing Richard's estate, and secretly stealing his money (Leonhardt).

Larry said he initially trusted Douglas to manage his father's affairs. Afterall, the court-appointed Douglas, and was supposed to be overseeing the guardianship.

But two years later, when Richard passed away, Larry realized a large sum of his father's money was missing.

Because Larry kept meticulous records about his father's bank accounts and assets, he discovered more than $265,000 in CDs his father had at the bank were unaccounted for. As a guardian, Lynrod Douglas was the only person with access to those funds.

"I said what about the CDs?," Larry asked Douglas. "[Douglas] said, 'I could never find the CDs.' I contacted the bank and the bank told me they were cashed in September of that year. He was the only one who could legally cash them."

Larry filed a complaint, which started an investigation into Lynrod Douglas.

Anthony Palmieri, Chief Guardianship Investigator with the Palm Beach Clerk of Courts, led the investigation which found Douglas was stealing from Richard Leonhart, and four other wards.

"I think the system as designed is working in a lot of cases, but when the system goes off the rail, one case is too many cases," Palmieri told the I-Team.

According to court records, Douglas misappropriated about $420,000 from five wards.

Richard Leonhardt was a WWII veteran who retired in Stuart. His son Larry says he worked hard his whole left, and deserved better than what his guardian, Lynrod Douglas did to him (Leonhardt).

From Richard Leonhardt, Douglas took $152,992 to pay off a mortgage, used $75,867 to buy another property, and $4,000 to pay off a credit card.

From a ward named Helen Percia, Douglas took $121,894 to pay off a mortgage and deposit into his business account.

From wards Richard and Betty Weber, court documents state Douglas misappropriated nearly $10,000.

From a ward named Kevin Benner, Douglas stole $55,197 for his business account and to buy a Mercedes Benz.

And from another ward, named Grace Mackie, he misappropriated $525.

"I'd like to hear them in Tallahassee change a few things," Larry Leonhardt told the I-Team. "[Guardianships need] more oversight. You can't just have carte blanche without someone keeping an eye on it."

Judges are supposed to be providing oversight of guardians and their spending from their ward's accounts. Guardians submit annual financial reports to the court for review.

But the I-Team discovered Lynrod Douglas exploited a loophole in the system over and over again, that allowed him to conceal funds from the court.

He did it by inaccurately reporting his Inventory Lists.

When a guardian takes over a ward's estate, he or she is required to take an inventory of their ward's money, assets, and valuables.

The guardian has the authority to take the inventory by themselves, without anyone double-checking their reporting.

Ken Burke, Clerk of Court in Pinellas County and Chair of the statewide Guardianship Improvement Task Force, says this is a problem.

"The guardian does the inventory by themselves," he said. "There is no check, no person with them.

He said too often, guardians can under-report assets and leave bank accounts off of the inventory list, then steal them.

"Unfortunately the temptation is too strong when there is no check or balance," Burke said. "You would never allow that anyplace else."

Court documents show Lynrod Douglas routinely left assets off of his inventory lists for his wards.

In the Leonhardt case, he never reported the $265,000 in CDs to the court, so the judge was never able to provide oversight of that spending. The judge didn't know that money existed.

Larry Leonhardt was never allowed to see the inventory list, so he had no way of knowing the guardian stole it until it was too late.

Investigators say they found incomplete inventory lists in several of Douglas' cases. For some wards, he left entire bank accounts off of inventory lists and used those funds for himself.

The Guardianship Task Force is currently reviewing the entire guardianship system in Florida, and plans to make recommendations to the legislature. Changes to the inventory process may be among those recommendations.

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I-Team: How a Florida guardian stole $400k from his wards